In November, the UK will host the 26th UN Climate Change Conference of the Parties (COP26). As we approach COP26, there is growing attention on sustainability and securing global net zero carbon emissions.
Like many organisations, we consider and value sustainability across our business. In January 2021 we announced that we were amongst the earliest signatories to the Terra Carta sustainability initiative. Considering environmental sustainability, as well as economic and social sustainability, will take centre stage in the move towards securing global net-zero by 2050. ‘Sustainability’ can no longer be treated as a buzzword.
In 2019, the UK became the first major economy to pass net zero emissions into law. Changing policy and legislation will likely set out more legal requirements for businesses and organisations to meet these targets. There is also a consumer demand converging with a workforce increasingly looking at their employer’s environmental sustainability credentials. The need for organisations to be conscious of their own sustainability is critical. It is no longer an add-on to corporate social responsibility (CSR). It is becoming a core part of business strategy, structure, and activities.
Organisations are starting to default to sustainability on their strategies and activities, strongly considering their environmental contribution. Maintaining oversight and assurance on actions will be critical to manage risk and reputation, embed successful culture changes, and ensure good governance over the next decade.
Transitioning to default sustainable
The transition to default sustainability will require effective horizon scanning. Policy and legislation are changing quickly, and the UK is one of the most comprehensive legislators among the international forum of the G20. The Competition and Markets Authority recently announced it will act against “greenwashing”, raising the risk of reputational damage. This will require robust and appropriate information, as the delivery of sustainability plans comes under increasing scrutiny.
The CMA intends to publish guidance for businesses this summer to help support the transition to a low carbon economy, without misleading consumers. Understanding and being adaptable to change will support organisations to manage risk and reputation in an evolving environment.
Unilever provide a case study of an organisation who pivoted their strategic focus to sustainability across their operations. In 2010 they started their sustainable living plan and sustainability became a default in their strategy. In December 2020, they announced they would be one of the first major global companies to voluntarily commit to put its climate transition action plan before shareholders for an advisory vote.
This level of transparency means the board need both advice and assurance on their operations and strategy to manage risk. Unilever has established well-defined management structures, with expert input and external insights to govern sustainability and create a sustainable long-term operating model. Clear roles and systems of accountability support good governance and management, making up the mechanics of sustainability governance.
Public sector organisations are also being given requirements by the government to become net-zero and consider sustainability. As part of the move to integrated care systems (ICSs), each ICS is required to have a green plan approved by that organisation’s board or governing body.
With updated guidance released in June 2021, each ICS is asked to develop a consolidated system-wide Green Plan by 31 March 2022. Establishing the mechanisms for governance of these plans will support achieving sustainability targets following the establishment of ICS systems. New data requirements, specialist input and leadership buy-in will aid the development and delivery of plans system wide.
The mechanics of governance sets up the structures and process. But sustaining and embedding sustainability and its delivery across any organisation will require management of the dynamics of the individuals and teams involved. Leadership capacity and capability, and a transition that involves staff and stakeholders will establish open, transparent, and cohesive cultures. When those involved in the structures and processes are engaged, progress will be accelerated.
Across the private and public sector, sustainability is becoming the default. Understanding the ‘mechanic’ and ‘dynamic’ aspects of governance will ensure sustainability is successfully embedded. Those who are prepared and making changes will likely see competitive advantages sooner.
Look out for developments at COP26 this autumn, where increased action on sustainability to tackle climate change is likely. Is your organisation horizon scanning for the next decade, where understanding and placing sustainability will be critical for a successful transition to 2030?