Written by Tanya Ashton.
The coronavirus crisis has put traditional business models to the test.
It has been a universally difficult year.
One theme emerging from the Coronavirus crisis is resilience. It’s the business buzzword of the moment. Businesses want to future-proof themselves.
And future proof we must, as, sadly, there are bigger humanitarian threats to contend with. (Now this all gets a bit heavy but, bear with me). Think; social disparity and inequity, global heating (we’re past warming according to the UK Met Office), biodiversity loss, deforestation and pollution, the list goes on.
The pressure to respond is growing too. Shareholder expectations are rising. Stakeholders are demanding transparency and traceability. Legislation is evolving rapidly accompanied by a hike in compulsory and voluntary reporting. And consumers are frustrated with business and government’s failure to make buying sustainably, simple.
You’re Not in it Alone
In the midst of a crisis this may feel too big to contend with, but (and here’s some good news) you’re not in it alone. 200 CEOs called on the UK Government to deliver a “clean, just … inclusive” recovery. This group of industry leaders believe an “ambitious low carbon growth and environmental improvement agenda can … make the UK economy better prepared to deal with future shocks such as those related to climate change”.
There’s even better news, there’s opportunity too. Businesses emerging from this crisis with a sustainability plan front and centre will thrive, attract the best talent, retain key customers, and entice big investors. All enhancing their crisis resilience, reducing their susceptibility to risk and improving their brand reputation.
So where to start?
Direction of travel in the sustainability arena is complex. Navigating this journey is undoubtedly made simpler through a clear governance structure, materiality matrix and sustainability steering team.
In this article, I’ll show you how to build your steering team into an effective tool of change through this step-by-step approach.
1, Define its purpose
Success is built through clarity. This clarity ensures everyone understands the steering team’s purpose and will reduce squabbles and misunderstanding later on. It’s purpose will vary from business to business depending on risk priorities, culture, values and ambition but should include:
- To prioritise goals
- Remove roadblocks
- Understand size of material risk and related opportunities
- Define policy creation
- Outline, agree and monitor targets
- Challenge and intervene where necessary
- Direct the business
2, Confirm level of authority
Successful steering teams have a high level of authority including power of ratification and veto. This power safeguards continued alignment to the sustainability strategy and the delivery of risk mitigation. How authority is governed within the team must be clearly defined including agreement on how decisions are made and by whom.
3, Who’s in the room?
It can be tempting to invite everyone who can influence change at a senior level.
Balance between a manageable number and the most influential people from the right departments works best. I’d aim for about six and no more than eight. That’s enough to generate discussion and not slow proceedings. They don’t all need to be sustainability experts. It’s more valuable that they know your business and their sectors well and understand where the biggest sustainability risks hide.
Depending on your business I’d include:
- Procurement, holders of bought in risks (they’re still yours)
- Manufacturing and supply, big energy consumers
- Commercial, to keep abreast of customer expectations
- Insight or Brand who have a finger on the pulse of consumer, public and wider stakeholder expectations.
Importantly these latter two groups can monetize your investment.
The most important person in the room is your MD. Even better, the CEO. They are personally liable for environmental risk. So, should be both aware and involved in decision-making. If you can’t persuade your MD or CEO, park it and revisit. Don’t give up. It’ll be worth it in the end. In the meantime, call on a non-exec director with the wider business interests at heart or another senior board director carrying significant risk. Consider procurement, supply, or manufacture.
Once you get C-Suite members in the room, make the most senior, chair. It adds engagement and gravitas. Agree the agenda with them upfront for a smoother run.
As with any group, beware group think. Individuals are the representative of their department and should have the freedom and opportunity to speak up about concerns.
It’s helpful to have a trusted, independent third party in the room. Someone with a birds-eye view, giving an alternative perspective. Pinpoint your highest material risk, then invite a representative or sustainability expert from an NGO in this field. This might sound terrifying, fool-hardy even, but they’ll become one of the most valuable people in the room.
4, The Agenda
- Your biggest material risks and progress against them. Material risks are those environmental and social risks most important to your stakeholders and could have a significant reputational and hence financial impact on your business.
A materiality matrix will help to prioritise sustainability risks and red flag where action is needed.
All programmes and projects reviewed by the steering team should be mitigating material risk. The matrix below outlines some examples.
- Roadblocks. Focus on those which could derail you and stop you meeting your sustainability objectives.
- Targets and measurements. Sustainability targets work in the same way as any other, by quantifying progress, shining a spotlight on potential issues, and where to refocus efforts. The best bit, they create an opportunity to celebrate success. Plus, to report confidently you need accurate measurements in place.
- Future scanning. Shifts in the macro and micro-environment will influence focus. Awareness and understanding of these changes will make decision-making more timely. Who saw the plastics issue growing in our oceans and was prepared for its mammoth repercussions?
The steering team is the hub of your governance structure. All internal and external sustainability-related communication and reporting should be assured from here. Whatever your alphabet soup of reporting CDP, TCFD, SECR, they should all be approved by this team first.
Businesses are under increasing scrutiny and it’s this team’s job to guarantee reports are quantifiable, fit for purpose, transparent and authentic.
Resilience for the future
A steering team modeled in this way will shift your business up a gear. You’ll be more adaptable and quicker to respond to problems and opportunities.
We’re already seeing businesses that perform well across the triple bottom line proving themselves to be more resilient and future-fit as ESG funds out-perform the market. A steering team is one step towards this resilience. Benefits of this approach can unfold quickly, opening up access to the best new talent, retaining customers, and winning business.
… and in case you’re wondering, the reporting soup above includes:
- CDP – Carbon Disclosure Project
- TCFD – Taskforce on Climate-related Financial Disclosure
- SECR – Stream-lined Energy and Carbon Reporting