Why should sustainability be embedded across your strategy architecture? - PODCAST

Clarasys’s Sam Maguire, speaks with Hannah Frost, owner of Frost ESG and member of Clarasys sustainability advisory board, about why it’s so important to embed sustainability across your entire strategy architecture.

Sam Maguire: Welcome to our Simply Sustainability podcast presented by Clarasys. In this series, we look at what can sometimes be the intimidating topic of sustainability and break it down into digestible bite-sized chunks to help you on your way to a more sustainable future.

So, 2021 has felt like the year that the world has woken up to the climate crisis and has really decided to act. What we’ve seen in the run-up to COP 26 is the organisations scrambling to review and re-imagine their sustainability ambition, making sure that they align with rapidly increasing public pressure.

In a previous piece, we discussed what a great sustainability strategy looks like. And in this session, we want to expand on one area that was discussed there. All around how do you achieve company-wide buy-in to your sustainability strategy? And one thing we want to look at there is that we believe that the most effective way to achieve engagement in sustainability is to not just have an isolated sustainability strategy but to embed sustainability across your entire strategy architecture. So every strategic document, every approach that you do.

We’ve brought in Hannah Frost, who runs an ESG consultancy called Frost ESG to have a brief chat about what she thinks is important when considering your sustainability strategy and how and why it should be fully incorporated into the entire organization.

Hannah, it’s great to have you here. Welcome.

Hannah Frost: Thank you. And thanks for having me, Sam. It’s great to be here.

What is important when considering sustainability in your organisation and why should it be incorporated across your strategy architecture?

I think from my perspective, probably the hardest thing for organisations to acknowledge is their role that they are there to serve others and do so by improving wellbeing for everyone at all levels, including; products, employees, future generations, absolutely everything. And of course, the most important piece of that is the planet.

Once these companies really own this responsibility and are verbal about owning this and, and are really transparent, they’re going to be in a much better position to be able to agree on the core principles of a net-positive company.

So you’ve got to start somewhere. Often the best place to start is to really unlock the company’s purpose, passion and skills for employees, as well as stakeholders. This has to be holistic in order to succeed, otherwise, they could just be at risk of designing a strategy that may improve some areas of the business in a great way and others that have unintended consequences in other areas.

I’ve been speaking to people a lot about this recently. And there was a story that I thought was quite interesting. A supermarket chain had designed a really great food bank process for their customers and for their local community.

And, quite rightly, were really proud of that piece of work, but hadn’t recognized that actually, their own employees were really struggling as a result of the pandemic, and weren’t being paid the living wage. And so it really felt like they had unintentionally upset their employees by focusing on the community only, and not on employees as well.

They’ve corrected that now, obviously, but it’s, it’s a nice example to sort of help that you really need to think about all aspects of your business when you’re thinking about sustainability in your strategy.

Once you’ve established your purpose and agreed that you can focus on the main task you can next focus on your net positive goals. The purpose is really key to sort of laying the ground rules of what your company stands for.

Designing net positive goals is super important, but the main thing is to be really, really aggressive with your action plans and your approach. And Sam, I was wondering, do you want to talk to that in a bit more detail on the type of work Clarasys does?

How do Clarasys help businesses with sustainability challenges? 

Sam Maguire: Yeah, absolutely. So one of the big pieces that we are helping clients with at the moment is, designing those aggressive action plans that are really tangible. What we do to help design those is to think about people.

Sustainability is such a broad term. It covers so many social, environmental, economic, and different governance elements that there needs to be prioritization.

So we think about what’s important to the people that you want to serve your customers, your employees, your investors, your stakeholders, wider society, and think about, well, what is material to your organization based on their perspectives as well as some of the science. So in terms of the environmental science we want to serve.

How we do that is we look at materiality at both an organization and departmental level. So if you’re clothes, retailer, you may think at an organisational level that you want to focus on carbon. Because you might face carbon taxation in the future, it may impact the commercial elements of your business.

You may want to think about water use and about human rights practices? Because they are prominent issues in the retail industry. And that’s great. So you can set that at an organizational level. These are the areas that we want to care about, and this is what we are concerned with, but you need to then also narrow down into the particular areas of your business.

So how do you focus on carbon, water, and human rights, related to different departments, but also what is important to those departments themselves? So what might be important to your finance team might be focusing on access to capital and being able to attract particular investors for your sustainability work.

For your people team, it may be around actually building sustainability into your employee value propositions so people could want to come and work for your organization because it is focused on purpose and being net positive.

And we think that’s really critical. It’s not just about setting that top-level view, but it’s also as you mentioned Hannah, it’s about being holistic and thinking through what might be important to those different departments, and doing that materiality piece at both that organizational level and the department level.

Hannah, have you seen that work at all, do you think that that’s important to do things at both levels?

Why looking at strategy architecture across entire organisation is important when considering sustainability

Hannah Frost: Yeah, absolutely – more than just both levels, I think it’s all aspects of the organization. And that can sound a bit overwhelming, but actually, if you get your purpose and your values and your net goals in place, it can become a relatively practical and action-orientated approach that the whole organization can buy into and follow.

I think one of the things that I see more and more successful organizations doing. It’s when they form strong partnerships and synergies with other companies who are going through this as well.

Let’s face it, everybody is finding sustainability strategies, net positive approaches, a challenge. And I think we would be silly to deny that this stuff isn’t easy. But if you’re partnering with whether it’s people in your same sector in the same industries, you’re all working together and collaborating to really approach the issue together. You may well as an organization, feel that you don’t need to do that. And quite frankly, it can feel a bit odd because if you live, in an industry and environment that is competitive, for example, it may feel like you’re sort of stepping out of your usual sort of behaviour of being competitive against each other. But actually, you may only come up with a maximum of half of the solution because the challenge is so great.

And so by collaborating with others, you can move the needle and the action plan much further and learn from each other as you go.

So partnering with organizations is great and competitors, et cetera, but also working with experts and NGOs can become really key in this sustainability field.

You know, a lot of these companies have done it before the NGOs have got plenty of experience in this space. And I think the real advantage is that they can actually become your moral guides in this space. So in sort of layman’s terms, you may not always get on per se, but actually, they are keeping you honest in your approaches because they, they will be looking at, from the outside in and so becoming really key to contributing to trust and transparency which will really send messages to your employees and your stakeholders that you’re taking this really seriously. And as Sam, you said, it’s not just sounding like a message from the top but actually, you’re sending the message that you are being really true to taking advice and working with others.

Sam Maguire: Absolutely. I think that’s spot on. And I think in terms of that mess from the top piece, Yes, there needs to be a direction of ‘these are the big areas that you’re working on’, but then it needs to be that empowerment and that enablement for different departments to go and get the partners that they require.

They know the work that they need to do. They need to be able to set up relevant partnerships for them, set relevant targets to them that they’re working on with those partners and collaborate as best as possible. For years different departments may have worked with particular partners or suppliers.

And it’s about moving that and shifting that into much more of that collaborative space, as you say, it’s not a, we buy you sell. It’s more of a, how do we work on this goal that we might have shared? And that, that fits in with the broader thinking around systems.

So we want to move to a way of operations that is more about how do we come together as systems to do things rather than do our own independent thing in this isolated bubble.

What I wanted to talk a little bit about Hannah, is a lot of this stuff is really complex in terms of setting strategy, and it can be quite hard. I wanted to focus a little bit on how we do that hard stuff. And, and how do we actually set targets and measure performance?

Is there anything that you’ve seen work really well in that space? And then I can hopefully share some of what we did at Clarasys.

How do we go about setting strategy, targets and measuring performance? 

Hannah Frost: Yeah. I mean, I’ve said it before, I think honesty to all your stakeholders, including employees sounds simple, but it’s actually probably the key bit.

So messages around the road are hard, you know “we’re not perfect”. That goes a long way. I think. Honesty and transparency then is how you really tackle the difficult.

In this space. I think, you know, the agenda changes hourly right now, and it’s just so hard to sort of set a plan for five years time and think that that’s what you’re going to stick to because it’s just not like that in real life. I mean, you only have to be following what’s happening in cop and every five seconds, there’s something new.

So dealing with the hard stuff is getting all your employees for sure to be used to being flexible and sort of conscious of the shifts in approach as we progress. I think also you then can embed some really concise process and approach that everybody is aware of and can follow.

I’ve talked often about the commitment value approach, which is about saying everything that you look at, you think about sustainability commitment in the processes that you do, and if you have really good systems in place for that, that can become second nature for departments and people that were working in that field.

Sam, I know that you guys do a lot around system. Have you got any ideas on how you can look at systems and maybe performance as well and how you measure that?

Sam Maguire: It’s huge for us and the key thing you mentioned there was about flexibility. The world is changing at such a rapid pace now. Having five, 10-year horizons are important, but you also have to have the governance in place to actually make decisions within those.

And what that means for us is helping organizations identify the right places for governance that enables decision-making in corporate sustainability at different levels.

And that means, one – setting the performance targets that you’re working towards at those different levels, both the sustainability things that you’re working on, but also the other elements of performance that you want to do.

So it’s not a separate thing. It’s something that you look alongside maybe your performance targets growing, efficiency around sales, output. The other relevant targets that you’re working on. And that you’re considering sustainability alongside those, because that means that you are able to actually weigh up your performance in other areas with your progress around sustainability.

And that’s something that we work on quite a lot with clients, and it is different. It’s completely changing people’s mindsets where before they may have just focused on cost revenue, bottom line. Whereas now they’re having to think about carbon impact. They’re having to think about waste impact, or how that might impact employee well-being. But it means for actually better decisions that are both sustainable for the environment, but also for their employees for the business as well in the long term.

Why embedding a sustainability net positive culture is key, what it is and how you achieve it

Hannah Frost: Yeah, absolutely. I think everything has a process and step by step approach. And I think once you’ve established that and people just get used to working in that type of environment, it really needs to become part of the culture. And I think culture is absolutely key in this space, you know, embedding sustainability, net, positive culture.

As Paul Pullman said, who’s ex CEO of Unilever who is a sustainability expert in this area. He was talking about the fact that a net positive culture is really the culmination of a series of steps for the organization it’s your endpoint, your Nirvana for want of a better word, and to get there, you really need to engage people in identifying not only who they are, so, you know, get going sort of back to really important issues like diversity inclusion and parity, but also what they can be. And that ties back to if you’ve established a really good purpose and, and sort of almost empathy. Building within your organization. They are probably the most important pieces that really drive people to sort of be part of the net positive culture you to consider.

You also need the practical side, which is, you know, you’ve got to consider things like, who do you need to skill up? How do you, do you know what your skill gaps are within that within your organization? Are there educational needs that you need to focus on? Does your team make-up actually work when it’s working in such a flexible environment and in a, and do you need to sort of adjust the way teams work together?

Who, who they working with and does that need to change? And generally just thinking about what are the behaviours and mindset shifts that you really require to ensure that there’s culture really embedded throughout the organization. And obviously most importantly, finally is reward. I think often organizations are so focused on the job in hand that they forget to celebrate successes and really reward employees and clients to be fair, that this behaviour is essential to achieving Net Zero is going to be absolutely key and finding ways to do that is going to really mean that you succeed in this space.

Sam Maguire: That makes a lot of sense. That’s something that we’ve worked on quite a lot at Clarasys. Is thinking through all the different elements from the cultural to the more operational org design pieces in terms of how we work internally, and how we are starting to help clients. I guess what my biggest reflection is from what we’ve talked about is that one, there’s a strategic piece in terms of where we want to go and where we want to get there. But then it’s the real operating model piece that supports that.

So how do we design organizations to make sure they’ve got the performance aspects embedded? They’ve got the cultural pieces and the right people, the right skills in place and the right data and technology that might support it as well. Hannah, I don’t know if you think this is fair, but I think that is the big ask that we have of organizations and where we want to help them is thinking through how they develop these holistic strategies that work at every level.

But also, making sure they’ve got the right tools to redesign their way of operating. Is that fair?

Hannah Frost: Yeah, absolutely. And I like the ask aspect because you need to be dedicated to this and take the time to get all that right. You know, we’ve all seen sustainability plans that make big promises with no process behind them.

And I think if you can sort of really establish this upfront and get a system in place, there’ll be an absolute opportunity for success in this space let’s face it. I mean, personally, I’m probably biased, but I think that the opportunity to work as a sustainable organization is only going to be better and the rewards are going to be greater over the next 10 years, 20 years, 30 years. So getting in early and investing time into getting it right from the outset is going to be really key.

Sam Maguire: Completely agree. And that’s both from an operational perspective in terms of reducing the risk that you, you may face from legislation coming in, but also the opportunity to attract customers to retain employees and ensure that they feel that they’re working somewhere purposeful that there’s such a multifacet way, that this is the right thing to do, but it is complex. And we have to recognize that that is hard. There’s such a big challenge ahead of people. And one of the things that we’re really focused on at Clarasys is taking that scale of the challenge and breaking it down.

Making it really, really easy and ensuring that organizations don’t get lost in the bamboozlement that is the world of sustainability and can make it part of their day to day and in quite a straightforward way. So, Hannah, we’ve spoken quite a lot about how we would approach enabling organizations to embed sustainability in everything that they do.

Hannah Frost: Yeah.

Sam Maguire: Have you seen any organizations or worked with any organizations that you think are doing this really well?

Which organisations are embedding sustainability across their entire strategy architecture?

Hannah Frost: One of the ones that always stands out and probably some of you have heard about Unilever and their sustainability agenda. And you may know they do have a really good reputation in this space, but you may not be aware that actually, this started back in 2017, where Unilever actually invited all of their employees to have a say on the future of the company’s sustainability strategy for the first time.

So that’s 40,000 members of staff who took part in a survey. And that really sent a message of representing that working together was really going to be how they became a successful company. As a result of that, they really focused on this idea of benefits beyond profit. So as we mentioned previously, you know, it is sort of thinking about things with a different viewpoint.

And really after the survey was collated, they were shared with every employee via email and handed to the company’s key stakeholders at a meeting. Since then, the firms become one of the most sought after consumer goods firms on LinkedIn and people are really motivated to work for a company that’s on a journey to become more sustainable.

So even focusing on benefits versus profits, actually the opportunity for working for an organization for this, but also doing business with an organization like this that is so focused on this has resulted in their profits improving as well. So it really is a win-win for all involved.

Sam Maguire: Yeah. We’ve observed one of the platforms that we work with quite a lot, Salesforce, have had similar success through starting to embed sustainability in, what they do, be it through the provision of their sustainability cloud platform. But more importantly, in terms of. One, the targets they’ve set as an organization, but also the space that they’ve given for people to have conversations about sustainability and they have quite effective network groups.

So be it through particular areas of diversity inclusion, but also for the planetary aspect of sustainability for the air force community. I know it’s a grip where they enable employees to speak about what they want to see happen as a company and help be involved in setting strategy.

And that is really quite an effective way to make people feel like they are part of the process. And I think that’s such an important part of this is giving people a voice, but then doing something with it.

Hannah Frost: Yeah, absolutely. And yeah, the theme that seems to be coming out is to involve all, give them their voice and you’ll be so much more successful in this space cause everybody has bought into it.

Sam Maguire: Exactly. The one thing that I would always caveat with. It’s great to give people a voice but you do have to do something with it. So be that the change initiatives, the projects you want to do, but I think personally, the most effective way of doing this sort of work is making sure that it’s written into everyone’s responsibilities that they have relevant sustainability considerations, for their work.

So I worked for a social housing client for quite a while. And we talk about sustainability there. So we were talking about how actually, it would be really important for the people who were on the development side, that they have particular considerations around circularity around energy efficiency that they are thinking through as they build the homes. But it’s not just them. It was also in terms of the repairs people, or the people providing appliances that they were thinking about certain things as they went through it from a, again, energy efficiency, circularity perspective, where they were getting things from what their suppliers were doing around living wage, et cetera.

And it was about going around with the whole organization be it finance, be it their community teams, being it, their people teams and the HR function, that they were all picking out what was important to them as an organization around sustainability and making it part of their responsibilities. And that’s really critical.

It’s so important to give people a voice, but actually then give them the capacity, the education, and the remit to go and do something about it.

Hannah Frost: Yeah, absolutely. Yeah. That makes a lot of sense.

Sam Maguire: Cool. Well, Hannah, thank you. That was quite a wide-reaching conversation, but hopefully, people can take from this a little bit about your view around why sustainability should be embedded across their whole organization.

And I just want to say thank you for your time today. Really appreciate speaking with you.

Hannah Frost: My pleasure. Good to chat. Thanks.

Sam Maguire: Thank you for listening to our simply sustainability podcast. We hope you enjoyed it. For more information, please contact us at sustainability@clarasys.com.