Where should responsibility for improving corporate sustainability sit? While a rising number of organizations are appointing chief sustainability officers, many leaders will argue that businesses cannot isolate sustainability in a single function. To achieve their ESG targets, it must be embedded across every part of the business, GreenBiz reports.
“Sustainability is part of our company’s strategy to a point, but it must become a normal part of how each function works,” said the sustainability director of a consumer business, which preferred to go unnamed. “If you take any sustainability target — for example, net zero — it affects every part of our business, from supply chain to R&D to product development. For us to make progress, CO2 management must be built into how those teams work.”
This same scenario exists in every industry. For most businesses, impacts on environmental and social sustainability are concentrated not in their own direct operations, but in their value chains. For one healthcare company that Sustainability Leaders recently spoke to, only 5 percent of its impact on various ESG issues exists in its direct business. The remaining 95 percent is upstream in its supply chain and downstream in its consumer base.
To effect change in these parts of a company’s value chain, the strategy cannot lie within a corporate sustainability function alone.
Consider the product and supply chain work happening at one technology company. The organization’s R&D team has an ecodesign process that requires that new products improve environmental performance in at least one of five ways: energy; packaging; substances; weight and materials; or circularity. The company currently has a target to ensure that all product introductions meet these requirements by 2025.
This policy has changed not only how the company’s R&D and innovation teams work but also how its procurement organization works with suppliers.
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Why companies must adopt a business-wide approach to sustainability (GreenBiz)