Many are worried that sustainability will not be prioritised as societies and businesses are gradually recovering from the effects of the pandemic. Such concerns are based on the observation that companies as well as consumers are struggling just to survive and that any investments whatsoever in sustainability will be considered a non-affordable luxury.
In an optimistic, yet business-minded way we beg to differ: The pandemic is forcing all companies and organisations to revisit their strategies and make well-founded and bold decisions on how to re-position themselves to come out stronger during the anticipated recovery, be that in the form of a V, U, L shaped curve or more of a bumpy road. When redefining their strategies for the “new normal”, what could be more relevant for businesses during an unparalleled restructuring of the economy than to take into account what their customers and other key stakeholders value most. And for governments, searching for a vision and mission to rebuild and unite societies, what higher meaning and direction can engage to inject much-needed positive energy into the business ecosystem?
So, do people – be they policy-makers, business leaders, employees, customers or consumers – really care more about sustainability now than before the pandemic?
There are signs that sustainability and purpose do matter more and that the pandemic has changed the consumer sentiment in this direction worldwide. Not surprisingly, there is also research showing that making sustainable choices must be affordable. Interestingly, the leap forward in digital and low-touch business models during the pandemic makes evidence of a promising proposition that sustainability and affordability – through digitalisation and innovation – can go hand in hand.
We at Centigo believe that Sustainability will be of utmost importance for businesses to position themselves successfully and add to their competitive advantage. We also believe that governments at all levels will include sustainability in visionary and bold targets which in turn will lead to increasing demands on effective and accurate reporting. To proactively prepare for and prosper in this new reality, companies and organisations will need to:
- Define a strategic direction and an agile implementation approach – for an engaging and motivating purpose for all key stakeholders and to make optimal progress in a context of changing competitive landscapes and balancing of cost vs benefits over time.
- Develop the innovation muscle – to combine the opportunities and competitive threats of digitisation, emerging business model and sustainability drivers when forming attractive value propositions to target markets.
- Make sustainability reporting an effective process, to be as reliable and clear as eg financial accounting – to follow up progress towards targets, comply with regulations, and qualify for grants and other incentives.
Applying a sustainability-centric mindset when developing these three capabilities will require cross-functional changes across organisational units/teams for all core processes and supporting functions – and in many cases include suppliers and customers in the eco-system which powers one’s business. As with all business critical and cross-functional changes, change management and communication are key success factors. In the recovery from COVID-19, what do we at Centigo believe will be new and more emphasised?
1) Strategic direction and agile strategy execution: Leaders need to recognise that there is a shift of mindset that started well before the pandemic and has become even stronger, despite strictly financial challenges: Purpose is increasingly needed to engage and motivate customers, employees, key business partners and indeed investors. Describing what this purpose is, making it pervasive in communications and in setting the strategic direction will be essential to drive strategic change through organisations and value chains. Today’s dynamic business context will more than ever favour organisations which are flexible and able to respond quickly. To make one’s organisation agile, not only locally in an IT development team but across silos/departments/functions, will be a critical success factor to navigate towards the desired position in the market.
2) Innovation: Centigo's motto when helping clients in digitalisation and sustainability has been that:
"Sustainability Gives Digitalisation a Purpose.
Digitalisation Makes Sustainability Work."
In addition, our experience is that many of the methodologies which have emerged in the digital transformation era can successfully be applied to sustainability innovation. To meet the sustainability challenges and goals, there is a huge need for innovation – and to leverage digital capabilities will be essential to make this happen. The ongoing pandemic may be a blessing for several sustainability goals, not only because of less pollution due to lower travel activity, but because it is forcing companies to innovate to survive and thrive in general, by being more attractive to one’s customers, more effective in one’s operations, and adapting one’s business model to the changing competitive landscape. For example, cyclical economy (sharing, renting, pooling) is a growing business model, which utilises digital innovation to be more attractive and effective, This occurs in eg property (co-working), retail (subscription models), entertainment (digital distribution), office equipment (repair, renew, re-use) automotive (car pooling), and construction (rental, leasing). A common denominator in successful launches of innovative business models which are more sustainable is the combination of purpose, customer value and an innovative use of already existing digital capabilities.
3) Sustainability reporting: What you measure is what you get. To define and integrate sustainability targets and follow-up processes reminds everyone involved of the importance of results and progress. This is the positive and motivating internal angle. There will also be external pressure and must-do’s to consider, as governments define more ambitious targets and demand mandatory reporting over and above what is already in place. Government funding may also be conditioned upon measurable results. One theme in the World Economic Forum, which took place before the pandemic had spread into the Swiss Alps, was how to make sustainability reporting less of an art form and more of a science practice. A perceived problem is a lack of standards and frameworks applied, in spite of a plethora of models; old and new, niche and wide, process oriented as well as outcome focussed, etc.
To simplify and easily get started, Centigo has developed a lighter framework which is compatible with the others, and allows organisations to more flexibly define what outcomes and processes are most relevant, which is typically part of a so-called materiality assessment. Depending on industry, location and size of the organisation, there may be a preferred choice of official framework(s) to adhere to. Multi-nationals will need to comply with reporting requirements in several legislations, as is the case already for eg financial accounting. The maturity level of sustainability reporting however is in comparison with financial reporting much lower with regards to efficiency and quality/reliability. Digitalisation, well-defined roles, responsibilities and routines are key enablers to achieve more effective data capture, processing, quality assurance and visualisation of sustainability progress vis-à-vis targets.
- We at Centigo support organisations and companies in making changes happen, from early strategic analysis and planning to implemented results and value. Our vision, “Sensible Growth. Everywhere.”, applies to ourselves as a company and employees as well as to the clients whom we serve and the societies worldwide in which we operate.
For example, Centigo has helped clients to define and implement sustainability and climate strategies, establish and improve reporting and target follow-up processes, create new and sustainable business offerings and models, and support rapid growth of new sustainable companies and business areas.
If you are interested in discussing further how to turn sustainability into an embedded part of your organisation’s advantage when building back better, please contact us at Centigo.