Sustainability Performance Management Matters

When we are looking at the current state of the earth and the current challenges in sustainability, only one conclusion can be drawn: we are entering a period of fundamental change in which our current business models are outdated when it comes to addressing these challenges.
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This is also acknowledged by our recent CEO Sustainability research, which shows that although more than 80% of CEOs believe businesses should lead the efforts to define and deliver sustainable goals; only 33% are making sufficient efforts. With this in mind, now is the time for organizations to step up their game and unlock their full potential in contributing to global priorities.

What Is Not Measured, Will Not Be Managed

On the road to addressing the global sustainability challenges, the need for transparent and effective non-financial reporting has never been more urgent. When sustainability performance is proactively managed, organizations are better positioned to address the sustainability challenges ahead.

Furthermore, they will be able to extract business value from their initiatives. This is why Sustainability Performance Management (SPM) is a fundamental cornerstone for corporations to take sustainability seriously. Because what is not measured cannot be managed.

Sustainability Performance Management

SPM is a structured process to collect, analyze and report on sustainability data and to improve the performance. When the data is measured and analyzed it becomes an input for the corporate strategy.

With SPM, organizations able to measure and manage their sustainability performance effectively, while enjoying a number of environmental, social and business benefits:

  1. Increase revenues and opportunities by introducing new products and services.
  2. Greater intangible assets and relationships with among others investors and employees.
  3. Reduce costs and improve efficiencies, which in turn enhance the financial performance.
  4. Reduce risks and regulatory costs. By actively managing the sustainability performance a reduction in the number of safety issues or environmental incidents can be achieved.

However, in our extensive work with businesses we’ve experienced that companies are faced with four significant challenges related to sustainability.

  1. The ability to link sustainability to the wider business performance. Our CEO study on sustainability indicates that only 38% of the respondents believe they can accurately quantify the value of their sustainability initiatives.
  2. Gathering sustainability data in a cost efficient manner. There is a substantial challenge in identifying the most relevant data driving results. Moreover, companies are often using immature tools and processes.
  3. The disability to interpret sustainability data and in turn unable to drive the business performance.
  4. Reporting the right information to the right stakeholders. Investors, consumers, employees, NGOs and governmental institutions all require different information.

We believe that all companies will be forced to implement the Sustainability Performance Management cycle in the years to come. Not only are sustainability issues becoming more visible and relevant over the coming years, they are increasingly impacting the long term profitability of companies.

In order to remain competitive, companies should start now with implementing a robust Sustainability Performance Management cycle. While this might be challenging, businesses should take advantage of existing experience and best practices. This way organizations can start to develop the beginnings of transformational change with a clear focus on value creation and the impact businesses can make.

Author: Joost Brinkman