You might have already caught wind of the international commentary declaring the next 18 months as being absolutely critical in addressing global climate change. Emissions of carbon dioxide need to be cut by 45% by 2030 in order to keep the rise in global temperatures below 1.5ºC. For this level of action to take place, key policies and frameworks need to be locked in by the end of 2020. But how do we achieve this seemingly impossible task?
Coincidently, 2020 also marks the expiration date of the existing corporate sustainability strategies of many of Australia’s largest organisations, from Westpac and Brambles to Stockland and Woolworths. Not to be overly dramatic, but this means that the next generation of sustainability strategies must be designed to save the world and ensure that companies are prepared for a rapid transition to a low carbon future.
Fortunately, the world is a very different place than it was 5 years ago when most of these strategies were drafted:
- the cost of renewable energy has reached (and in some cases exceeded) parity, meaning moving towards 100% renewable energy is not only feasible but, in most cases, makes sound financial sense.
- investors and consumers expect greater transparency around the decision-making process, driving the financial imperative for strong action.
- Australian businesses have been forced to take a leadership position as they can no longer use the absence of meaningful national climate or energy policies as an excuse for inaction.
Drawing on my 8 years working as a Sustainability Strategist across a range of sectors, here are the 5 key elements that I believe all ‘Beyond 2020 Strategies’ cannot afford to do without.
- Must align with global commitments and targets
In the absence of a meaningful climate policy at the federal level it’s imperative that Australian businesses do not act in isolation but are instead aligned with the ambitions of the international community. One method for achieving this is the setting of Science-Based Targets (SBT). Developing SBTs offers businesses the opportunity to go beyond addressing their direct emissions, providing a roadmap to engage with supply chains and customers to ensure that your commitments are aligned with ‘doing your part’ to avoid the worst impacts of climate change. Equally, no sustainability strategy should be designed without aligning outcomes with The United Nations Sustainable Development Goals (UNSDGs). This involves more than simply including a nice picture of the goal next to your framework, but requires that you align each action or metric to one or more of the key indicators (of which there are 230) and targets (of which there are 169) set out in the SDGs. The SDG Compass has a helpful tool to guide you through this process.
- Must demonstrate a more strategic approach to delivering social impact
The majority of existing corporate sustainability strategies have treated social impact like the ignored stepchild of sustainability. Typically taking the form of a few sausage sizzles and an annual charity fun run, these activities are commonly used to appease the personal philanthropic passion of someone high-up in the business. While admirable, this approach ignores the significant business benefits that a carefully designed social impact program can deliver, including amongst others driving greater customer loyalty and actively empowering and engaging your employees. I’ve explained the details of this further in my post on Maximising your Social Impact.
- Must pay particular attention to the climate resilience and circular economy
In addition to addressing immediate material issues, any future focused sustainability strategy should also address emerging issues that might transform your operating landscape. In a future that will likely be highly impacted by climate change in which resources are severely constrained, climate resilience and circular economy are two issues that no organisation can afford to ignore.
The financial exposure of businesses to the impacts of climate change has clearly not gone unnoticed by investors, highlighted by the fact that ESG disclosure audits conducted by all major financial investment auditors now include metrics related to climate exposure. In response to this, organisations of all types will need to assess and mitigate their exposure to both physical and transitional climate related risk, potentially adhering to reporting frameworks such as Task Force on Climate-related Financial Disclosure (TCFD).
Furthermore, in light of the National Waste Crisis and forecast increases in landfill levies organisations will be forced to extend their thinking beyond reductions in operational waste towards exploring opportunities on how they can close the loop on resource use altogether, de-materializing entire value chain from design through to disposal.
- Must adopt a transparent approach to prioritisation
The next five to ten years will see even more demand for transparency from investors and customers. Gone are the days when key decisions regarding what is and is not progressed occur behind the corporate curtain. With Edge’s clients, all the strategies we develop include some sort of prioritisation process for the initiatives that have been ideated. This could be as simple as a high-level Impact vs Effort Assessment (see below diagram) that prioritises initiatives into “quick wins” and “flagships” or a detailed Cost-benefit-analysis.
Only now, are we starting to see our clients make this information available amongst their stakeholders and the broader public. This transparency not only helps stakeholders understand that decisions are not arbitrarily being made at the 9th hole but are methodically grounded in science. They are informed with both where their initiatives are in the pipeline and more importantly why.
- Action plans must be granular, transparent and make individuals accountable
The last round of sustainability strategies saw great progress in relation to the development of sustainability frameworks, but most strategies still lack detail when it comes to implementation. Therefore, they did a great job at outlining the “what” but lacked following through with the “how”. Investors and consumers have wisened up and will not trust in the “what “without a detailed action plan of the “how”, especially after the corporate excuses of waiting for technology or policy have been debunked.
When Edge undertakes action planning workshops, we ensure that each initiative or task explores three common areas of implementation:
- PEOPLE who is doing the task or who needs to be engaged to do it?
- PROCESSES what processes need to happen?
- SYSTEMS what software, framework or infrastructure needs to be put in place to embed it?
If your sustainability strategy covers these 5 areas then we will all be one step closer to substantially reducing our impacts and making the 2030 target a tangible reality. Need some assistance developing your ‘Beyond 2020’ Sustainability Strategy? Feel free to reach out for a chat anytime. Contact Max Van Biene at email@example.com. Or to stay up to date on this issue follow us on LinkedIn.