Navigating Business Evolution: The Power of Operationalizing Sustainability
In the labyrinth of ESG, CSR, supplier diversity, decarbonization, biodiversity, and net zero, a single thread ties them together - Sustainability. Businesses aspire not only to grow economically but to foster equity in access to resources, education, and more.
How can businesses make sense of these concepts in a transformative sense? The answer lies in operationalizing sustainability—infusing environmental and social considerations into governance, processes, and the very fabric of a company's business model. Let's delve into how this approach can positively impact the world, people, and businesses.
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Optimizing Operations for Success
Successful business growth involves continuous optimization of operations. Integrating sustainability within operations becomes a potent strategy to reduce waste, conserve energy, and utilize resources judiciously. For instance, adopting the total cost of ownership model empowers supply chains to make informed, cost-effective, environmentally, and socially friendly decisions.
The Profound Benefits of Sustainability
Operationalizing sustainability yields remarkable benefits, and these are at the forefront of every strategic discussion. Key advantages include:
Increased Revenue: The pursuit of sustainability aligns with customer demands, with 63% of organizations building sustainability programs based on this demand, as reported by Gartner. Furthermore, EY states that for B2C businesses, 50% of consumers are willing to pay a premium for a product or service that has a positive ESG impact.
Decreased risk: Operationalizing sustainability mitigates risk for stakeholders, local communities, and the planet. Adopting sustainable practices mitigates risks such as reputational costs, increased regulations, and litigation, as highlighted by PwC.
Reduced costs: McKinsey highlights areas where businesses can reduce expenses, including energy use, waste, emissions, water, and using less material. Implementing a sustainability program can be costly but there certainly is a return on investment.
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Focus Areas: Internal and External
Operationalizing sustainability requires a dual focus on internal and external facets. Internally, businesses must align their values with sustainable practices, evaluating governance, policies, and procedures. Externally, a close look at vendor life-cycle touch points and strategic sourcing processes is essential to ensure alignment with sustainability goals.
According to McKinsey, 80-90% of a business's environmental footprint and associated risks reside within the value chain. This underscores the critical need to collaborate with vendors, extending this effort upstream to raw extraction.
By fostering transparency throughout this chain, you can pinpoint potential risks to people, the planet, and your business. This supply chain insight becomes the cornerstone for developing a sustainable supply chain strategy. For assistance in supply chain analysis and a detailed actionable report, reach out to Phased Consulting.
Internal Operations
Embarking on a journey of ESG commitment starts from within—your internal operations. It's not just about talking the talk but walking it first. Imagine setting sustainability requirements without aligning your values internally – it's like trying to build a house on an unstable foundation.
Dive deep into your business's soul—evaluate the vision, mission, purpose, goals, and strategies. Then, infuse sustainability factors into this foundation. It's not just about making changes; it's about building a transformation roadmap that echoes your commitment to a sustainable future.
Consider the nuances—will you weave in a Diversity & Inclusion department? How about decarbonizing those elusive scope 1 & 2 emissions? Let sustainability infiltrate every internal decision and process, transforming your operations into a testament of your commitment.
External Operations
Venture outward into your external operations, where your vendor life-cycle touch points become the canvas for sustainable partnerships. What sustainability questions will shape your vendor prequalification or onboarding process? Imagine creating a vendor code of conduct, a manifesto that binds your vendors to principles of human rights, equity, and responsible business practices.
Peel back the layers of your operations processes. Who holds the reins for procurement decisions? Do you want to share your journey with customers who turn a blind eye to environmental and social concerns? Consider the risks. Perhaps a shift from strategic sourcing to responsible sourcing is not just an option but a necessity.
Every move, every decision – they ripple through your external business partnerships. Define your strategy, envision how you want to conduct business in the future, and let it be a beacon that attracts partners who share your commitment to sustainability.
In the tapestry of your operations, internal and external threads intertwine, creating a story of sustainability that goes beyond rhetoric and becomes the defining narrative of your business.
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Everything Considered
While there's no one-size-fits-all approach to sustainability implementation, a standard reporting framework exists. The IFRS recognizes the guide from GRI and SASB, ‘A Practical Guide to Sustainable Reporting Using GRI and SASB Standards.’ Financial institutions and investors increasingly factor in sustainable operations when making decisions, with 90% of investors revising investments based on a business's sustainability proposition, according to EY.
Operationalizing sustainability isn't without challenges, considering the intricacies, risks, and stakeholders involved. However, adopting a phased, bite-sized approach allows businesses to navigate the complexities effectively. The guarantee for businesses is clear - evolve with sustainability or risk losing clients, talent, and revenue until relevance fades away.
Embark on a dynamic journey toward sustainability. By seamlessly integrating social and environmental considerations into operations, businesses unlock benefits surpassing challenges. In an era where clients and employees prioritize organizations doing right by people and the planet, shaping a harmonious future is key. Connect with Phased Consulting Inc. today for tailored solutions aligning with your business needs and goals.
