Sustainability vs. Business Transformation - Not a Zero-sum Game
Although the news keeps us informed, everything we see, hear, and read is chosen by publishers and broadcasters to grab our attention and sell their publication (and, in most cases, the advertising it contains). New catastrophes trump existing ones, events with immediate impacts supersede those which unfold over time, and something easily reduced to a simple narrative is preferable to anything requiring a longer attention span. To quote an old cliché, if it bleeds, it leads.
This constant churn of stories can fool us into thinking issues have come and gone because they’re no longer headline news. Climate change is one such issue. While wildfires, floods, and droughts are always lead stories, the ongoing need for positive action to reduce greenhouse emissions gets much less coverage unless there’s a climate conference in town.
Right now, inflation and the cost-of-living crisis are the headline grabbers. Some polls suggest climate change runs a poor second in people’s priorities compared to worrying about how to make ends meet. Similarly, businesses struggling with both spiraling energy and raw material costs and demands for wage increases are also grappling with what to prioritize. Caught between two worthy but seemingly incompatible choices - business transformation or greater sustainability – they’re weighing up whether the latter is a luxury they can afford, especially if customers and stakeholders are losing interest.
Still a Priority
Don’t be fooled; sustainability is as important as ever. In his book, Climateconomics, Bob Keefe argues that the battle against climate change is as much an economic issue as an environmental one, “I don’t think people have realized that climate change is an economic issue now because it’s always been seen as an environmental, health or social issue. The fact of the matter is climate change is battering our economy.”
Increasing business value and improving sustainability aren’t mutually exclusive either. A recent KPMG article, Driving Value through ESG, states, “… the value attributed to a business is increasingly being assessed not only according to financial metrics capital but by what is fast being coined as ‘natural, social and human capital'. Businesses that can develop or demonstrate these forms of non-financial capital will reap the rewards.” Quoting a recent study by the NYU/Stern Center for Sustainable Business, it continues, “leading your competitors and peers in the market correlates to a 12 percent uptick in market capitalization, whereas being a stand-out leader on ESG is worth 15 percent.”
Mastering the Balancing Act
So, the good news is you don’t have to choose between business transformation and sustainability, but the challenge is you need to do both. Luckily, the benefits are worth the investment. Successfully designing sustainability into your business transformation can make your supply chains more resilient, reduce your cost of capital, help you become a more attractive supplier and partner, and improve your reputation.
As highlighted in our previous blog on sustainability, Mapping Your Path to Net Zero, the BusinessOptix platform now allows you to associate ESG metrics to processes just as you’ve done previously with time, FTEs, system utilization, and costs. Once you’ve established your current position, you can use our mapping and analysis tools to identify potential emission reductions, run simulations to quantify the GHG impacts of proposed changes, and prioritize those which produce the best results. In turn, this enables you to:
Implement a lower consumption operating model quicker by adopting known best practices across the organization.
Reduce the administrative burden of environmental reporting. Design automation, coupled with scenario analysis and linked to your GRC framework, makes compliance and audit less resource-intensive and costly.
Avoid unintended ESG impacts from business-as-usual improvement programs and more conventional transformations. You can quickly assess the trade-offs between time, cost, people, and environmental metrics and ensure proposed efficiency gains do no harm from an environmental point of view. You can also ensure your projects and programs reduce emissions, rather than just move them from Scope 1 to 3 or vice versa.
Even though current headlines might persuade us otherwise, the pressures discussed in Mapping Your Path to Net Zero - regulatory, investor, and consumer – are here to stay. Sustainability should still be near the top of every Board’s priority list because making positive changes increases business value while doing nothing erodes it. Balancing business transformation and sustainability is undoubtedly a challenge, BusinessOptix can help you systemize the design of programs that do exactly that.
To learn more, contact us today.