How can you make the business case for sustainability to your board of directors?

If you need to make a business case of sustainability to your board of directors, it means maybe it is time to change your board of directors. Board directors at that level and worth his/her position, should already be aware of the potential upsides and downsides that sustainability can pose to a company. For example, capturing the green market and building brand image, reducing environmental impacts and costs, and addressing potential environmental regulation risks. Board directors should have the strategic foresight and advise companies on the key role of sustainability. They don't need convincing on the business case of sustainability. They should be the ones pushing management to take action.

Drafting narrative and documentation that resonates with the board's priorities, emphasizing the link between sustainability initiatives and the company's overall strategic objectives is the key. Let's delve deep into this through an example- When markets shift to cleaner alternatives – for example, from internal combustion engine (ICE) cars to electric vehicles (EVs) – this changes the entire value chain for related products and services. Having a clear sustainable purpose and strategy can identify how companies can deploy their core capabilities to create new markets and value propositions by serving society’s changing needs without compromise on financials. This transition becomes a business case for sustainability for the board.

A few points of attention here: 1. People have values, not companies. So, although it is important to consider what we simply define as “company values”, it is the people in leadership positions and in all other positions we need to consider and their personal stand. As we talk about convincing the board members, then it is all about their values as individuals, more than whatever is stated as formally being the company’s values. 2. Values are the base, yes, but if one wants to convince board members of a business case for sustainability, it needs to be material for the company to begin with. A company can engage in philanthropy for noble causes, but a real business case needs to be based on sustainability materiality.

When presenting a business case for sustainability to the board of directors, it's essential to frame it in terms of financial and non-financial benefits tailored to the company's strategic objectives and values. Highlighting potential cost savings through efficiency improvements, risk mitigation, and enhanced brand reputation can demonstrate the tangible bottom-line impact of sustainability initiatives. Additionally, emphasising long-term value creation, market opportunities, and stakeholder expectations can underscore the strategic importance of embedding sustainability into the business model. Providing concrete examples, data-driven analysis, and benchmarks from industry peers can further bolster the case.

Should your board of directors or management be convinced why a new sustainable approach to running the business is necessary, you have lost half of the battle already. You need their input, participation and buy-in for the transition to a sustainable business, to ensure the success of said adoption.

Working extensively with startups and founders, I have found that many of these companies have fantastic, innovative offerings. Through ESG, we are sometimes able to advise the leadership on ways to improve their raw material sourcing or review their production energy requirement, explore alternatives along with maintaining their premises and equipment. We assist in reviewing the entire value chain. Once improvement strategies are implemented, leadership often sees a positive impact on employee well-being. Naturally, we present any recommendations along with a cost-benefit analysis to assist company leaders in their decision making process.

Entender os benefícios e riscos é fundamental, pois dele advém o apoio da alta direção para a execução das ações propostas. Operacionalizar ações de sustentabilidade depende de um bom alinhamento estratégico com o board da companhia. Benefícios são capazes de mostrar o ganho com o investsimento em ESG, mas sem sempre são quantificáveis a ponto de demonstrar o retorno financeiro direto. E isso não pode ser restritivo para adoção de ações sustentáveis e alinhadas ao ESG.

One critical and decisive factor is showing the impact of regulations. Due to the rather new and fast-changing sustainability landscape, one should not only discuss around existing regulation but should also include and show the risks and opportunity of upcoming regulations and directives.

Benefits are overwhelming however to fully reap them you shall need to work aim at embedding sustainability acrsso all your departments. Start from the low hanging fruits and then create a path for medium and long term transformation.

Quantifying benefits and risks in a sustainability business case involves assessing various factors. Benefits may include cost savings from resource efficiency, enhanced brand reputation, and access to new markets. Risks could encompass regulatory changes, reputational damage, and supply chain disruptions. Consider metrics like carbon footprint reduction, and stakeholder engagement to measure outcomes. Conducting a comprehensive value-benefit analysis and using sustainability frameworks can help provide a quantitative basis for decision-making.

Highlight financial gains from cost savings through energy efficiency, waste reduction, and premium pricing on sustainable products, and explain how sustainability attracts ESG-focused investors. Show that sustainability reduces risks by ensuring regulatory compliance, enhancing brand reputation, and building supply chain resilience. Discuss broader impacts on corporate social responsibility and environmental stewardship, reinforcing community relationships and reducing the company's carbon footprint. Use success stories and key performance indicators (KPIs) to provide concrete examples, and outline a clear implementation plan with specific goals and timelines.

Comunicação com todos envolvidos é fundamental num processo de sustentabilidade. Além da comunicação de agenda positiva, é importante reforçar o compromisso, apoio da alta direção e resultados alcançados.

It's important to remember that ESG extends beyond environmental sustainability. The social & governance aspect of ESG go a long way too! In my experience, the G of ESG is critical in communicating the expected impact & business case for ESG initiatives. By reporting on statutory requirements in line with ESG standards, an organisation's board can be eased into the concept. Subsequently, benefits of ESG initiatives to all stakeholders must be made evident. An IBM survey has shown that 67% of the respondents were keen to apply for positions with environmentally sustainable companies. Customers & investors today expect sustainability as a norm - it's no longer merely a 'feel good factor', rather a business imperative.

The board values value. For every business case, there should be a tangible value attached to it or it should be an enabler for a futurevalue proposition. Otherwise, the activity should not be carried out. One should be totally clear on the value of their initiatives as well as the value it brings. Communicate succinctly, focusing on the key message. Structure your pitch in a sotrytelling fashion so as to engage the audience but do not provide too much details of the process as it might distract them from the core messages.

examples of ther companies, especially competitors are useful to bring urgency for change. some numbers will be hard to quantify however appeal as well to the ethical considerations. Use acadamic research and bring on board leaders that have gone through a successful transformation, There are many networks you can use as your allies.

Top management and Governance bodies’ competencies and expertise shall evolve to make sustainability an integral part of the company’s broader strategy. A key factor in enabling this change of mindset is training: start with the principles, tailor them to the specifics of the industry and the company and identify risks and opportunities. Practical examples, especially from peer companies that can serve as a benchmark, are important. Many of these can be found at events, webinars and conferences.

Short term financial thinking might be a risk, however regulations and consumers' pressures are now very powerful sticks! As mentioned showcase the "carrots" that can be achieved via a successful transformation. And point out one thing...the cost of the status quo!

By adopting a multifaceted approach, businesses can overcome challenges and build a robust sustainability business case. * Stakeholder Engagement to gain diverse perspectives, align goals, and ensure a holistic approach to sustainability. * Clear Communication on hits and misses in Sustainability performance. * Technology Integration to improve resource efficiency, reduce environmental impact, and enhance overall sustainability performance. * Supply Chain Optimization ensuring ethical sourcing, reduced waste, and efficient logistics. * Employee Education and Engagement in sustainable practices to create a culture of "individual responsibility".

Create a sustainability task force, by assigning seats at the committy to each segment of the business. Meet at least once a month to establish and measure your sustainability roadmap and get the buy-in from each representative and their team.

I agree and I had mentioned above. If you are just starting and the board is rather skeptical, you can use already established frameworks, like B Corp or others., to craft your strategy. And you can tap on their networks for support.

Within the plans and roadmaps, clear roles, responsibilities and accountability shall be clearly defined. Any confusion may lead to poor performance, non-achievement of set targets and possibly penalties.

Para involucrar y comprometer a la junta directiva estas prácticas pueden ser útiles: 1) Organizar sesiones de sensibilización sobre los conceptos clave de sostenibilidad, incluyendo los beneficios empresariales, los desafíos y las oportunidades. Exponer ejemplos de casos de negocio que muestren los beneficios tangibles de la sostenibilidad para la rentabilidad y la competitividad empresarial. 2) Establecer objetivos específicos de sostenibilidad y asociarlos al paquete retributivo y/o sistema de recompensas. 3) Identificar quién o quiénes de la junta son believers de estos temas para impulsar la agenda de sostenibilidad dentro de la junta y motivar a otros miembros a comprometerse.

To keep your Board involved it is critical to: - have one member of the Board fully responsible for sustainability topics, targets and outcomes. - embed sustainability commitments and results into business targets and therefore let them have an influence on compensation discussions.