Improve Score and Customer Stickiness
Changing regulatory requirements, shifting customer demands, and a growing appreciation for the corporate value expansion potential has made sustainability an integral part of business strategy in boardrooms the world over. Looking ahead, company leaders must align their resources with the latest climate change science by embracing science-based targets from the Science Based Targets initiative (SBTi). SBTi is a global collaboration between the Carbon Disclosure Project (CDP) based in London, United Kingdom; the United Nations Global Compact (UNGC) based in New York City, United States; the World Resources Institute (WRI) based in Washington, D.C., United States; and the World Wide Fund for Nature (WWF) based in Gland, Switzerland. These targets aim to reduce greenhouse gas (GHG) emissions to net-zero by 2050.?
By setting clear targets and embracing sustainable business models, companies have the opportunity to create competitive separation and maximize both impact and profits. This blog explores the significance of setting clear targets and leveraging best practices to leverage sustainability to elevate your customer relationships.?
Adapt to Changing Regulatory Requirements and Customer Demands?
The business landscape is witnessing a rare generational market inflection point, driven by changing regulatory requirements and customer demands on the environment. Stakeholders, including investors, consumers, and employees, expect companies to take a proactive approach in shifting to sustainable business models. By embracing sustainable practices, leaders can expand company shareholder and broader stakeholder value, ensuring long-term success and competitiveness.?
Leverage Best Practices to Move Beyond Shareholder Primacy?
To succeed in sustainability, companies must leverage the latest best practices from academic research, standards bodies, and government regulations. This transition to "Beyond Shareholder Primacy," as coined by University of Michigan professor and author Stuart L. Hart in his forthcoming book, expands the focus beyond short-term profits to encompass broader stakeholder interests and drive value. Prioritizing stakeholder value, companies can pursue "Sustainable Capitalism" and adopt regenerative business models, creating a positive impact on society and the environment while forging greener bottom lines.?
Understand the Five Categories of Sustainable Targets?
When setting sustainability targets, companies have five primary categories to consider, each tailored to their unique vision, mission, values, strategy, goals, and capabilities:?
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Align Sustainability Targets with Value Chain?
According to a London, United Kingdom-based sustainability target assessment non-profit collective Net Zero Tracker, a growing number of companies have embraced sustainability targets. More than one-third, 702 of the world's 2,000 largest publicly traded companies now have net-zero targets, up from one-fifth, 417 companies, in December 2020, showcasing a significant shift towards sustainable practices. Many of these large companies are direct or downstream customers of small to midsize businesses (SMBs). However, there is room for improvement, as 65-percent of corporate targets do not yet meet minimum procedural reporting standards. Leaders must align with customer sustainability targets while prioritizing company reporting transparency to ensure the effectiveness of their sustainability efforts.?
Improve GHG Inventory Coverage to Improve Score??
The CDP Climate Change 2022 Scoring Methodology requires companies report 70-percent of scope 1, 2 and 3 GHG emissions. Although companies can submit only scope 1 and 2 data in response to customer sustainability data requests, a company’s CDP score is negatively impacted by excluding scope 3 and other data. As an example, gathering and reporting scope 3 GHG emissions can improve company CDP sustainability scores from a D to an A for select score criteria. Improving your company’s sustainability targets through SBTi and GHG emissions reporting through CDP can improve your company sustainability customer perception and lead to improved customer stickiness as companies seek more sustainable suppliers to help reduce their scope 3 GHG emissions.??
Ultimately, it is not the data gathering or reporting that will determine which companies are the most sustainable, it will be companies whose team’s actively execute GHG emissions reduction projects in the pursuit of net-zero emissions.?
Create a Practical and Profitable Sustainability Roadmap?
To reduce emissions and waste and cut costs effectively, companies need a practical and profitable sustainability roadmap. This roadmap should encompass a holistic approach, integrating sustainability considerations into every aspect of the company, from upstream customer packaging reduction to downstream post sale end of life waste reduction.?
Setting clear sustainability targets and embracing science-based goals are paramount for companies seeking meaningful results in sustainable business performance. Leveling realistic expectations by aligning with achievable sustainability targets is critical for establishing support and maintaining momentum. It is better to set practical targets, deliver results, and raise your targets than to make near-term commitments unsupported by identified project plans. Improve the likelihood of achieving company environmental impact ambitions by charting a practical path forward through setting clear targets.?