By: Bart van Halteren, MDF Regional Director for
Southeast Asia
Starting from 2013, MDF Pacific-Indonesia
(MDFPI) has worked closely with Mars Global to address the sustainability of
the company. Mars Global is one of the world’s largest food companies and is
the world’s third largest cocoa buyer and represents the familiar brands of
chocolate such as Snickers and M&M. MDF PI assisted Mars and 10 other large cocoa buying
companies, such as Nestlé, Hershey, Cargill, etc., to design a cocoa
sustainability framework and metrics monitoring system called Cocoa Action and also designed Mars’ M&E system to ensure that the management of the
program is able to take strategic decisions and actions on the sustainable
production of cocoa. Additionally, MDFPI was also commissioned to develop a
better M&E system for Mars to better understand the effects of its
corporate sustainability initiatives world-wide. Corporate sustainability is a
hot topic that continues to garner focus as development initiatives across the
globe place more emphasis on the issue of sustainability. So what exactly is a
Corporate Sustainability Strategy – why do we need it and how do we monitor it?
The need for a “business case”: Defining
Corporate Sustainability (CS) and CS Governance
"Sustainability
is the capability of an organisation to transparently manage it
responsibilities for environmental stewardship, social well-being and economic
prosperity over the long term while being accountable to its
stakeholders".
ISO 26000
refers to Corporate Sustainability (CS) as a balanced approach of organisations
to address economic, social and environmental issues in a way that aims to
benefit people, communities and society (ISO, 2010). Sustainability does not
simply mean a set of “do-good and feel-good initiatives” but it needs to be
structurally integrated into the organisation's way of working and its value
system. However, it is important to note that the objectives of creating a CS
strategy should not only be related to fulfilling social objectives but it
should also help to differentiate a company from its competitors and create a
Unique Selling Point (USP) that might benefit the company itself. On the other
hand, you have organisational governance for sustainability, which is the
system by which an organisation makes and implements decisions in pursuit of
its sustainability objectives.
Why
are so many larger corporations embracing Corporate Sustainability?
The old fashioned practice of “naming and
shaming” still pushes these larger corporations towards sustainability
strategies. However, how sustainable are these types of “forced” sustainability
strategies? These sustainability strategies only address the corporations’
responsibilities and not the benefits to the company and as such are not very
sustainable at all; hence the change in name from Corporate Social
Responsibility (CSR) to Corporate Sustainability (CS). A recent study by the
Boston Consulting Group and MIT confirmed that 67% of surveyed companies
believe that a CS strategy is necessary to be competitive and an overwhelming
majority of companies who have a CS strategy identified profit as a result.
The ‘Social License to Operate’ is not
only for corporations
CS strategies and their successful
implementation hinge on the ‘social license to operate’. What does a ‘social
license to operate’ mean? As many companies discover, working with large,
well-known international NGOs does not automatically create a social license to
operate (winning the legitimacy, credibility and trust of stakeholders). A
social license exists when the activities of an organisation, company or
project have the ongoing approval of the local community and other identified
stakeholders. Earning and maintaining this social license relies greatly on the
establishment of good relationships with all stakeholders. The license can be
tested through stakeholder engagement strategies such as: joint vision and
mission setting, identifying stakeholders, drafting a materiality index (where
stakeholders identify “material” issues) and making conscious choices of which
strategies will contribute to the triple bottom line of the company (environmental
stewardship, social well-being and economic prosperity).
The need to measure, monitor and report
Assessing
organisational impact(s), often called ‘the organisation’s footprint’ (not only
used for environmental assessments), can be done using various concepts and
tools specifically designed for CS such as: Life
Cycle Inventory (LCI), Social Life
Cycle Assessment (SLCA) and Sustainability
Impact Assessments. Many organisations are now trying to align their sustainability
goals with the Sustainable Development Goals (SDGs) and their measuring tools. In order to obtain support, transparency and accountability are key;
including reporting on the results of the assessments, often using performance
indicators. Many companies are
now using the Global Reporting Initiative’s (GRI4) format for sustainability
reporting. The GRI4 reporting format has been greatly improved and in the
future will assist organisations in “integrated reporting”, which renders
separate sustainability reporting obsolete. Essentially, the aforementioned is
exactly what sustainability is all about: structural integration into the
organisations’ way of working and value system.
Sustainability metrics measuring and monitoring of progress: the use of
Key Performance Indicators (KPIs)
Many organisations working on CS strategies for the first time focus on
defining Key Performance Indicators (KPIs) first. The question is: ‘key’ to
whom and for what? Simply put, monitoring means conducting regular activities
that will answer the question of whether we are on track to achieve our
objectives. This means that companies will need to first identify their
sustainability objectives both internally (within organisation) and externally
(stakeholders). Central to
sustainability is not achieving external (PR-related) targets and ‘KPI's’ only,
but making sure that the day-to-day operations are sustainable and geared
towards supporting the sustainability process. To monitor this, Sustainable
Development Indicators (SDI's) are the most frequently used tools in this
context. The correct
selection, formulation, review and interpretation of lead and lag indicators (lagging indicators measure results and
leading indicators measure efforts made) are crucial for a successful sustainability
performance monitoring system. Only after this whole set of indicators have
been defined, both for operational as well as management review purposes, ‘key’
performance indicators can be selected by the various levels of managers.
Of
course, these are only the first steps in a long but important process of
developing and successfully implementing a corporate sustainability strategy.
Author
Bart Van Halteren is the MDF Regional
Director for Southeast Asia. Mr Van Halteren is driven by finding management
solutions for a better world, assisting governments, private sector companies
and CSO's to find sustainable solutions. With over 18 years of experience in
most countries in Asia, Africa and Europe, he is highly experienced in program
planning techniques, project and program management, monitoring and monitoring
systems design, program evaluations and institutional/ organisational
development, strategic planning, change management, as well as facilitating
strategy design and organisation analysis and assessment for governments,
CSO's, UN organisations and private sector companies working for sustainable
growth and development.
Want to know more? Contact our experts at MDF and let us help you
Email us: mdfasia@mdf.nl
Visit us: www.mdf.nl/mdf-asia
No comments:
Post a Comment