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What Does Sustainable Development Actually Involve?

Organizing Companies to Work Effectively Toward Goals

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“How dare you!” – “People are suffering.

People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth.” Just 16 years old at the time, Greta Thunberg confronted the politicians assembled at the 2019 UN Climate Action Summit in New York with this furious indictment, expressing the deepening frustration felt by increasing numbers of people all over the world. The call for better environmental and climate protection regulations and a fair distribution of resources is not new: Al Gore presented the “inconvenient truth” about global warming in his alarming documentary in 2006, and The Club of Rome released a report entitled “Limits to Growth” as early as 1972.

While contemporary initiatives like the “Fridays for Future” or “Scientists for Future” movements are raising awareness of environmental issues within our society, the debate about the true consequences of climate change is as heated as the earth itself. The much-needed change in values and consumer behavior seems to be progressing very slowly.

Another thing to consider is the fact that companies in all sectors are currently facing some incredibly difficult challenges. The enormous effort and investment required to get digitalization projects off the ground had barely begun before the coronavirus pandemic halted everyone’s plans. The EU’s Green Deal adds extra pressure in the form of stricter guidelines and ambitious targets. It’s easy to see that the rules of international business and success in capital markets are increasingly being shifted in favor of sustainable companies. Most executive management teams have also now realized that sustainability is no longer just “nice to have” but rather a “must-have” feature of business.

When It Comes to Implementing Sustainable Business Practices, Some Companies Seem Completely Paralyzed While Many Others Have Been Slow to Respond at Best. So What is the Problem?

The concept of sustainability is too abstract for many companies – the business case for a sustainable approach is difficult to comprehend. Many business leaders start by focusing only on meeting minimum regulatory standards. Truly sustainable activities are still associated with additional costs and long payback periods. We’ve also noticed that the risk-averse attitude of some companies can often be attributed to uncertain decision-making and the use of information that is too complex.

A "business as usual" is out of the question

In our experience, companies tend to focus only on the climate protection element of sustainability. This is certainly one of the most urgent tasks, but there are a host of other challenges too. The 17 sustainable development goals created by the United Nations provide a blueprint for sustainable action. Celebrated as a tremendous achievement by the international community, these goals mark out the path toward peace, prosperity, education and justice for the entire planet. Companies can also use the goals to comprehensively review their own actions. Entrepreneurial, sustainable action is not just about donating to good causes and buying up forests in Indonesia. It is much more important for companies to set up and optimize their business models with sustainable development in mind.

As creators of value and consumers of resources, companies cannot dismiss the fact that they have a key role to play in the move toward a more sustainable future. Business as usual is simply not an option: Analyses by the Stockholm Resilience Center show that we are perilously close to or have already crossed four of the nine planetary boundaries. If things continue as they are until 2030, a devastating and irreversible impact on our planet is no longer just a possibility – it is a certainty. If policy-making processes take too long to implement new laws, such as supply chain changes, it will be individual companies with the initiative and innovation to create sustainable business models that make the difference. The logic behind this approach seems very simple: To reduce the negative impact of operational value creation and make a positive contribution to sustainable development on an international level.

Faced with all the complexities inherent in these objectives, it is a huge challenge for companies to find their way, set goals and start the transformation process. Many are confronted by numerous questions, including how do we do business more sustainably? Where is the best place to start? And which activities will offer the greatest added value for the environment and society?

From “How Dare You!” to “How Can We?”

A systematic, guided process is helpful for finding the right answers. We have designed a process for supporting companies on the path to greater sustainability:

  • 1. Guidance

    It’s easy to lose your way among the 169 sub-goals and over 240 indicators for the UN’s sustainability goals, particularly since the goals were primarily formulated for governments. For companies, it is therefore all the more important to understand the main goals, their necessity and the positive business cases for them.

  • 2. Insights

    Taking the time to map out and visualize operational value creation chains is a way of identifying risks as well as positive effects on society and the environment. This method can help a company to recognize which elements of sustainability are relevant to and directly influenced by its activities.

  • 3. Focus on Goals

    Not all negative effects can be remedied immediately. Sustainability goals must be consciously prioritized and integrated into a company’s business goals. This is the only way to achieve quick wins and to make the greatest possible contribution for society and the environment.

  • 4. Review Progress

    Managementsysteme und Standards sind wichtig. Denn wirksame Strukturen, Prozesse und Rollen dienen einer Organisation als zentrale Steuerelemente, um die Nachhaltigkeitsleistung zu steigern. Wichtig dabei: Die Systeme müssen gepflegt und weiterentwickelt werden. Der damit verbundene Aufwand steigert den Reifegrad und damit auch den Mehrwert.

  • 5. Continue Developing

    The transformation toward sustainable development is a long journey. Business models must be critically reviewed on a regular basis, checking that they are still viable for society. As a company grows, sustainability requirements beyond its own boundaries but within its supply chains will also become relevant.

Author

    Fabian Kentsch

    Consultant | Cluster: OPEX

    LinkedIn

    Daniel Wessig

    Senior Consultant, Operations Excellence

    LinkedIn