The new wave of ESG strategy and management

Are we ready to find common ground and acknowledge that in order to attain true sustainability, systems must be treated as interconnected?

The need for a holistic framework

As we move into an era that demands radical synergy—integrating systems, ideas, solutions, and crucially, people—the importance of understanding the whole as well as the parts becomes clear. So far, sustainability initiatives have been scattered, aiming at various goals that often seem unconnected. It is crucial for every company dedicated to innovation and resilience to grasp the need for a holistic perspective in applying effective sustainable solutions.

In a recent report, “Catching the Wave: Seizing the Opportunities of the Sustainable Transformation”, WBCSD (World Business Council for Sustainable Development) and ERM collect and analyze key sustainability insights across sectors and areas of expertise. The resulting guidance is invaluable for companies committed to overcoming the obstacles we face in the ongoing transformation. The report synthesizes insights, successes, and observations in five key areas: leadership and governance, strategy and planning, progress and commercialization, networks and engagement, and continuity and tenacity. Further, it proposes a uniquely collaborative and actionable framework designed to identify and address barriers to change.

 WBCSD framework for sustainable transformation is a guideline for:

→ Getting the lay of the land: Using the framework as a company-wide sustainability maturity checklist to identify areas for improvement and prioritize actions.

→ Building Capacity: Using the recommended actions to shape and guide internal engagement, sustainability awareness/skills gap assessment, and education program development for teams across the organization.

→ Joining Forces: Using the guidance to develop and flesh out cross-sector partnerships to overcome sustainability challenges that can only be tackled through the value chain collaboration.

In the following, we will highlight the report’s critical messages and predict an enhanced synergy between the environmental, social, and governing aspects of creating sustainable change in business.

Key message 1: Find strength in multiple truths

It has become apparent that companies must not only acknowledge but also embrace multiple truths to navigate sustainable transformation successfully. This is not a sign of confusion or indecisiveness but a testament to our ability to adapt and evolve when faced with complex challenges. We have identified a polycrisis, meaning that the crisis is holistic and affects all parts of our ecosystem. We have recognized that the environment is not separate from humans, but as social beings, we are an intrinsic part of it. We see how technology is charging ahead exponentially, and that new operating and business models are adopted. In essence, what eventually emerges is an understanding of how each individual point of view and part forms a whole.

Coexisting truths:

The report, therefore, encourages companies to take stock of the different truths and form an overview that guides them toward finding effective, sustainable solutions. Looking for common ground and synergy is more than just finding solutions, it is also about seizing opportunities and managing risks, all critical factors contributing to a business's future success.

Key message 2: Be honest in overcoming obstacles

The WBCSD report calls for companies to honestly evaluate the state of their current efforts and acknowledge and address the internal barriers to achieving sustainability goals. WBCSD suggests future improvements should consider three main weaknesses: short-term focus, sustainability-as-a-cost mindset, and sustainability skills and awareness gaps. 

Barrier 1: Focus on short-term performance
→ Most corporate incentives are aligned with short-term profits, constraining the business case for medium-term transformation as well as sufficient investment in long-term resilience. The incomplete integration of sustainability risks and externalized costs in lending decisions leads to misallocated capital and the underfunding of viable sustainability investments.

Barrier 2: Persistent “sustainability-as-a-cost” mindset
→ Many corporate leaders struggle to imagine how their companies can realize the sustainability transformation’s commercial potential and use it for competitive differentiation and advantage.

Barrier 3: Insufficient sustainability-related skills and awareness
→ Sustainability’s operationalization is slowed by a shortage of staff at all levels who have the right skills and awareness.

External barriers to implementation should not be seen as reasons for inaction. Essentially, what is called for is a long-term view with trust in the market and in people as change-makers. There is considerable commercial value to be gained in tackling internal hurdles, and the ensuing power of collaboration has the potential to lift the most persistent external barriers.

Key message 3: Leverage lessons learned from digitalization

Companies, just as individuals, acknowledge that disruption to the business as usual will occur whether we want it or not. Therefore, companies must be able to handle the waves of disruption that climate change and the sustainability shift bring now and in the future. This requires realistic forecasting, preparation, and welcoming change. Systemic transformations are challenging to navigate, but organizations have experience with them. Here, leveraging lessons learned from previous large-scale change is a distinct advantage. 

The WBCSD report lifts as an example of the ongoing digital transformation, which has its roots in managing COVID-19 and the change to remote work. This reorganization has radically altered business as usual, touching on operations, markets, business models, and society as a whole. The report adds that the current sustainability transformation will not be kind to those who wait and see, just as climate change has not been kind to all of us who failed to react to early warnings. 

Key message 4: Make radical innovation the norm

Even though businesses have gone through transformations, this one will be more rapid and surprising than any before. Companies and experts across fields and industries are learning on the go and realizing that there are no ready-made blueprints for navigating the challenges ahead. However, as WBCSD research looks closer at companies that have partially integrated sustainability and tackled systemic change in the past, a viable approach to action and commercial value emerges. 

The report introduces a sustainability transformation framework that is based on in-depth interviews and extensive desk research. It reflects the best practical knowledge and experience about what has worked for companies so far. These companies have integrated sustainability to an advanced level and are willing to explain how the adaptation translates into commercial success, operational efficiency, and long-term resilience.

In conversations with companies that tested the framework during its development, WBCSD learned that the suggested sustainability transformation framework offers various entry points and works across whole companies and value chains. It can, among other things, help solve issues that arise during strategy development, guide integration, product, and marketing decisions, help companies spot opportunities to manage people better and improve collaboration with suppliers and peers.

Navigating sustainability successfully:

FACE IT: Leadership & Governance
Boost the sustainability mindset of senior leadership and develop a quantified business case that enables deep integration of sustainability into the company’s overall strategy.

MAP IT: Strategy & Planning
Make sustainability the foundation of the strategy and planning cycle and integrate sustainability decisively into all decisions and operations.

DO IT: Progress & Commercialization
Capitalize on sustainability as an innovation engine to develop new markets, future-proof profits, and seize operational impact opportunities.

SHAPE IT: Networks & Engagement
Drive action by joining forces with suppliers, competitors, and other stakeholders, and build trust by nurturing relationships, communicating authentically, and being open to new ways of working.

CONNECT IT: Continuity & Tenacity
Nurture transformation by continuously and comprehensively integrating sustainability across the whole organization.

Conclusion

Complete sustainability integration requires unprecedented collaboration with competitors, suppliers, stakeholders, government agencies, research institutions, and local communities. This collaboration is complex and requires a high level of integration—of procedures, intercompany teams, data systems, priorities, goals, metrics, etc. Companies open to this radical transformation will gain an upper hand in a fast moving market.

Setting up intense value chain collaborations without tightly structured processes can run into trouble quickly. The WBCSD guidance in the report helps companies honestly face the current state of their efforts and build cross-sectional collaborations that center around a common goal, sustainability.

Here, we see a distinct opportunity to jump-start a new era of holistic sustainability management, merging the infamous E, S, and G into a unified push toward an environmentally and socially sustainable future.

Report: https://www.wbcsd.org/download/file/18419