How to align sustainability with business strategy – part two

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Tree in a building representing harmony between sustainability and business.

In part two of his article, TURLOUGH GUERIN presents six more questions for environmental and sustainability professionals to ask throughout the process of putting together a business case.

In the first part of this text, which seeks to reveal how environmental and sustainability professionals (ESPs) can ensure their projects, programs and initiatives (PPIs) align with their organisation’s strategy for business development, the author considered common problems in sustainability-related business cases and posed three questions for ESPs to ask throughout the development of a PPI. Here, he raises six more and summarises the best practices for ESPs going forward.

Questions for environmental and sustainability professionals

4. Are you focusing attention on the vital few issues?

After answering question three (found in the previous part), it is time to make sure the organisation’s focus will be on the vital few issues that make the PPI so important when it comes time to present the business case. This is crucial to ensure you’re not guessing at what will work best, or giving the perception of such. Ask yourself the following questions:

  • Are you moving away from the solution by exploring other possibilities?
  • Do you understand the business model of your organisation?
  • Are you getting to the underlying business issues?
  • What are the vital areas related to this PPI – procurement, bid management, talent management etc?

5. Have you converted the soft evidence into hard evidence that the organisation can measure?

ESPs start by collating soft evidence for why the project is important. From there, this soft evidence must be converted into hard evidence in order to prove that the problem or opportunity behind the PPI actually exists. Ensure you’re ready by answering these questions:

  • Can you now clearly articulate to the CEO/board why this is important?
  • Have you taken all practical and reasonable steps to ensure the officers of the organisation can defend themselves if the risks that the project is addressing were to precipitate?
  • Will the project comply with legal constraints and can you demonstrate that officers of the organisation are discharging all of the relevant compliance obligations?
  • What new risks, if any, will the project introduce?
  • Will it enable the organisation to reduce its exposure to risk?
  • Will it impact on WHS issues, HR issues or workplace compensation?
  • Can the organisation’s reputation benefit by progressing the PPI forward? Conversely, would not taking action have a negative influence on the organisation’s reputation?
  • Does the PPI foster and support innovation within the organisation?
  • What impact will the PPI have on the organisation’s most important stakeholders?

6. Can you convert the hard evidence into a financial equivalent?

Through the following questions, ESPs confirm that they can calculate the impact of the proposal and/or project to the organisation. Ask:

  • What is the proportion of the organisation’s spend associated with this PPI?
  • What amount of revenue could it generate?
  • If a saving of five percent could be achieved in any spend area – workers compensation premiums, forward liability costs for HR, fleet and other insurance premiums, utilities, safety incidents/near misses etc – what would that mean financially for the business?
  • Will the required investment result in a reduction in OPEX or CAPEX?
  • How else will it likely impact on the organisation’s financials – cash flows, balance sheets etc?
  • What would the payback be over a period of months or years?
  • If the project is out of the budget process, how will it impact on the existing budget envelop? What will be the financial benefits?
  • Have the cumulative benefits across different parts of the business been evaluated and summed up to give an overall benefit? If not, what is stopping that from happening?
  • Have you fully understood the impact of the proposed PPI on the business model?
  • Have you considered the timing so that the PPI aligns with the strategic planning cycle and budgeting?
  • How do you best sell the decision to move forward with the PPI?

7. Have you explored the ripple effect?

Carefully consider who or what else in the company is impacted by the problem or opportunity. This can be done by asking the following questions:

  • Does the board invite the executive to present on new initiatives and projects and would this project be appropriate for making the board aware of how this issue will help manage risk or provide a strategic opportunity?
  • Has the board got a clear understanding of what constitutes environmental, social and governance responsibilities within the organisation and how will this PPI impact on ESG policies and positioning?
  • Has the board considered emissions and energy use and the risk consequences for the business?
  • Will the decision to invest in the environmental and sustainability PPI deliver on the organisation’s strategy?
  • Will the project help drive alignment of activity in the company with the core business strategy?
  • Will the PPI impact other KPIs in the organisation? If so, how are they likely to impact the business?
  • What communication mechanisms are proposed to be used?
  • How do you align and communicate the delivery of the project throughout the organisation?

8. Are you slowing down for ‘yellow lights’?

These questions ensure you are slowing down to take stock when necessary. You don’t want to push ahead with a PPI that is doomed to fail.

  • What has stopped the organisation from doing something about this before now, or what may stop it in the future?
  • If the impact of a problem or opportunity is big, ask “what has stopped the company as a whole from successfully resolving these issues before now?”
  • If this is a new opportunity with no history, the yellow light question is “what, if anything, may prevent the successful implementation of this solution from going forward?”
  • Can you justify the decisions regarding this PPI to the organisation’s executives and board, as well as to external authorities?
  • What are the impediments to your organisation executing the PPI?
  • Are there aspects of the PPI that could come back to haunt you?
  • Have you considered the organisation’s risk appetite to undertake this PPI?
  • Are there intellectual property and/or privacy risks that may come out of this PPI and can the organisation address them?
  • Are there impacts on competition law?
  • Will IT and technology, systems and processes support the PPI?

9. Are you treating the cause of the problem rather than the effects?

When considering new PPIs, identify the cause of the symptoms that are showing up by asking the following questions:

  • Do you know the underlying cause of the problem or opportunity you are proposing to deal with?
  • Is the proposed PPI going to address underlying systems or effects?
  • Will the proposed PPI solve the underlying problems being faced by the organisation?
  • By agreeing to the PPI, is the organisation opening itself up to more complex business practices?
  • Will execution of the proposal streamline or simplify existing complexity in the business?

This is an extensive list of questions. ESPs should ask themselves every single one of them during project planning and prior to presenting business cases to seek funding approval. ESPs shouldn’t be expected to answer all of the questions, but rather draw upon them in discussion with other professionals in the organisation. By addressing these questions throughout the fund-seeking process, it is hoped that these questions will help unblock projects that get stuck in the corporate approval approval pipeline.

Summary

While there are usually many worthwhile PPI concepts being generated in an organisation, only those that create new value and that meet the organisation’s commercial and financial success criteria are likely to be supported by the executive team and/or board. This should be the case whether the projects relate to the environmental or sustainability objectives or any other project or business objective.

In summary, ESPs should seek to understand the drivers of commercial success within their organisation. Understanding and communicating in the language of the business is central to this, along with a curiosity as to why any PPIs should be supported. While this should be the case for any business or organisational professional, it is particularly the case for ESPs, who all too often are perceived to be driving agendas separate to or even contrary to commercial objectives.

Turlough Guerin is a non-executive director of on several boards, including Bioregional Australia Foundation, a champion of the global One Living Planet framework. He is an advocate for sustainable business, strong and effective climate governance and is a fellow of the Governance Institute of Australia.

 

Image: Alexander Abero, via Unsplash.com

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