3 ways to change corporate sustainability for the better: EY

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3 ways to change corporate sustainability for the better: EY

Sustainability has become a corporate buzzword, thrown around at conferences and shareholder meetings where c-suite leaders relish in using the term to appease board members and customers. 

However, corporate sustainability has lost its way and with the next 10 years critical for organisations to become greener, there is a dire need for a sustainability makeover.

A new report from EY suggests that corporate sustainability needs a rebranding to ensure the planet stays intact and targets are well and truly met.

The EY report suggests three ways organisations can reposition their corporate sustainability: changing the notion of a corporation, calibrating sustainability strategy and disclosure, and shifting from the top down.

Changing corporation

For corporate sustainability, it's not about the journey but the destination. The report’s authors said sustainability needs to revert to being a noun rather than a verb.

They said, “Sustainability is not an activity, nor is it an industry or a theme  it is a specific point at which economic activity is maintained within sustainable limits. It is that, or it is nothing.”

For individual corporations, this means they need to pinpoint the environmental resources it relies upon for its value chain, the planetary limits within which these resources can be drawn down, and the operational parameters that need to be maintained to preserve this balance, the report explained.

“And it doesn’t matter if the resource extraction is occurring outside of a corporation’s perceived ‘operational control’, if a company is profiting from an unsustainably produced resource, then it is incumbent upon them to proactively rectify this if they are aligned to the sustainability imperative,” the authors wrote.

If this means that most of the corporations are no longer aligned to its sustainability agenda, it will force a reckoning that shows how large the problem is.

Calibrating sustainability strategy and disclosure to planetary boundaries

To underpin this shift, we need to see a significant advancement in the science and accessibility of planetary boundaries, in particular the association of planetary boundaries with specific industries and the inputs and outputs of those industries, the report said.

While global organisations have a treasure of corporate sustainability data and a wealth of knowledge on how to convert units of economic activity and output into environmental impacts, what they lack is an accurate and accessible way for business to know which planetary boundaries they materially interact with and what level of impact is tolerable given the cumulative pressures on that boundary.

The report authors explain, “This approach is already well established in the context of science-based targets linked to atmospheric greenhouse gas concentration; however, it needs to be broadened to more complex global issues such as species extinction and habitat loss. Whilst such issues can be measured relatively easily on a mass balance basis within a localised area, the challenge is in applying these at the value chain level.”

A key aspect of this will be understanding the cumulative impact of multiple actors on a localised or globalised environment, and the cascading impacts from one ecosystem to another.

Shifting from the top down

Those organisations who are truly committed to their net-zero goals and real-world sustainability have to reflect this throughout the decisions made from the leadership team.

The report authors warn that this major change will be the hardest initiative it will ever implement and must be reflected in the competencies and passions of the wider business.

“It is not just a matter of competency but a matter of principle,” they said.

Several sustainability-focused companies have sceptical leaders at the helm who call sustainability a ‘woke’ agenda being “foisted on corporations and constraining their ability to exercise their commercial free will”.

The authors said, “Others use a purported devotion to shareholder returns to argue that the corporation effectively does not have the right to make sustainability its first priority.

“These directors are, of course, perfectly entitled to these views and they are perfectly entitled to exercise them at a corporation that is not committed to sustainability.”

© Digital Nation

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