How to get started with your sustainability strategy - A guide for SMEs
Sustainability has become such a popular word in the corporate environment. Oftentimes, people think about environmental impact and carbon footprint. The new trend in sustainability is to estimate one’s CO2 emissions and purchase carbon offset credits to become carbon positive.
But sustainability is much more than that. Sustainability is the balance between profit, people and planet. It requires measuring your environmental, social and economic impact. It requires being honest and transparent about your impact. Sounds overwhelming? Don’t you worry, we know too well. In this article, we provide you with a step-by-step guide on how to get started with sustainability in your SME.
First and foremost, you do not want to waste your time. You want to build a sustainability strategy that will create value for your company. According to a McKinsey study, companies' sustainability work generates value when:
- it aligns with the company's goals, mission and values;
- clear priorities, targets and goals are set (with KPIs);
- it is fully integrated in the corporate culture.
In that regard, it is crucial to involve your C-suite / management team in the design of your sustainability strategy.
Start by assessing:
Do you have a strategic action plan, with KPIs and SMART goals?
What kind of corporate culture do you have at the moment? How would you describe it?
When reviewing your existing strategy documentation, you will identify aspects that you would like to maintain and other elements that you would like to change.
List all your stakeholders. Stakeholders are identified persons, groups or organizations that impact or are impacted by your organization. For each stakeholder, assess the level of interest for your organization and the level of impact they have on your organization. You can then map your stakeholders on the following impact-interest matrix:
Read more about stakeholder mapping on miro.com.
2. Value chain and identified impact
The next exercise consists in mapping your value chain: what activities do you conduct in-house and what activities do you outsource? There are many ways to map your value chain and you can choose the representation that suits you best. Simply bear in mind that you need to structure it based on: input, operations, output, distribution, consumption.
At each stage of the value chain, identify:
The stakeholders that are most relevant
The main positive and main negative environmental impact(s)
The main positive and main negative social impact(s)
The main positive and main negative economic impact(s)
The main positive and negative impacts here are estimated if you do not have any data collection and measuring system in place yet. It is important to research the main areas of impacts in your industry and the geographical areas where your and your stakeholders’ activities take place (see SDG compass page 13).
At this point, you can (and should) conduct stakeholder surveys to collect feedback from your main stakeholders. Ask them to rate the importance of each of the impacts you have listed (see SDG compass page 13).
3. Risk assessment
As a next step, you will look into the main risks for your company. Have you ever conducted a risk assessment?
Start by identifying the risks. These can range from an internet outrage that would disrupt your operations to a natural disaster that would threaten your employees’ lives. For each risk, describe who is exposed and how.
Once your business risks are listed, on a scale from 1 to 5, evaluate:
The probability for the event to occur (1 - very unlikely; 5 - very likely)
The impact on your business (1 - very low impact; 5 very high impact)
You can then calculate the severity (probability * impact) and rank your risks from the highest level of severity to the lowest.
Address each risk with a coping strategy:
Read more about risk management.
4. Action plan
You now have the following:
Your strategy documents (mission/vision/values ; strategic action plan ; corporate culture representation)
Your stakeholder mapped according to their level of interest and impact
Your value chain with the main positive and negative impacts of your activities
Your main stakeholder’s survey results
Your organization’s risks, ranked in order of severity.
How can you connect the dots to have a structured sustainability strategy?
1. Place the risks on the value chain mapping
2. Create a table on Excel or equivalent, with the following columns:
You can now prioritize impacts that are associated with a key stakeholder (with highest rate of importance) and to a high risk (to be avoided). You can also include in your action plan the activities and impacts that relate to risks that need to be transferred or reduced.
3. Distribute responsibilities for impact monitoring.
Once you have short-listed the impacts and activities that you want to prioritize, appoint a task owner to each line, who will be responsible for monitoring the impact. They are responsible for improving the company’s impact and ensuring continuous monitoring.
4. Define SMART goals
The task owner will then determine SMART goals for each line of the action plan they are responsible for. They also determine which actions must be undertaken in order to achieve their goal. The list of actions can and should also refer to the associated risk coping strategies listed in 3. Risk assessment.
5. Your action plan is now finalized:
You can align this action plan with any sustainability framework you would like to work with by adding more columns as linkage (SDGs targets and sub-targets, GRI indicators list, ISO 26000 core subjects, Global Compact principles, etc).
Review your action plan in a management meeting at least once per quarter. Conduct an annual audit on your sustainability work to measure your progress. Make sure your sustainability goals align with your company’s mission, vision and values.
You can structure your action plan into 3 main categories. These categories can be based on the value chain, stakeholder mapping, company’s strategy or any other inspiration. Bear in mind that the 3 main categories should help you structuring your sustainability work, both in terms of reporting and in terms of communication.
By determining and using the right communication channels for each stakeholder, you facilitate the integration of your sustainability work in your corporate culture. Your annual audit and annual surveys can and should cover aspects of your corporate culture, where you can assess whether your different stakeholders share the same vision of your corporate culture.
You communication channels must be adapted to each stakeholders:
Tips and tricks
By keeping your business strategy in mind during the elaboration of your sustainability strategy, you align your sustainability work with your current strategy and ensure your action plan already integrates the existing aspects of your business strategy.
Prioritizing is key. Set realistic goals and focus on what you can do in the reality of your business and available resources. Your sustainability work will keep improving each year, it must become part of every manager’s role.
Read about sustainability, materiality assessment and corporate culture before conducting this work. It is recommended to get help from a specialized consultant for better results.
When you short-list your areas of impact, bear in mind that some will be irrelevant to some of your stakeholders but highly relevant to others. You can also rate the areas of impact as a management team (as one stakeholder) and/or look into your main stakeholders interests (for example potential investors). When submitting the survey to the selected stakeholders, you can add the option to add any comments or suggestions, to ensure you are not missing any important area of impact.
If you would like to see an example or book a free consultation, contact us at email@example.com!