Beginner or Embedder? Here's a 4-step Tool to Assess Your Company’s Sustainability Maturity.
By Tensie Whelan and Chisara Ehiemere
Embedding sustainability is emerging as the next wave of enterprise value creation for corporate leaders. At the NYU Stern Center for Sustainable Business (CSB), we developed a Return on Sustainability Investment (ROSI) methodology to better measure and monetize these opportunities. Our ROSI research finds a strong causal relationship between well-executed, embedded sustainability strategies and better management and financial performance across many industries. Companies that integrate sustainability into the core of their business strategies will be best positioned to attract and retain talent; secure the funds needed for implementation and innovation; mitigate environmental, social and governance (ESG) risks; and increase sales and customer loyalty.
However, there is a danger that companies will approach sustainability risks and opportunities solely as a compliance issue — responding to demand for ESG reporting metrics — rather than building sustainability into business strategy. Without strategy, sustainability is neither prioritized nor well-designed and executed. Without appropriate governance, funding sustainability capital needs is challenging. Without sustainability key performance indicators (KPIs) tied to compensation, employees may be measured against metrics that conflict with sustainability goals.
Companies with embedded sustainability approaches recognize this. Unilever, for example, has an integrated sustainability strategy, Unilever Compass, with associated KPIs, and provides incentives to stakeholders such as suppliers and employees to help them meet their goals. Arca Continental (a Latin American beverage and snack company) developed a board-level sustainability committee to focus on the strategic importance, visibility and shared ownership of sustainability, and has tied a percentage of executive compensation to sustainability goals.
Read the full GreenBiz article.
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Tensie Whelan is a Clinical Professor of Business and Society and Director of the Center for Sustainable Business.