Month <span class=January 2015" src="/wp-content/uploads/2014/04/cropped-office-building-secondary-1.jpg">

Month January 2015

8 Questions for Sustainability Innovators

The SSC Team January 15, 2015 Tags: , , Strategic Sustainability Consulting No comments

Here is an article we wrote early last year, and we thought it was worth sharing again! Enjoy:

At Strategic Sustainability Consulting, we love Scott Anthony, the thought leader and managing partner of the innovation and growth consulting firm Innosight. His book, The Little Black Book of Innovation, challenged us, and we recommend it to anyone thinking about how to innovate within a company.

But enough flattery. Anthony's recent Harvard Business Review article, Eight Essential Questions for Every Corporate Innovator, got us thinking about how innovation and sustainability are a natural fit, and we wanted to share it with SSC readers.

Below, we've highlighted the questions that Anthony recommends that corporate innovators ask themselves, and then we added our thoughts below each question, from a sustainability perspective.

Identifying New Growth Opportunities

  • What problem is the customer struggling to solve?
  • Which customers can’t participate in a market because they lack skills, wealth, or convenient access to existing solutions? 

There is a huge opportunity for companies to use sustainability as a lens to enter new markets -- including the developing world. Selling to the "bottom of the pyramid" requires innovative thinking -- and companies like Unilever, Coke, and Nestle are paving the way, by using "shared value creation" to benefit the local communities in which they operate.

Identifying the Threat of Disruption

  • Where are we overshooting the market by providing features that users don’t care about and don’t want to pay for? 
  • If you were going to disrupt your company, how would you do it?

Despite a lot of wishful thinking by companies, consumers generally are not willing to pay extra for "green" features. Instead, savvy companies are using sustainability to enhance safety, quality, durability, efficiency, and value. Don't make the mistake of thinking you can get a green premium for your product -- instead focus on creating a better product or service through innovation. Being "green" is just the icing on the cake.

Designing Compelling Offerings

  • Who has already solved the problem you are trying to address? 
  • What can you do that few other companies in the world can do? 

Sustainability is a global challenge, and no single company can solve it alone. Innovators need to identify and exploit the leverage points in the system--and often those appear at the junction between entities. Public-private partnerships like the UN Global Compact, collaborations like The Sustainability Consortium, and industry groups like the Innovation Center for U.S. Dairy are proving that sometimes the whole is greater than the sum of its parts.

Commercializing Your Idea

  • What assumption are you making that, if false, would blow your strategy up? 
  • How can you learn more affordably and efficiently? 

The world of sustainability is rapidly changing-- methodologies, regulations, best practices, frameworks, legislation, stakeholder expectations--and the work of sustainability innovators is never done. Make sure that your eyes are not so closely fixated on your prize that you miss the changing world around you. You need to continue to regularly engage with your peers, to review your risk assessment methodology, and to indulge colleagues who will play the devil's advocate. Look for partners across your value chain, and make an effort to challenge each other in your various pursuits!

Thanks to 2degrees for publishing a version of this article!  Read the 2degrees article here.

Have additional ideas on ways for sustainability leaders to innovate?  Leave a comment or join the conversation on Twitter!

4 Reasons Why Corporate Sustainability Reporting Might Be a Waste of Time

The SSC Team January 13, 2015 Tags: , , , , , Strategic Sustainability Consulting No comments

By: Alexandra Kueller

As more companies are publishing annual sustainability reports, some fear that these reports are plateauing, rather than offering more value each year. Some companies are beginning to think that producing reports are not worth the effort or money. In an article published by The Guardian last week, they stated that while sustainability reports do provide useful information, they are not being as effective as they could be.

The article provided an in-depth analysis on a report published by SustainAbility, a think tank and strategic advisory firm, examining what companies can do to help make their reports… well… not as wasteful. Below are four possible ways your company’s sustainability report might be a waste of time:

Heavy Language

No one likes reading an article or a book that is plagued with dense language and phrases, and a sustainability report is no different. All too often, reports are filled with special wording to adhere to reporting standards, or they are bogged down my technical language. While certain key phrases or words are inevitable, don’t have your entire report filled with jargon that no one is going to want to sift through.

Failing to Connect with the Audience

Your company spends countless hours putting in the effort to create a sustainability report, but for who? Who exactly is the audience your company is trying aim their report at? Tying in nicely with the previous point, if your company is structuring the report to be read by customers, but instead reads like a report intended for upper level executives, you aren't going to have readership. Be sure to remind yourself while constructing your report who your intended audience is, and be sure to not lose sight of that.

Confusing Standards and Frameworks

GRI. IIRC. SASB. These are just three examples of some of the many reporting frameworks available to companies. But how is a company supposed to choose and navigate one of these frameworks? They're all different! Should your company go with a compliance-driven approach? Or maybe they should consider a principle-driven approach or a materiality focused take on a global framework. A single framework is exhausting as is, but having so many options might lead to “framework fatigue” and possibly...

Choosing the Wrong Framework

Even if your company does end up choosing a reporting framework, it does not necessarily mean that it will be a good fit for your company. If a company is using a framework that is not best suited for them, their reports could potentially leave out a lot of valuable information. For example, Novo Nordisk recently decided to no longer follow GRI standards and instead take an “integrated reporting” approach, since they determined that would best reflect how they manage their business. 

Be sure to check out our blog post exploring how sustainability reports change over time!

Risk and Sustainability: A Perfect Pair

The SSC Team January 8, 2015 Strategic Sustainability Consulting No comments

Each passing year, more companies are producing sustainability reports, and as of December 2013, at least 50% of companies from each major industry are publishing reports. With more reports coming out each year, there will naturally be a shift in trends. Over the past decade, there has been a shift away from a focus on environmental issues in reports to corporate governance and sustainability of the business model. The shift in reporting trends has lead to a shift in how companies are approaching sustainability; many companies are now finding was to integrate enterprise risk management (ERM) into the sustainability framework.

Workiva recognizes the importance of ERM, and last November they hosted a webinar discussing the driving factors behind ERM, why it is important to address risk within companies, and more. Here four are key takeaways from the webinar:

The four driving factors behind ERM

  • Best practices - banks, corporations, and energy firms are some great examples of ERM being successfully implemented 
  • Corporate disasters - previous corporate disasters, such as Enron, WorldCom, and the global financial crisis, are proof of why more companies need to incorporate ERM
  • Regulatory actions - regulations (Dodd-Frank, ORSA, the S.E.C., Sarbanes-Oxley) are also a driving forces for ERM within companies
  • Industry initiatives - Treadway Report (US), Turnbull Report (UK), Dey Report (Canada)

Sustainability has critical risk implications for any organization

  • Strategic risk can affect a company's business model, long-term economics, strategy and execution, and more
  • Customer and product management, risk-based pricing, and cost management can all be affected from business risk
  • Some outcomes of operations risk can have an effect on supply-chain management, operations and systems exposures to business interruptions
  • If a company is not compliant with legal and regulatory requirements, they could be exposed to regulatory-compliance risk 
  • Financial risk can lead to exposures to energy and other commodity risks, as well as risk transfer implications

Good governance vs. poor reputation

Companies with good governance are seeing results. Unilever published their Sustainable Living plan, and the company has noticed significant growth. Proctor & Gamble, who also have a strong sustainability initiative, have seen their product sales increase substantially. A 2010 report by S&P noticed companies with ERM had a much better stock performance during the peak of the financial crisis as well.

But if a company does not have strong governance, it can lead to impacts stemming from poor reputation. Some of these impacts include:

  • Fines
  • Litigation costs
  • Legal fees
  • Loss of license to operate

implementing erm in your company: the Questions to be asking

  • Who makes what decisions within the company? Examine which committees, functions, people, etc. are the ones making critical decisions.
  • How do we make more informed decisions? What steps do wen need to take in order to make better decisions?
  • What decisions, strategies should we implement to optimize our risk return? Learn to integrate risk into your decision making.
  • How did we do? Simple enough!

Want to learn more about how sustainability can help a company deal with risk? Read our blog post discussing the topic here.