Speaker: Divya Demato, CEO and co-founder of GoodOps, hosted by Fergal Byrne, The Sustainability Agenda.
The Sustainable Value Chains podcast series features senior sustainability experts and executives who explore a wide range of environmental, labor and human rights, ethics, and sustainable procurement issues and looks at how companies can develop more sustainable value chains.
In our rapidly changing world definitions and expectations are also subject to major shifts.
Gone are the days when merely announcing a commitment to reducing water usage or ensuring fair wages made a company a leader in sustainability. Today, true sustainability leadership demands more. It's about embedding environmental and social initiatives deeply within the core business, moving beyond CSR to integrate these values across the entire value chain. In this episode of the Sustainable Value Chains Podcast Divya Demato, CEO and co-founder of of GoodOps outlines a clear perspective on clearer perspective on what sustainable leadership means today – and how it has changed since the pandemic.
Sustainability Leadership Today: Going Beyond the Basics
So, how exactly has sustainability leadership changed over the past few years? Divya explains that before the pandemic we saw a deluge of corporate sustainability reports, but the post-pandemic world demands these environmental and social commitments be deeply woven into the business fabric, going beyond mere Corporate Social Responsibility (CSR). As a result, companies that were once at the forefront, those who made early commitments to reduce water use, pledge net zero, or ensure fair wages, now blend into the mainstream. Today's sustainability leaders are reimagining business strategies. This includes innovations in product packaging, responsible raw material sourcing, transitioning to renewable energy, and committing to policies that protect society's most vulnerable. The cornerstone? Building trusted supplier relationships. The shift is not just about ticking boxes for the upcoming 2030 and 2050 milestones; it's about establishing businesses that can thrive amidst rapidly changing global conditions.
Divya further categorizes leadership tiers in sustainability. The first involves those companies that quickly adapt to new sustainable technologies and practices. The second, the “leaders of leaders,” invest in novel solutions, sometimes in collaboration with competitors. The third are pioneers, those who challenge and shift industry paradigms. Examples include Unilever's living wage commitment and Patagonia's unwavering environmental pledge. However, the current urgency around sustainability isn't just driven by foresight; for many industries, it's about immediate survival. With predictions like the potential depletion of seafood by 2048, some sectors face existential threats. The path forward requires not just innovation, but also deep introspection about the legacies companies wish to leave behind.
The Role of C-Suite in Sustainability
For successful sustainability initiatives, a top-down approach is paramount. While sustainability teams lay the groundwork by identifying environmental and societal challenges, real momentum is generated when the C-suite, especially CEOs and CFOs, offer their support. This leadership involvement ensures sustainability permeates throughout every facet of the organization – from product design and innovation to procurement and energy infrastructure. CEOs, in particular, play a critical role. Their foresight into future challenges allows the company to pivot, innovate, and remain relevant in an ever-changing landscape. This isn't solely about addressing current consumer needs or navigating impending regulations; it's about ensuring a viable business future in the face of existential threats such as climate change or resource scarcity.
Challenges in Transitioning to Sustainability and Sustainable Value Chains
Leadership in sustainability isn't without challenges, however. Some initiatives, like promoting living wages, might not always translate to immediate profits. Yet, even if a company isn't leading the charge, inaction isn't an option. Every business, due to its reliance on natural resources, faces potential disruptions. To navigate these disruptions, firms need to be proactive about sustainable sourcing and adopt regenerative practices.
But one of the biggest mistakes companies make is viewing sustainability only as a marketing or communications exercise. This perspective often leads them to grapple with whether their supply chain practices truly warrant the sustainable labels they claim. Strategically, businesses should evaluate their sustainability claims and align them with genuine practices. Financially, these initiatives demand significant investments, especially in areas like R&D. Adopting sustainable practices could involve using biodegradable packaging, transitioning to regenerative agriculture, or ensuring fair wages for workers. Successful sustainability transition requires cross-departmental collaboration, involving heads of procurement, logistics, marketing, and finance, to ensure a coherent and integrated approach.
Tools like materiality assessments can guide businesses in prioritizing their sustainability efforts, pinpointing high-risk areas that might impact both consumers and the larger world. Such evaluations can forecast potential challenges, as demonstrated during the pandemic, and aid in future-proofing business strategies. While prioritizing is vital, it's equally crucial not to overlook any sustainability aspect, as lesser concerns can swiftly become significant risks. On the communication front, if a company has a genuine sustainability story, marketing becomes straightforward. Yet, issues arise when businesses prioritize branding before actual sustainable actions. With the supply chain's increasing visibility, especially during crises like the pandemic, consumers now seek transparency and authenticity in sustainability stories, underscoring the need for marketing and operations to work collaboratively.
Divya stresses, however, that sustainability efforts are about progress, not perfection. The key is transparency about where a company stands in its sustainability journey.
Best Practices for Sustainability Leadership
Leaders in sustainability aren't merely setting long-term goals; they're taking transformative steps toward tangible impacts. The most proactive businesses have their sights on 2030 and 2050 emissions targets, considering their Scope 1, 2, and 3 impacts. Since roughly 80% of a company's emissions often fall within Scope 3, there's an emphasis on reimagining the business model. This involves genuinely investing in their suppliers, helping them modernize with tools like solar panels and other renewables. These leaders recognize that without adequate support for frontline workers, achieving sustainability is a pipedream. Successful strategies prioritize efficient operations and community programs, like migrant education and improving the health conditions of workers, acknowledging that protecting these communities ensures long-term business viability.
It’s also noteworthy the role of procurement has emerged as pivotal. The Chief Procurement Officer (CPO) should ideally sit alongside other C-suite executives, bridging the gap between suppliers and business objectives. This redefined role sees procurement not just as a cost-saving function but as an innovative hub that balances affordability with sustainability. In the past, the procurement department often operated in the shadows, but as businesses realize its central role in driving sustainable solutions, it's gaining the respect and voice it deserves. The new-age procurement team returns to the drawing board with solutions and options, working closely with suppliers to highlight new sustainable methods unknown to upstream departments, positioning them as central figures in the journey towards a more sustainable future.
Lastly, Divya reaffirmed that while sustainability is not just about communication, the narrative becomes more straightforward when businesses have a genuine story to share. If companies work towards sustainability in their supply chains and value chains, their marketing narrative will naturally resonate with consumers.
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