Sustainability - How to set up a strategy from scratch?

By now we have all at least heard that Sustainability is a top concern in today's society and the pressure is mounting. And yet ... for you, the company faced with all this pressure - it is not crystal clear where to start, and what to do!

In this blog post, we'll shed light on the distinction between tactical and strategic sustainability, and emphasize the importance of conducting a materiality assessment to guide your sustainability efforts.

Sustainability = used in reference to all three Environmental, Social and Governance aspects

CSRD = Corporate Sustainability Reporting Directive

Tactical vs Strategic Sustainability

Tactical Sustainability - How most companies have started

Often, the companies we start working with already have some initiatives in place. If you are working in a company, it is plausible that you have an office waste recycling system, that your employer treated the topic of Diversity, Equity, and Inclusion to some extent and potentially even has clear diversity goals. In a few cases, your company could have a travel policy and, eventually have already conducted a first carbon footprint assessment.

These initiatives are what we call Tactical Sustainability: positive actions in the right direction, often led by a small group of motivated colleagues eager to do something about sustainability, usually in addition to their normal work schedule.

By adopting a Strategic Sustainability plan, companies can achieve a much greater positive impact on sustainability. A systematic approach provides clear goals and coordinated actions, which can result in significant improvements in sustainable practices and a measurable reduction in environmental and social impact.

Strategic Sustainability - How companies should consider sustainability

With the CSRD, the EU has set up very clear timelines, which will require all companies with more than 250 employees to disclose their sustainability strategy.

Read more:🔗CSRD - What is it

There is nothing special about a Sustainability-related Strategy per se. It is defined like any other strategy by a set of goals and targets. It includes action plans to get there and usually defines responsible people and resources involved. Often, it is kicked-off by a materiality analysis.

Why do most companies fail to structure a sustainability strategy?

First, they still struggle to recognize sustainability as an - urgent - true business topic. Secondly, establishing a sustainability strategy is a tough and daunting task. There is a knowledge and experience gap and shortage. Few people have ever done it and those who try to get quickly overwhelmed by the huge amount of different information/requirements.

In the next paragraphs, we prepared for you a quick guide to help you understand what it would take to set up a sustainability strategy, starting from its main elements:

1| Conduct a Materiality Assessment

We strongly recommend starting with a materiality assessment, which aims at identifying what are the material (=relevant) topics for your business, and their relevance. e.g. If you are a company selling accounting software, material topics could include energy consumption and employee diversity, equity & inclusion while topics such as human rights in the supply chain or production waste wouldn't be included.

💡Materiality is a central piece of the Corporate Sustainability Reporting Directive and it will be at the core of sustainability reporting exercises. So you are not losing any time, on the contrary, it's a stepping stone into any sustainability strategy.

A Materiality Assessment usually includes a mapping of the ESG topics according to CSRD, a double materiality assessment in which you measure both your impact and the potential financial risks and opportunities, and finally a stakeholder assessment.

Interested to understand how to structure a materiality assessment in line with the CSRD? Read our blog post on materiality.

2| Set Goals & Targets

We recommend starting with setting longer-term goals (e.g. 1 to 5 years) and then breaking them down with more specific short-term goals (e.g. per quarter). The goals should include specific metrics with targeted numbers: when choosing the metrics to track, refer to the ones used by the scientific community or in the CSRD (e.g. follow the GHG Protocol for tracking your emissions). Last, assign a responsible person for each target.

For example: Timeline = 1 year; Goal = Increase workforce diversity; Metrics & Targets = gender ratio from 20% to 45%, age distribution from 25-40 to 60<, different nationalities from 5 to 20; Responsible person = John.

3| Define Actions & Action Plans

And now, define a set of actions to address material impacts, risks or opportunities and ensure the deliveries against the targets set. Start by listing all the actions in progress and plan the actions for your next year. Each action should have a scope, a time horizon (that would be in line with the related target) and a budget allocated.

For example: Action 1 = Ensure gender-diverse applicants pipelines.

This shall be broken down into a set of steps, with clear responsibles.

Strategic Sustainability: a recap

By following the previous steps you will be able to identify your material topics, set targets and define an action plan, completing your first sustainable strategy!

Our approach At ROSE, our software solution combines the four steps just described in a unique and intuitive way. By filling in the ROSE Assessment our solution shows the company's status quo (step 0) in terms of existing sustainable practices and metrics and identifies the material topics (step 1) through the ROSE Compass. Starting from the existing practices, it is then possible to set goals and targets on existing and new metrics (step 2) and define the action plan with tailored suggestions (step 3).

We’d be happy to discuss how we can help you tackle the increasing complexity of sustainability requirements and even have some fun in the process! 😉

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