UNs Sustainable Development Goals: 4 lessons for companies to do it right

Let’s be fair, setting up Sustainable Development Goals (SDG) initiatives can be a daunting task attached with significant risks, which any responsible manager has to take into consideration. And until now there are more talks about the SDG concept than examples of successfully executed initiatives (I will provide concrete examples in my next article and please contact me if you have comments or a project you want featured).

Even with a sustainability agenda in place research from McKinsey [1] shows that companies often encounter problems with execution resulting in their initiatives lacking long-term value creation.

THE 4 LESSONS

Here are 4 lessons from companies that accepted the challenge of starting sustainable initiatives and what they got right:

1.     KEEP IT SIMPLE (select a few focus areas)

2.     SET MEASUREABLE GOALS (evaluate and share performance)

3.     CREATE A BUSINESS CASE (yes, profit / loss applies to sustainability initiatives too)

4.     MAKE IT INCLUSIVE (create incentives for employees, customers and suppliers)

1. KEEP IT SIMPLE

In a recent study from McKinsey they found that many companies choose more than 10 areas in which to concentrate their sustainability efforts; some choose more than 30. It is hard to imagine how a sustainability agenda with such a large number of initiatives can get the necessary buy-in and resources to be successful.

In our experience, the best approach for maximizing impact is to select three, or at most five, strategic initiatives. [1]

Recommendation: Focus on areas that are a good fit with the corporate strategy by studying what matters most along the entire value chain through internal analysis and dialogue with suppliers, customers, regulators and nongovernmental organizations. The end product of these efforts should not be a mere laundry list of vague ideas but rather a systematic sustainability agenda.

2. SET MEASURABLE GOALS

For each initiative, a company needs to set clear, quantifiable goals with a long-term focus (five years or more) and communicate those goals both internally and externally.

Notice the difference between a general aspiration to “reduce the impact of our packaging on the environment” and a specific, measurable goal to “eliminate 20 million pounds of packaging”. [1]

Recommendation: Publicising quantifiable goals and transparent impact valuation motivates the organisation, forces leaders to allocate resources, and promotes accountability. An analysis of companies that are part of the Carbon Disclosure Project found that those that announced their goals to the public did better when it came to cutting emissions—and also had better financial returns on such investments.

For a real-life example of an excellent executed IMPACT VALUATION see link to Evonik Industries AG below. [2]

3. CREATE A BUSINESS CASE

Making the business case for sustainability might sound like an obvious thing to do, but apparently it isn’t. Only around a fifth of survey respondents [1] reported that the financial benefits are clearly understood across the organization.

Recommendation: As the profit and loss is divided across the organization, many companies are struggling quantifying the financial impact of the sustainability initiatives it is advisable to appoint an executive as the “owner” of each goal. The “owner” shall continually track the costs and benefits of specific sustainability actions including indirect effects, such as an enhanced corporate reputation and increased customer loyalty, which pay off over the longer term.

4. MAKE IT INCLUSIVE

The top reason that survey [1] respondents gave for their companies’ failure to capture the full value of sustainability was the lack of incentives to do so. Only 1 company in 12 includes sustainability criteria in calculating performance-based compensation for executives, and only 1 in 7 rewards suppliers for good sustainability performance.

Recommendation: Don’t forget to include non-executives in the sustainability journey; ownership on all organisational levels is key for the long-term success of the initiative. Meaning, ensure that key performance indicators are implemented, as well as responsibility and accountability is delegated, and – not least – rewards are shared.

...

EXAMPLE: IMPACT VALUATION

Evonik Industries AG

(Stock-listed German speciality chemicals company headquartered in Essen, North Rhine-Westphalia, Germany with 35,000 employees worldwide.)

At Evonik they deal with the effects of their business activities. For this purpose, they regularly measure and analyse the direct and indirect impacts of their business activities from an economic, ecological and social perspective.

Take a look at Evonik’s IMPACT VALUATION measurements and you will quickly see underlying references to the United Nations Sustainability Development Goals (LINK).

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What do you think? Are you in the process of managing a SDG initiative? Would you like to share your experience with the readers of this article?

I always value comments and questions, and please let us know what you think in below comment field. Thank you.

More information

Thank you for reading this article "UNs Sustainable Development Goals: 4 lessons for companies to do it right”. For more article please visit me on LinkedIn to find topics covering:

• Sustainability: Quick guide to United Nations 17 Sustainable Development Goals
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Special thanks

Special thanks to below sources of inspiration and references:

1.     Source: McKinsey - Getting the most out of your sustainability program

2.     Source: Evonik Industries AG – Impact Valuation