Governments across the world have introduced comprehensive legislation for addressing environmental sustainability (ES) issues, but have found implementation and enforceability to be practically complex. In the same way the introduction of policies and strategies by corporations and businesses has not always led to substantial changes in how companies operate.
There are several reasons for this, the most notable being that globalised market access has increased volatility, forcing focus away from longer term issues (such as sustainability) to short-term risks and opportunities for profitability and survival.
Also, the business case for sustainability is not immediately visible to the uninitiated, meaning that there is a focus on legislative compliance only.
Corporations have become aware of the investment and commitment difference between minimal level of activity required for marketing purposes (often called ‘greenwashing’), and the comprehensive level of activity required for true incorporation of ES into company functioning.
However, the threats to our planet from greenhouse gas emissions and other forms of pollution and resource depletion are becoming increasingly clear. A developing body of research and numerous business examples worldwide are showcasing the possibility of both short-and long-term benefits to integrating ES into the core business functions of an organisation. Terms such as eco-efficiency, eco-design, and eco-advantage are being used in case studies that demonstrate the financial as well as the ecological benefits of innovations to, for example, reduce resource use, eliminate packaging, recycle parts and reuse easily disassembled materials at the end of a product’s life cycle.
CK Prahalad, Professor of Strategy at the University of Michigan’s Ross School of Business, identifies environmental sustainability as the new driver of innovation and source of competitive advantage, while authors David Winston and Daniel Esty in their book ‘Green to Gold’ define sustainability as the new business megatrend. The case for integrating ES into core business is better than ever.
For an organisation to operationalise sustainability, ES must move from being the responsibility of a support function focused on legal compliance and short term risk management, to a core operations function aimed at innovation and opportunity realisation.
Aligning ES policy with operations goals
In order to integrate ES policy and strategy it is necessary to translate the corporate level policy and strategies into practical goals and activities at the operations level, based on implementation experiences. A system should be in place that allows operational leadership, together with environmental specialists, to prioritise operational environmental issues (for example, water, waste, energy, air pollution, substances of concern and biodiversity) that support the corporate strategy and deliver results for the operation.
A feedback mechanism is also required to provide information back to corporate level. A system must be in place that allows ES specialists and operational teams to benchmark and share best practice across the organisation and in particular with the corporate ES function. Corporate policy, strategy and target reviews are then informed by actual best practice and performance.
Bringing ES into the core operations
Increasingly, ES strategies/policies will necessitate operational changes and ES specialists on the ground will need to work closely with core business functions to realise opportunities, manage risks and ensure compliance. This will mean that ES no longer operates in a supportive capacity removed from core processes. ES specialists must become part of operations teams and must provide advisory services directly to teams, leaders and operations management. Core operations functions, such as production and engineering, need to internalise ES objectives as part of the composite suite of objectives pursued and develop the knowledge and competence to manage environmental performance in areas such as water and energy use, including waste management.
To monitor progress and inform improvement efforts, ES objectives need to be tracked using a system of goals, KPIs/metrics and targets at appropriate levels and in areas of high environmental resource use or impact. These indicators ensure that ES-related improvement opportunities, risk mitigation and compliance gaps are identified in problem-solving processes and addressed by focused improvement teams.
As internal environmental practices mature, the operation needs to increasingly partner with the other supply chain functions for further innovations that will impact operational environmental performance. This includes working with Research and Development to redesign products and packaging, with Procurement to source eco-efficient materials or with Distribution to bulk pack product, or use hybrid vehicles. Partnering with other stakeholders such as NGOs, small business or local government can also lead to cost-effective innovations, such as upcycling ‘waste’, sourcing renewable energy, or re-using water.
Often sustainability reporting is conducted infrequently and is based on ad hoc data gathering and compilation. Rigorous measurement of ES activities enables better sustainability reporting as ES measures are tracked at the same frequency as other KPIs. The benefits of ES activities are therefore immediately visible — both at operational and corporate levels.
Integrating environmental management into day-to-day operations begins with small steps — clarity on priority environmental issues for the operation, a focus on high-impact areas, quick and early wins, and educating and engaging employees. Subsequent steps require the systematic empowerment of operational teams at all levels and across all functions to manage the environmental issues relevant to their areas with related enablers such as benchmarking and sharing of best practices. Industry leaders then take environmental performance to the next stage by innovating products and processes in partnership with the supply chain and identified stakeholders.
An integrative improvement system that guides and monitors the step-by-step implementation of ES best practices (such as TRACC) is an ideal tool for operationalising the corporate ES strategy, as it clearly demonstrates how the challenges of sustainability can become opportunities for growth and profitability.