Why companies are putting sustainable business strategies first

Every t‑shirt that gets pur­chased, every cof­fee ordered, every car dri­ven has an impact on the plan­et. To be sus­tain­able – in the long term as a busi­ness – a com­pa­ny must put sus­tain­abil­i­ty strat­e­gy at the heart of its brand.

While only 34% of com­pa­nies dis­cuss ESG at every board meet­ing, accord­ing to research by Dili­gent Insti­tute ear­li­er this year, 71% say it is inte­grat­ed into their over­all com­pa­ny strate­gies. This encour­ag­ing devel­op­ment indi­cates a grow­ing align­ment of ESG objec­tives across the breadth of the company’s oper­a­tions.

At a recent round­table, cor­po­rate lead­ers dis­cussed the ways in which sus­tain­abil­i­ty is affect­ing each and every part of a busi­ness. “For longevi­ty of a busi­ness, you need to have sus­tain­abil­i­ty at the heart. You need to have very clear strate­gies on what you’re try­ing to achieve. It’s under­stand­ing that if you start from a set of prin­ci­ples and you’re actu­al­ly build­ing some­thing for the long term, you’re more like­ly to be around for the long term,” says Jon Lane, CEO of fash­ion brand Pas­sen­ger. He adds that sus­tain­abil­i­ty can mean both envi­ron­men­tal con­scious­ness and the long-term suc­cess of a busi­ness. “You’ve got to be build­ing [a com­pa­ny] that keeps going, that’s not going to get knocked out of the mar­ket because it’s gone past it’s sell-by date.”

To do so, though, requires com­pa­nies to con­sid­er how sus­tain­abil­i­ty is inte­grat­ed into every part of their busi­ness, from oper­a­tions to cor­po­rate cul­ture to com­mu­ni­ca­tions and mar­ket­ing.

“Cus­tomers are inter­est­ed in sus­tain­able solu­tions,” says DS Smith’s chief pro­cure­ment offi­cer Alex Jen­nings. “So, there’s a com­mer­cial rea­son for doing it,” he adds, even if the sus­tain­able solu­tion incurs an added cost. For the pack­ag­ing man­u­fac­tur­er, sus­tain­abil­i­ty is infused through­out its oper­a­tions, from design to pro­duc­tion. To achieve that inte­grat­ed approach, all 700 of DS Smith’s design­ers under­took cir­cu­lar design train­ing. Not every ‘recy­clable’ good is actu­al­ly able to be recy­cled. To com­bat that, DS Smith’s design prin­ci­ples are found­ed in sus­tain­abil­i­ty and focused on improv­ing recy­cling.

Sim­i­lar­ly, at Pas­sen­ger, design, sourc­ing and man­u­fac­tur­ing all adhere to the company’s sus­tain­abil­i­ty prin­ci­ples. The com­pa­ny uses recy­cled fibres and sus­tain­able tex­tiles to reduce fashion’s car­bon foot­print. For both busi­ness­es, select­ing the right sup­pli­ers and deploy­ing sus­tain­able pro­cure­ment strate­gies are key. Lane says: “We’re try­ing to change people’s mind­set because peo­ple are just doing things because that’s what they’ve always done. Part of our role is to come along and be the awk­ward bas­tard who basi­cal­ly says, ‘Well, why are you doing that. You need to change that.’”

Ideas for how to improve inter­nal process­es have come from every­where across the busi­ness. “I’d much rather be in a posi­tion where there’s a lot of mar­gin­al gains hap­pen­ing in sus­tain­abil­i­ty, rather than too many ‘big bang’ approach­es,” Lane says, indi­cat­ing that the company’s cul­ture embraces sus­tain­abil­i­ty and inno­va­tion.

Jen­nings agrees that cul­ture is essen­tial in get­ting sus­tain­abil­i­ty right across a company’s oper­a­tions. “You need to make sure that you’re get­ting the right peo­ple to help. Embed­ding it is such a big cul­tur­al shift in an organ­i­sa­tion that employs 30,000 plus peo­ple. It has to start from the top.”

But for both, it comes back to com­mer­cial rel­e­vance. If the busi­ness doesn’t make mon­ey, sus­tain­abil­i­ty is nei­ther here nor there. Both have found that sus­tain­able prac­tices can not only attract great tal­ent and offer a com­pet­i­tive advan­tage with cus­tomers but can improve effi­cien­cies and encour­age invest­ment.

For grow­ing busi­ness­es, the tal­ent pipeline is a key audi­ence when it comes to sus­tain­abil­i­ty. Dr Anjana Bas­net, a busi­ness lec­tur­er at Arden Uni­ver­si­ty, sees all the institution’s busi­ness stu­dents take a CSR and busi­ness ethics course as part of their degree. She says sus­tain­abil­i­ty is of huge impor­tance to her stu­dents: “I per­son­al­ly feel that this is where stu­dents are. They have ideas that they will take into the real world.”

Those stu­dents will even­tu­al­ly become the work­force pop­u­lat­ing com­pa­nies like DS Smith and Pas­sen­ger. Jen­nings says: “We have to cre­ate safe envi­ron­ments for peo­ple to feel com­fort­able being cre­ative and being inno­v­a­tive and chal­leng­ing prod­ucts and process­es and think­ing. We have to make sure that the stu­dents under­stand that there is a com­mer­cial con­nec­tion between this dri­ve, and not just a moral duty.”

Once that cul­ture is in place, how­ev­er, it still must be com­mu­ni­cat­ed out to the company’s var­i­ous stake­hold­ers. Basnet’s research took her to Nepal to exam­ine sus­tain­abil­i­ty report­ing in list­ed com­pa­nies. She found that even though com­pa­nies had strong CSR activ­i­ties in place, they were not com­mu­ni­cat­ing it to the invest­ment com­mu­ni­ty through sus­tain­abil­i­ty or annu­al reports. While UK plcs are required to report, SMEs and non-list­ed com­pa­nies are not. “It’s not that it is not being con­duct­ed,” Bas­net says of sus­tain­abil­i­ty, “But it’s not com­mu­ni­cat­ed exter­nal­ly.”

Lane’s expe­ri­ence at Pas­sen­ger has echoed Basnet’s find­ings. “We’ve nev­er done a big sus­tain­abil­i­ty report. We just don’t have the head­count to do it,” he says. “If we went away and wrote a report, it would take our eye off the ball of actu­al­ly mak­ing small, incre­men­tal changes.” That said, the com­pa­ny does use its mar­ket­ing and con­sumer touch­points to com­mu­ni­cate its sus­tain­able pur­pose. Part of the cus­tomer jour­ney is to engage with ini­tia­tives like Passenger’s tree-plant­i­ng pro­gramme or its use of recy­cled fibres.

At DS Smith, which does report annu­al­ly on sus­tain­abil­i­ty, the com­mu­ni­ca­tions extend beyond just that one touch­point. He says the com­pa­ny does work “up and down our sup­ply chain to chal­lenge our cus­tomers and chal­lenge our sup­pli­ers around cir­cu­lar think­ing around sus­tain­abil­i­ty.”

Dili­gent Institute’s research shows that the full board is now respon­si­ble for envi­ron­men­tal issues in 38% of com­pa­nies. This marks a dras­tic shift from 2019, when only 20% of busi­ness­es saw the full board engage with envi­ron­men­tal over­sight. Sim­i­lar per­cent­ages of com­pa­nies engage the full board in ESG and sus­tain­abil­i­ty strate­gies, sup­ply chain risk and sus­tain­abil­i­ty report­ing.

It takes strong lead­er­ship and an engaged cor­po­rate cul­ture to encour­age sus­tain­able busi­ness prac­tices through­out an organ­i­sa­tion. Align­ment across a company’s oper­a­tions is cru­cial to the suc­cess of sus­tain­able busi­ness strate­gies. But then those ideas must be act­ed upon through sup­ply chain and pro­cure­ment changes, man­u­fac­tur­ing process updates or edu­ca­tion­al pro­grammes. And for those ini­tia­tives to real­ly make a dif­fer­ence, the organ­i­sa­tion has to then share them with the wider organ­i­sa­tion and world through an inte­grat­ed com­mu­ni­ca­tions strat­e­gy.

“If we can tell the sto­ry about where the prod­ucts are from or how we’re doing things, that’s the point of engage­ment with the cus­tomer. It’s all around nar­ra­tives and sto­ry­telling,” Lane says. “What we want to do is inspire our­selves and peo­ple exter­nal­ly to know that you can make small changes and they’re going to make a dif­fer­ence. But also, to expect bet­ter and to ask ques­tions.”

Those that do ask ques­tions and do chal­lenge process­es may find they make the cru­cial dif­fer­ence to embed­ding sus­tain­abil­i­ty at the heart of the brand.