As the world transitions towards net-zero carbon emissions, businesses are under regulatory pressure and demands from investors, customers, and employees, to become more sustainable. There are clear benefits for companies that steal a march on their competitors by embracing a sustainable operating model.
By helping to address the world’s challenges, companies can benefit from higher risk mitigation and resilience, as well as yielding high financial rewards.
An operating model incorporates every aspect of how an organisation operates, the people, culture, processes, governance, information, technology, infrastructure and facilities and other aspects that enable its running.
Creating a sustainable operating model means integrating a focus on people, the planet and prosperity across each of these areas.
But how does a company go about building a more sustainable operating model?
Here, our sustainability team, led by Sam Maguire, outlines 10 key points that companies should consider when embarking on such an exercise.
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Are there clear elements of sustainability that your operating model should prioritise?
There are so many different elements of sustainability in the environmental space including carbon emissions, pollution, waste, and impact on biodiversity, that it is not feasible to prioritise each one simultaneously. In addition to environmental issues, companies need to consider equitable pay, diversity and inclusion, and health and wellbeing among other social issues with regulatory compliance. And regulatory compliance is another important piece of the jigsaw. Clearly, there’s too much to consider at once. So, we need to be clear about which elements we are going to focus on from an operating model perspective.
Best practice, when considering sustainability, is to have tiered priorities. We don’t have to choose to address one at a time, we may decide on a suite of priorities. But as we successfully address the first tier, we should know which areas we are going to work on next.
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What is the level of risk under your current operating model?
Look closely at the different areas of risk relating to your current operating model and sustainability. This could include the regulatory risk you are exposed to unless you change, such as non-compliance around carbon emissions, waste, or diversity and inclusion. It could be your level of exposure to environmental or social disruption due to the way you operate. Moreover, if you fail to change the way you operate will investors continue to invest or partners work with you? Do you risk alienating your customers? Are there PR or supply chain risks?
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Who has responsibility for sustainability within your organisation?
When a central team looks after sustainability, the impact is never as great as when responsibility is distributed and incorporated into the roles of different people around the business. Therefore, we really need to think about who makes decisions in specific areas. For example, if a large national supermarket tries to reduce its carbon emissions, the head of the delivery team would be an ideal candidate to adopt sustainability responsibilities. This person has first-hand knowledge and is invested in ensuring a new strategy works.
The supermarket might also give responsibility for sustainability to the head of procurement, as this person will make sure every organisation in the supply chain shares similar values and is taking responsibility for its own emissions.
The point here is that you need to understand the responsibilities that need to be adopted in all the different areas of the organisation.
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Are people and the planet part of your decision making processes?
Tools and frameworks need to be in place to make sure every decision that is made within an organisation, from procurement to recruitment, considers the impact on people and the planet. This means intentional checkpoints need to be added to every existing process.
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Where are there opportunities to redesign more sustainable processes?
We should look at where processes can be improved to achieve the sustainability outcomes designed. For instance, is the billing process completely paperless, or have your redesigned your manufacturing to be fully circular?
How can we ensure our workforce is diverse? In terms of recruitment, we could introduce blind processes where names are redacted. Or offer additional support during the recruitment journey to help people with neurodiversity. A person who may not perform well in an interview may be a brilliant problem-solver and an asset to the team, but in a traditional recruitment drive, they might be overlooked because they may not perform well during a less sustainable recruitment process.
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How will you track the impact your operating model has on people and the planet?
We need to be clear about what we want to measure, how are we going to gather data, and how will we put this information in front of the right people at the right time.Failing to track progress means we won’t know whether our new processes are working for our organisation and everyone involved. Progress galvanizes people and significant gains give us something to talk about to investors, customers, and employees.
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How will your systems and data architecture enable you to plan and deliver a more sustainable operating model?
We need to consider what technology we need to plan and deliver change. Do we need a system or a set of systems that help to measure different elements of sustainability? Do we need a platform that provides visualisations? Perhaps we need technology to deliver on our promise to reduce emissions. For example, the national supermarket might decide to procure a new fleet of electric delivery vehicles.
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How will you work with partners and the broader system to enable a sustainable operating model?
Improving sustainability isn’t just about how we operate internally. It’s about what is going on around us and how we collaborate with partners. For instance, the head of procurement at the national supermarket, whilst looking at emissions, might want to create an infrastructure of local providers by building close partnerships with local farmers.
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Do you need to upskill your people to deliver the new operating model?
We need to understand the skills our people currently have and the skills they need to deliver the new operating model. Once we understand the starting place and where we want to get to, we can upskill our people. This might involve a combination of training, learning and development, and coaching.
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What are the behaviours and mindsets you want people to embody?
For change to happen, the entire organisation, from the CEO to the intern, has to get behind it. This means teams need to be briefed and completely clear about the direction the organisation is moving in and their role in the change. It also means looking at the company’s values and purpose statements. The company will only move in the right direction if everyone is working towards the same goal.
There’s a lot to think about here, and we aren’t suggesting wholesale change over a short period. Organisations should go through a structured design process by taking a high-level look at current sustainability levels and where it wants to be in the future. Move forward by breaking actions down into small chunks to deliver change in an agile way. By bringing people together from across the organisation, and introducing change in a collaborative way, the rewards will be greater.
