Remember the boiling frog analogy? Climate change has been a slow boil of an issue for decades. Covid made us sit up and realise that we are at boiling point, propelling us from the voluntary engagement to the imperative for change at every level - governments, businesses and individuals.
Businesses need to act quickly, with authenticity, to operationalise sustainability and demonstrate the results of their efforts to a growing and exacting group of stakeholders.
The rhetoric is often simple: do less of this, more of this and none of this. Putting it into effect is much harder. The EU has standards, the US has standards, Asia has standards. The UN has standards, there are standards for the E, for the S and for the G, and standards for how climate effects different stakeholders.
Peter Drucker’s oft-(mis)quoted aphorism ‘what gets measured, gets managed’ carries some weight when it comes to operationalising sustainability. How we look at something often changes what we see. Yes, we need to map the standards that we need to adhere to across our business, our operations, and our ecosystems of partners to report out on how we are limiting our impact. This is one lens, and a lens business may perceive as an additional ‘tax’. However, looking at a broad range of measures and metrics, from both an ESG perspective AND a business perspective, builds a more balanced understanding of effort, cost versus impact and opportunity.
However, measurement and metrics is only part of the challenge. To achieve real impact, we need to understand what action characterises improvement and decline in the data and, most significantly the levers we can pull to make things change and capitalise on the new opportunities this challenge presents. Necessity is the mother of all invention.
Seek first to understand
How many of us can say we have clear visibility of our value chain? True sustainability requires a clear and deep understanding of end-to-end supply chains - making a change in upstream may have consequences downstream. But the complexity of the chain, the organic way it has grown into specialist silos, a lack of resources or a lack of capability to analyse across the components and processes that enable them to deliver to their end customer, makes this challenging.
This is an inevitable consequence of long-established, legacy supply chains developed over many years. However, this is a critical first step in the sustainability ‘journey’. Without it, you cannot know where the opportunities for real impact lie. An incomplete picture may mean a significant chance for improvement is overlooked. And, secondly, the level of scrutiny many companies now face means an inability to understand the complete supply chain runs the risk of being ‘clean in one place: dirty in another’. Accusations of inauthenticity and ‘greenwashing’ tend to follow swiftly, and the reputational impact can be huge.
Modelling the future
Once the end-to-end is understood this opens up opportunities to optimise, identify improvements, manage impacts in the context of the whole, and reveal new opportunities. The data we have harvest from the end-to-end visibility can be used to model changes, mitigate risk of change, optimise approaches, drive agility and speed to results for the both the business and the climate. Increasingly we are seeing digital twins coming to the fore, building a realistic sandbox in which to dynamically test scenarios and interventions, model and predict their impact and find the workarounds that mitigate issues while maximising benefit. In parallel, these are an important factor in building the case for change internally. While ESG imperatives are high profile, shifting an organisations operation is no small undertaking and resistance to change is inevitable. Being able to demonstrate how we can meet government, societal and consumer demand, together with business results and possibilities is a solid way to build advocacy and support internally.
Ultimately, the path to operationalising sustainability is going to involve a complex combination of interventions. However, there are gains beyond just ESG compliance. Increased supply chain resilience is likely to be an outcome from reducing the carbon footprint in the supply chain. Increased consumer loyalty could grow with authentic ‘green’ credentials and we’ve already seen signs that investors and some consumers are happy to pay a premium for ESG-friendly businesses and products.
Those looking to embed sustainability in their businesses will have much to gain. Being a good business is good business and taking steps now to understand and analyse the full impact of one’s supply chain and the decisions needed to mitigate its environment impact now will pay dividends in the future.