Sharpen Your Acumen
By Vanessa Bicomong
In business, sustainability is more than just environmentalism or “being green.”
Harvard Business School lists two ways to measure sustainability: “the effect a business has on the environment, and the effect a business has on society, with the goal of sustainable practice being to have a positive impact on at least one of those areas.”
When the Kyoto Protocol (the international agreement that aimed to reduce carbon dioxide emissions and the presence of greenhouse gases in the atmosphere) was conceived in 1997, governments were held accountable for sustainability. In more recent years, the private sector — mainly big corporations — has also launched sustainability programs following global and national regulations on their own initiative. Beyond mere compliance, more and more business leaders now speak of sustainability as a competitive advantage. Corporate sustainability is thus related to business strategy and requires specific capabilities to execute it effectively.
ENABLING EMPLOYEES
Deloitte’s 2023 CXO Sustainability Report says 73% of chief experience officers (CXOs) from the consumer industry increased investments in sustainability over the past year. When it comes to the retail industry, CXOs find materials and technology pathways to sustainability easier to implement than training: 65% of retail companies are using more sustainable materials, and 53% are using climate-friendly technologies and equipment, but only 48% are training employees on climate-change mitigation. That’s less than half of retail CXOs saying that their employees get training on climate change and the specific actions they can take to minimize the company’s impact on the natural and social environment.
In the Philippines, many organizations have yet to fully enable their employees to meet sustainability goals together.
“I am of the firm conviction that organizational capabilities are a very critical component of sustainability,” says Pauline Fermin, President and CEO of Acumen Strategy Consultants. “Ultimately, people are the most critical, renewable resource, that can truly support real sustainability effort. Unfortunately, investments on organizational capabilities here in the Philippines is not consistent.”
To illustrate the challenge, we can look at the individual capabilities required for Sustainability Metrics and Reporting, as well as the organizational structure necessary for Climate Governance.
SUSTAINABILITY METRICS
Annual reports are typically prepared by the Communications department using data on sustainability metrics and indicators submitted by Sustainability teams. It’s people on the ground that provide this data: in a manufacturing company, for example, this includes plant managers and facility operational staff, as well as purchasing and supply chain personnel.
Training the key individuals in each department to understand the significance of the data they collect, its impact on overall sustainability goals, and its role in compliance and reporting, is essential. Not only are the resulting reports more accurate, but the people on the ground also develop an appreciation of and commitment to the company’s sustainability goals.
CLIMATE GOVERNANCE
Future-ready organizations have developed robust sustainability risk management frameworks that identify, assess, and mitigate sustainability and climate-related risks. Not that it’s easy: building this resilience involves preparing for disruptions, diversifying supply chains, and ensuring business continuity, thus embedding sustainability into day-to-day operations and decision-making processes.
A key aspect of this operational integration is the establishment of clear climate governance charts where roles, responsibilities, and reporting lines for sustainability and climate-related risk management across all levels of the organization are outlined.
Let’s take airlines as an example. Climate hazards are inherent: airlines must identify climate-related physical risks in each facility along with the operational and financial impact. Each team must then develop business continuity plans with detailed adaptive measures integrated into their business processes. Do they have clear emergency response measures? Are they able to build effective relationships with local governments and airport authorities for synergy on resilience plans? Are they able to provide accurate information – numbers, not just descriptions – for the assessment and prevention of flooding in each facility?
It takes time, but with the right organizational capabilities, companies of all sizes can effectively manage sustainability risks and continuously build resilience. Unless the company includes organizational capability building in its sustainability metrics, sustainability goals will not be achieved effectively and in a timely manner.
UNDERSTANDING THE GAPS
Achieving corporate sustainability goals requires the right processes and, more importantly, the right people. It begins with a clear vision from the leadership team level, supported by understanding and long-term commitment from senior managers, and delivered through specific yet diverse skills in teams on the ground.
Often, the call is not to “do things better” but to “do things differently.”
What are the capabilities you have in place, and what are the gaps to be filled?
Understanding the strategic organizational capabilities particular to your company — and how they can be developed or improved — is fundamental to making sustainability not just a buzzword but a reality.
Vanessa Bicomong is a lecturer at Ateneo de Manila University’s John Gokongwei School of Management, and program director for Customer Centricity at Acumen Strategy Consultants.
