Strategic planning: How to incorporate sustainable development?
In today’s world, environmental protection, the fight against climate change and social responsibility are concerns that businesses must incorporate into their strategic planning.
“By 2025, a business that does not have a clear understanding of its carbon emissions is running a major strategic risk,” says Jean-Michel Champagne, Sustainable Development Officer and lecturer at HEC Montréal.
Mr. Champagne also believes that a strategic plan must go further and look beyond just sustainable development. “Today, we are seeing a growing number of businesses putting purpose above profits,” he observes.
He offers the following tips to help entrepreneurs incorporate sustainable development into their strategic planning.
Why make social responsibility part of your business strategy?
A number of factors can motivate a strategic business approach that incorporates social responsibility:
- practical justifications (it’s good for business)
- legal considerations (the need to change as laws evolve and impose new guidelines)
- ethical reasons (the company is responsible for making changes, setting an example and raising awareness in the industry)
To support the importance of a sustainable development and social responsibility approach in a strategic plan, the HEC lecturer gives the example of the 2008 banking and financial crisis.
“A lot of research has shown that businesses that had better social, environmental and ethical governance adapted better to the crisis, recovered faster and were more resilient,” he notes.
The measurable benefits of sustainable development
- Energy efficiency—Reducing dependence on fossil fuels is economical and cost-effective.
- Promote team engagement—The positive actions of businesses inspire their employees. You can start with recycling or installing LED lighting. But there are also more subtle actions, such as providing incentives to use public transit.
Measure and understand above all
It is vital to know your company’s starting point and its most relevant initiatives. Thus, the first step in any sustainability initiative should be to measure and understand your current situation.
Start by answering the following questions in as much detail as possible:
- What are your energy sources?
- What role does travel play?
- How much carbon does your business produce annually?
- How much waste does your business produce annually?
Once you have developed a comprehensive picture of your emissions, you can commit to taking action to reduce your environmental footprint.
“Knowing and understanding will soon no longer be a virtue, but a necessary part of a company’s commitments,” says Mr. Champagne.
Evaluating your business’s direct, indirect and parallel emissions will help you determine the right approach to identifying and prioritizing the actions you need to take.
Involve all stakeholders in developing your strategic plan
Perhaps your business has already begun a green transition. Or maybe you are still in the process of thinking about the green shift to be made. In either case, you need to include sustainable development in your strategic plan.
“The business strategy must involve all stakeholders from the outset, not just those concerned with the economic aspects of the company,” says Mr. Champagne. “If the focus is only on profit, we miss the accountability aspect that is critical to a sustainable strategic plan.”
He therefore recommends that you involve your shareholders, suppliers, customers and key employees from the very start of developing your strategic plan. Depending on the type of activities you carry out and where you operate, you may need to involve certain elected officials and community groups in your thinking to ensure the social acceptability of your strategy.
What tools do you need to stay competitive in a sustainable economy?
Mr. Champagne thinks the new economy will be a low-carbon one. That is why he says it is important to estimate the fair price of resources in your strategic plan.
In addition, a growing number of shareholders, investors and lenders are asking companies to demonstrate their performance in reducing greenhouse gas emissions and their continuous improvement approach.
Mr. Champagne cites the Global Reporting Initiative as a reference. The international organization’s mission is to support companies in producing social and environmental responsibility reports. Among other things, it provides approximately 60 general and 80 specific indicators that enable companies to develop relevant sustainable development guidelines to have a positive impact on their economic, environmental and social performance.
“There are also benchmark standards, such as the Sustainability Accounting Standards Board (SASB), a non-profit organization that develops standards for sustainable accounting,” adds Mr. Champagne. The SASB sets out information on environmental, social and governance issues of significance to investors. However, it is aimed primarily at public or listed companies.
For the instructor of corporate social responsibility, the B Corp certification is undoubtedly the Holy Grail for companies acting in the public interest. However, this certification is more difficult to achieve. That is why he recommends starting by incorporating simple actions into your strategic plan, such as energy efficiency, responsible procurement, waste reduction, employee well-being and emission and water control.
Be inspired by the actions of others
“The best references in sustainable development are your peers,” says Mr. Champagne. “Improvements by some inspire others. While companies generally keep the details of their strategic plans under wraps, when it comes to sustainable development, many companies share their successes and help their competitors.” Examples include Patagonia and Beau’s Brewery in Canada.
“There are many success stories,” says Mr. Champagne. “More and more entrepreneurs are building businesses that address social and environmental issues.” Mr. Champagne notes that these are the best sources for inspiration in your strategic plan.
He also believes that it will soon be mandatory for companies to report their polluting emissions in their financial statements. “Funds and banks are going to have extra-financial requirements,” he notes. That’s one more reason to make sustainable development part of your strategic plan.
To learn more about strategic planning, download our free guide The Foundations of Strategic Planning.