MUMBAI, INDIA. Business landscape remains abuzz with sustainability concerns in the post-pandemic world. The new realism centred on ESG is widely influencing the collective consciousness of businesses, governments, policy makers and academicians to come together and address critical sustainability issues and it’s far reaching risks and impacts. Towards cohesive risk mitigation measures and transition path forward, multilevel global initiatives focus on triumvirate of public commitments, sustainable policies and responsible business practices along with a transparent disclosure framework.
Amid an uncertain ecosystem with new challenges unfolding, business firms are increasingly realising the need for a drastic shift in their functioning – guided by sustainability infused business strategies to drive their business success. At the same time, planning inertia and economic costs acting as drags, formulation and adoption of sustainable business strategies is easier said than done. In absence of clearly defined terms of sustainability, tangible scope constructed in context of specific industry or business segments and related KPIs, framing of a voluntary action plan for these goals is subject to wide imagination of individual firms. The bigger question in a vacillating backdrop of hype and inaction emerges as how a business firm can drive their voluntary commitments into responsible corporate policies and integrate sustainable practices in business functioning. Shifting away from regulatory compliance mindset and checklist driven practice templates, urgency of sustainability goals demand extraordinary ways to assimilate behavioural change and markedly different corporate practices.
Aligned to the larger vision of a business firm, sustainable business strategies and integrated accountability framework is anchored on the deep moorings of self-awareness, assimilative organisational culture, resources prioritisation attuned to realigned strategies and responsive KPIs. It provides a reliable foundation for driving sustainability-focused aspirations along with a pivotal blueprint connecting underlying business components, accountability framework and performance paradigm.
- A piece of the puzzle – Inventory taking as the first step towards solving the sustainability riddle: Engaging with all stakeholders across the extended landscape – including clients, vendors, service providers and business partners, a holistic stocktaking to gain insight about enterprise’s current sustainability footprint and fissures are the vital first step towards transition to a balance continuum. Beyond corporate level presumptive formulations, a ground-level identification of critical parameters of sustainability microcosm for different parts of business, evaluation of contributory risk factors and impacts reckoning its larger interplay within enterprise sub-systems can help in framing of a resilient transition path.
- The whole is greater than the sum of parts – Formulation of sustainability-focused business strategies: With new realisation that sustainability goals and profitability are not binary and conflicting choices rather vitally interdependent, formulation of sustainable business strategies with realigned focus and priorities becomes a foundational requisite. Widely discussed concept of triple bottom-lines is becoming more relevant for business firms in present times. Envisioning an integrated and federated sustainably agenda across business groups and sub-divisions, it will require business strategies realignment to commit towards measurable social, environmental and ecological impacts, besides financial returns.
- Can a leopard change its spots – Behavioural change and adaptive organizational culture: New realm of sustainability focused enterprise would require a conscious recalibration in corporate beliefs, values and organisational practices. To assimilate and strengthen sustainability values as a part of internal culture and inculcate enhanced sensitivity towards corporate obligations, a better awareness involving all parts of the business becomes a critical need. As practiced in any other organisational initiative, continued engagement and reinforcement of behavioural change by corporate leaders, nurturing of cross-functional drives towards experimentation and innovation can effectively enhance the sustainability quotients.
- As sound as a dollar – Sustainability weighted capital budgeting decisions: As a part of ESG integration in corporate strategies and practices, focused adoption of sustainability weighted capital budgeting decisions becomes a foundational requisite. Thus, traditional metrics of financial return based thresholds (e.g. IRR, NPV, payback period) would require additional considerations to explicitly factor true costs of risk and impacts relating to societal, environmental, and ecological nuances during business case evaluation for capital investment in a project. Sustainability aligned capital budgeting would ensure an efficient allocation of capital and resources prioritisation keeping a clear view of holistic outcomes/impacts – not just financial and economic feasibility alone.
- Make your own path – Experimentation and self-learning driven sustainability models: In absence of little and non-consistent historical data about the evidence and KPI outcomes of sustainability driven initiatives, an experiment, test and learn approach to develop contextualised models, scenario templates, impact analysis tools and action plan would be more helpful. Any endeavour towards indiscriminately adopting generalised tools and templates can unduly add complexities in firm specific contextualisation, rather than intended effort savings. Likewise, practicing over-simplistic peer comparison or cross-industry benchmarking may lead to inaccurate interpretations– particularly overfitting or under-fitting errors and consequent imprecise corrective analysis.
- Take a measured risk – Unconventional risk management paradigm: Unlike traditional risk management approach, sustainability infused risk management techniques require recalibrated modelling and scenario analysis tools, integrating subtle nuances of non-conventional risk dimensions. Besides being aggregative to risk impacts across different parts of the enterprise landscape, it should support dynamic evaluation of many less-analysed scenarios (unforeseen events with unknown impact history in terms of economic magnitude and time horizon). Further, the new risk paradigm should anchor a predictive stance in monitoring and control with more nuanced options of mitigation responses (e.g. adaptive, sharing) than preventive or avoidance alone.
- Stick to the facts – Transparent and factual performance disclosures: Multi-directional expectations from diverse stakeholders would continue to bring extra pressure to business firms to demonstrate visible and consistent performance on Sustainability focused outcomes. It is extremely important to remain anchored to the core ethos of the sustainability principles – being factual and truthful in disclosures – howsoever unfavourable the performance outcome may appear. Integrity and trust lost can have far wider and long-term business repercussions than truthful acceptance of missing the sustainability goals and KPI outcomes at any point, which were considered attainable at the time of blueprinting but altered in changed dynamics.
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