How to make a green transition that lasts

Customers, legislators and institutional investors all put increasing pressure on businesses to account for their responsibilities relating to climate, environment and people. Therefore, every decision-maker now has to bring the green agenda from their business periphery to the core, even though the green agenda may be extremely demanding and challenging to implement.

For your business to be able to meet today’s and tomorrow’s sustainability requirements, we have identified three main steps that, in our experience, can help you get started:

1. Look at sustainability as an opportunity – a cohesive part of your business landscape. You should not just see it as an expense anymore.
2. Understand your sustainability baseline and what it would take to change it.
3. Strategise to create the right business decisions and coherent communication about sustainability.
   

Below, we elaborate on each of the three steps you can follow to bring your green agenda to the core of your business and meet sustainability requirements.

Look at sustainability as an opportunity

The Paris Agreement has set a target of keeping a global temperature rise to well below 2 degrees Celsius. To reach this target, all companies will need to rapidly adapt to the changing way production is run, distribution is held, and consumption of products is perceived. It is estimated that this change will create numerous market opportunities (estimated at more than EUR 10 trillion), but it will also bring side effects such as making current business models and assets obsolete.

As a decision-maker, it is important to take into consideration how the sustainability agenda might transform and evolve for your business. In fact, the transformations that are related to the realisation of your green ambitions will make your business look different: Your supply chain will change, your clients will ask for different products and services, and you will need to put in place new technologies and competences.

We understand this present and future situation. It is imposed by the extremely complex and fast-evolving characteristics of the sustainability agenda and is as such an absolute challenge in every business-related decision.

Soon, if not already, decision-makers will be asked to investigate the extent to which sustainability is transformational or incremental for their business(es). This depends very much on each C-level-specific goal. If you need to transform your business to stay relevant and competitive, then incremental steps will be a waste of time, trustworthiness and engagement. On the same wave of thoughts, if your business opportunity is not clear, a radical and sustainable transformation of your business is also irrelevant.

We know that the challenges related to companies’ sustainability choices are not easy to tackle. Thus, when we are working with companies to reshape their way of doing business, we try to understand the people, organisations and markets – as we believe that a 360-degree comprehensive angle is needed to make a company’s green agenda become a reality.

Understand your sustainability baseline and what it would take to change it

For a typical production company, 5-10% of the carbon footprint stems from their own on-site activities. The rest of the emissions are mostly linked to suppliers and supplier’s suppliers.

In our experience, many organisations could benefit from a better map to navigate the complexity of their green transition. Here, it is essential that you establish the baseline in order for your organisation to make clear, sustainable choices. Yet, establishing this baseline itself requires several choices – the most present one being: How will you use the baseline? Reporting, target-setting, strategic decision-making?

You need to establish a solid baseline, and we find that it pays off to assess the future use of the baseline by answering the following questions:

• Will your clients require you to declare the carbon content of your products in future?
• Will you be providing sustainability data (such as ESG ratings) to lenders to reduce the cost of capital?
• Should you design KPIs primarily to support your own strategic transformation or align with international standards for transparency?
  

Answering these questions will help you to identify opportunities for own emission reductions in energy consumption and supply chain footprint. It will also help you when choosing, designing and implementing your climate strategy.

Strategise to create the right business decisions and coherent communication on sustainability

Real sustainability requires real strategising. Therefore, it is important that you investigate and are able to answer different key questions such as:

• What opportunities could we get from being more sustainable?
• What business risks are there by not being sustainable?
• What opportunities might our competitors have overlooked?
• What is the right pace for us?

By working with our sustainability approach Green for Real, you and your company can develop clear and executable climate strategies embedded in the overall strategic vision of your company. It is not an add-on or a necessity to please investors – it is a core business concern. This will take your company from reactive compliance to proactively leading the way and driving green initiatives through culture and behaviour.

Over the years, we trust that you have developed a deep understanding of your product lines, competitors and customers and that it is easy for you to strategise about new opportunities, an understanding of environmental impact and improvement opportunities. However, it also creates an evident risk for you and your company to address the most apparent issues and most popular agendas – or simply imitate competition with no real core actions.

To avoid being an imitator and move towards being a sustainable leader, you need to take on a risk and an opportunity approach and start thinking strategically about your green transformation – asking yourself questions like:

• What would a carbon-neutral world look like from the perspective of my organisation?
• What opportunities appear in different scenarios, and which assets are stranded?
• What do we need to change to pursue the most attractive positions and make the most of our potential for creating positive change?

The necessary foundation for a successful green transition is to design a clear climate strategy that supports your business’ willingness to move sustainability from the periphery to the core of your business and make sure that it happens now.