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  • Published on: 30.10.2023
  • 7:58 mins

How Sustainable Transformation can Benefit Your Company

The contemporary business landscape is marked by perpetual change: Companies are confronted with novel challenges, including technological advancements and globalization. Furthermore, businesses are grappling with the scarcity of skilled labor and the imperative to embrace sustainability in response to climate change.

The significance of sustainability in companies

Companies face mounting pressure from diverse stakeholders to integrate sustainability and adopt sustainable practices. Customers, investors, business partners, and governmental bodies increasingly demand greater transparency, credibility, and advancements in a company's sustainability efforts. 

Regulatory authorities at both the European Union (EU) and national levels have the capacity to legislate sustainability requirements for companies. They can do so by mandating transparency regarding their sustainable efforts. Frameworks such as the EU Taxonomy, the EU Greenwashing Initiative, and the EU Global Reporting Initiative (GRI) impose stricter requirements for sustainable corporate governance. The continuous issuance of new environmental protection regulations necessitates that companies take a consistent approach. Additionally, this ensures that sustainable transformation is prioritized by all companies.

Sustainable transformation: definition and principles

Sustainable transformation is the strategic evolution of a company toward sustainable business models and practices. It aims to generate enduring environmental, social, and economic value. The ultimate vision is a harmonious society, an integrated economy, and a thriving ecosystem. To realize this vision, we must focus on the following guiding principles:

  • Ensuring economic continuity 
  • Leveraging digital technologies for technological networking to enhance sustainability performance 
  • Establishing equitable working conditions and contributing to social justice 
  • Undertaking ecological restoration by reducing environmental harm and safeguarding natural resources 
  • Fostering a sustainable corporate culture and involving all employees in a comprehensive personal approach. 

Today, a growing segment of society, industry, commerce, and other sectors of the economy recognizes the necessity for social and economic transformation. This transformation is essential to addressing future challenges responsibly through sustainable strategies, processes, and products. 

The sustainable supply chain: a vital element of sustainable transformation

The process of sustainable transformation necessitates comprehensive and consistent implementation across all aspects of a company. A crucial and often intricate component of this transformation is the sustainable evolution of the supply chain. 

The sustainable supply chain is an approach to supply chain management that prioritizes environmental, social, and economic sustainability. Companies aspiring to undertake a responsible and sustainable transformation of their supply chains must consider the entire product life cycle. It is imperative to scrutinize the existing conditions and challenges within the supply chain, including critical factors like working conditions, resource consumption, environmental pollution, and human rights infringements. 

Within a sustainable supply chain, the environmental and social impacts of every stage are taken into account – ranging from raw material procurement to production and distribution, and on to eventual consumption. 

Furthermore, making supply chains more sustainable necessitates a shift from a linear to a circular economy model. The concept of a circular economy is gaining in prominence within the sustainability movement. In contrast to the linear economic model characterized by "take, produce, consume, throw away," the circular economy aims to renew, recycle, or reuse products at the end of their life cycle. This helps to improve resource efficiency and reduce environmental footprints.

Sustainability communication and reporting: from greenhouse accounting to sustainability accounting

The fundamental concepts of greenhouse gas and sustainability accounting play pivotal roles in the realm of sustainable corporate governance. These processes empower companies to gauge and appraise their influence on climate change, serving as indispensable tools for pinpointing potential shortcomings. 

Let's delve into the specifics of greenhouse and sustainability accounting

Greenhouse gas accounting entails the quantification of the total greenhouse gases emitted by a company, facilitating an assessment of their contribution to climate change. This practice has evolved into a critical component of sustainability accounting and reporting. Sustainability accounting goes a step further, evaluating a broader spectrum of factors.  

It not only scrutinizes environmental impacts, including greenhouse gas emissions and aspects such as biodiversity and water usage. It also incorporates the social and economic dimensions of a company's performance. This holistic approach aims to present the company's sustainability performance in a transparent and comparable manner. 

Key considerations for companies: sustainability reporting

Sustainability reporting facilitates the transparent and comparable presentation of sustainability performance. This entails disclosing data and information that assists stakeholders in assessing the company's sustainability efforts. To effectively engage in sustainability reporting, companies should be equipped to comprehend and apply global sustainability reporting trends. To that end, various frameworks and guidelines are available: 

Sustainability reporting requirements 

Companies must be mindful of potential pitfalls such as greenwashing and SDG-washing (related to the Sustainable Development Goals), where sustainability is superficially communicated without substantive action or real progress. Sustainable communication and reporting demand a genuine, transparent, measurable, and credible presentation of sustainability progress. To achieve this, it is advisable to adhere to the following steps: 

  • Clearly define objectives and key performance indicators. 
  • Foster seriousness and transparency in reporting practices. 
  • Enhance credibility through independent verification. 
  • Foster open communication with relevant stakeholders. 
  • Utilize creative storytelling techniques. 

The MHP Sustainable Transformation Office is available to support companies in navigating the realm of Sustainable Transformation, including the development and implementation of a sustainable communication and reporting strategy that aligns with these principles. Please feel free to contact our experienced consultants for guidance and advice. 

Understanding and embracing sustainable transformation as an opportunity

Business leaders should view sustainable transformation as an opportunity rather than a challenge. A creative and agile management model can facilitate the implementation of necessary changes. It is crucial to adopt change models and approaches that empower companies to address issues, devise solutions, and generate added value. 

With the support of the MHP Sustainable Transformation approach, your company can effectively tackle the following challenges: 

  • Gain a deeper understanding of the intricacies of global challenges and their impact on your business model. Identify market opportunities and formulate forward-thinking strategies. 
  • Identify stakeholders and their priorities, establish shared values and objectives, and integrate them into measurable and communicable Key Performance Indicators (KPIs). 
  • Foster the development and implementation of sustainable leadership to speed transformation and cultivate a shift in mindset. 
  • Recognize the significance of the circular economy and the pivotal role of sustainable supply chains. 
  • Undertake sustainable transformations of products, services, and business models. Employ concepts, methods, and tools to cultivate fair and circular supply chains. 
  • Grasp the potency of marketing and ethical considerations, as well as the risks associated with greenwashing. Identify storytelling strategies to communicate your sustainability agenda effectively. 

Embracing sustainable transformation as an opportunity can lead to positive outcomes for your company, the environment, and society at large.

Progressing toward sustainable transformation with MHP

For companies, embarking on a comprehensive sustainability transformation entails a profound shift in business strategy and models, operational processes, and corporate culture. Strategic sustainability reporting and the utilization of data-driven metrics empower companies to monitor and substantiate their progress across all facets of transformation. Furthermore, it provides a competitive advantage in terms of business operations. 

Leverage Sustainable Transformation as an opportunity to position your company for the future and make a positive impact on both society and the environment. Reach out to us now to access information and support for your sustainable transformation journey

Frequently asked questions on sustainable transformation

How can companies and suppliers make their collaborations more sustainable?

Achieving a more sustainable partnership between companies and suppliers involves establishing sustainable supply chains and embracing circular economy principles. It's vital to consider the entire life cycle of products, addressing aspects such as working conditions, resource consumption, environmental impact, human rights, and social consequences. Close collaboration, transparent communication, and the utilization of technology for supply chain monitoring and improvement are also beneficial. 

What are the benefits of a sustainable supply chain for businesses and customers?

A sustainable supply chain can help companies realize cost reductions, mitigate risks to their reputation, and bolster resilience. It also fosters the development of new business models, markets, and technologies. The ability to define and measure various aspects of a sustainable supply chain is crucial for building consumer trust, as environmentally conscious customers are drawn to sustainable products.

What steps does the MHP Transformation Office take to support your company in implementing a sustainable supply chain?

The MHP Sustainable Transformation approach supports your sustainability transformation with methodological and technical. MHP assists in executing sustainability projects and measures, as well as in integrating knowledge and technology. Initially, existing sustainability initiatives are identified and their maturity levels assessed.  Subsequently, a vision is defined, and a target vs. actual comparison ensures that all initiatives are aligned with this vision. Together, the most significant projects that deliver the greatest value are identified. Stakeholders actively participate in the transformation process to ensure long-term success. 

What is the key to achieving sustainable communication and reporting?

Sustainable communication and reporting require the establishment of clear objectives and indicators to measure progress. Progress and challenges should be communicated honestly and transparently to foster trust among stakeholders. Independent audits help you to enhance reporting credibility. Consistent communication with relevant stakeholders and the incorporation of feedback are imperative. Storytelling using concrete examples illustrates a commitment to sustainability and resonates on an emotional level.

About our author

Senior Consultant, Oper. Performance & Strategy (OPS)

Fabian Kentsch


About our author

Senior Consultant, Oper. Performance & Strategy (OPS)

Nicola Noll


About our author

Associated Partner, Digital Supply Chain Solutions (DSC)

Bastian Kempe


About our author

Senior Consultant, Oper. Performance & Strategy (OPS)

Nur Sebahattin Ceylan