Prioritising sustainability: building a business case

There are many potential barriers preventing organisations from starting or expanding sustainability programmes, whether they be due to cost, lack of understanding, or simply misaligned priorities.  All of these can ultimately be overcome with a solid business case for sustainability.  I’m going to start a two-part series of posts on the sustainability business case.  In this first post, I hope to offer some useful guidance for deciding which indicators and impacts to include in your business case.  The next post will then detail some generally perceived business benefits of sustainability programmes.

The case for sustainability can be made on an environmental, ethical, religious or moral basis.  The business case is separable from these for having an ultimate financial bottom line.  This does not mean that only short-term financial returns are taken into account, but rather that all benefits, regardless of time scale or impact type, are translated into their equivalent financial benefits.  Beyond even that, the sustainability business case is about not just the balance sheet, but also longer term competitiveness and comparative advantage.  In a world of increasing consumer awareness of sustainability-related issues, a strong sustainability agenda can not only save costs, but improve brand image, increase employee satisfaction and enhance a company’s value proposition.

The first step towards building a strong business case for sustainability programmes is deciding which impacts and issues to address.  Organisations should identify what aspects of their operations have particular impact on an environmental or social level, where potential threats and opportunities lie, and what Key Performance Indicators are most relevant.  The simplest way to do this is to conduct a company-wide impact assessment.  This can be done using general principles from standards/guidelines such as BS EN ISO 14001, ISO 26000, or the GRI, or more simply by just logically and methodically considering all aspects of the business – the nature and scale of their impacts.  Either way, a list of impacts and their relative importance should be drawn up at the organisation level.  After that, the list of impacts should be reviewed with reference to their importance for different stakeholders.  Stakeholders to consider may include:

·         employees;

·         company owners, shareholders and investors;

·         partners;

·         government and other regulators;

·         and local communities.

With a list of organisation impacts now formed, based on scale and importance to stakeholders, organisations should next identify which impacts present opportunities for value creation for the business.  I’ll go into more detail on this sort of thing in the next post, but typical opportunities may include minimisation of compliance risk, reputation and brand profile enhancement, and protection against rising commodity prices.  Aligning the list of impacts with a set of relevant opportunities should help to clarify which impacts to target from a strategic perspective.

Now that you know what organisation impacts you want to address, and how doing so will bring benefits to your business, the final step is to decide how you plan to make those changes.  There are a multitude of different potential programmes to choose from.  Examples include:

·         the appointment of a Green Team to oversee and implement actions,

·         encouraging public transport use to reduce travel miles,

·         installing efficient appliances to cut utilities costs,

·         recycling to reduce waste to landfill,

·         monitoring charitable contribution with a view to increasing it,

·         or monitoring accidents with a view to reducing them

·         etc. etc.

This step is a case of identifying which actions will be most effective for influencing the desired impacts, and which will perform best in terms of cost and resources.

So now you should have a set of actions which are relevant for your chosen impacts, which are in turn aligned to your organisation strategy and are most tailored to your operations.  These are the actions which are best to add to your sustainability programme, and are therefore the ones you should be including in your business case.  The next stage is to elaborate on exactly how these actions are going to benefit your organisation.  In the next post, I’ll run through some typical benefits which you’ll be able to adapt and take inspiration from for your organisation.  Until then, hopefully this post has helped clear up how to start defining your business case.

As always, thanks for reading.