Sustainability strategy – from vision to action

A sustainability strategy – provided that the companies work with independent strategies within the sustainable transition – means far more than before and may lead to sweaty palms in the boardroom: Much is at stake. The complexity increases. Expectations are rising.

At Ramboll, we have helped many clients complete their sustainability strategies. This naturally brings plenty of experience, which I will share a little of in this article. When we help companies, it always emphasises how we get from vision to action. Neither customers, competitors nor the climate really care what you have on a slideshow or website. Only action counts. Therefore, I provide you with four easy-to-digest focus areas, which we believe you should handle carefully and diligently.

The involving approach – what do the stakeholders say?

Drawing up a sustainability strategy is an excellent opportunity to involve the company’s stakeholders.

The company’s customers, employees, owners, business partners and local communities make demands on sustainability - so involve them. It is also clear from our discussions with the executive boards of the companies that the stakeholders’ pressure or wishes regarding sustainability topics take up more space than before.

It will always be a company’s executive board and board of directors that decide a company’s strategy. Still, powerful and essential stakeholders around the company must be openly involved in drawing up a sustainability strategy by uncovering their expectations.

The involvement can take place in a number of different ways: Employees and the board of directors can be involved directly through meetings, workshops or seminars, where there is an opportunity to build a shared knowledge of sustainability in relation to the company and identify which sustainability themes a company must focus on and what level of ambition must be within the individual themes. Other stakeholders, such as owners or customers, can be involved through interviews with a representative committee of them. A part of the involvement can also occur by using already completed surveys within specific customer segments or citizen groups.

In our dialogues with CEOs of the companies we work with, they are typically interested in what their colleagues or competitors are doing. It is essential to clarify the industry’s most forward-looking ambitions for sustainability. And what they do specifically. This means that it becomes clear whether the company’s level of ambition, e.g., will be seen as the industry leader or perceived as the slowest company, seeking to maintain the existing approach as long as customers and legislation allow.

Yes, CO2 is important – but sustainability is much more

For valid reasons, there is a lot of focus on reducing CO2 emissions, especially from scope 1 (direct emissions that the company itself can control, e.g., fuel consumption from vehicles) and from scope 2 (indirect emissions from the energy the company buys, i.e., electricity and heat and where the emmission takes place elsewhere).

But the focus must also be on CO2 emissions within scope 3 (all other indirect emissions from the company’s value chain, emissions related to suppliers and emissions from the use and disposal of the company’s products) and on other sustainability themes within ESG (Environmental, Social and Governance), e.g., water and wastewater, biodiversity as well as waste and circularity. We experience in our dialogues with the companies’ person responsible for sustainability that they are pushing for a broad focus on sustainability containing elements from both Environmental, Social and Governance, even though other managers in the company may be more eager to work with a narrower focus, which lowers complexity and may provide immediate deductions in certain areas.

In relation to biodiversity, there are, e.g., in Denmark and at the EU level, many examples of legislation directed against the species’ habitats - for example, the general Danish protection of nature types such as meadows, heaths and pastures. However, there is no internationally recognised and adopted method for interpreting and evaluating the fulfilment of the international goal (e.g., the UN and the EU) to limit biodiversity loss. Therefore, companies’ contributions to biodiversity will often be different. It is often obvious for companies to start with the nearby surroundings and the utilisation of their outdoor areas. The work with biodiversity can also result in more responsible supplier management, where suppliers are evaluated on how raw materials are procured, where they come from and their footprint on biodiversity. This is how each of the other sub-areas must be dissected, even if, at first glance, they may seem of marginal importance.

Attention to legislation, standards and reporting requirements

When completing a sustainability strategy, it is necessary to pay attention to legislation and national sustainability goals and the standards and reporting requirements being a part of EU legislation (CSRD and the EU Taxonomy).

In the EU Taxonomy regulation, companies must report on which economic activities the company has that are covered by the EU Taxonomy, as well as to what extent these economic activities meet the EU Taxonomy’s criteria for being environmentally sustainable and contribute to the EU’s climate and environmental goals which are: Climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, prevention and combating pollution as well as protection and restoration of biodiversity and ecosystems.

CSRD (Corporate Sustainability Reporting Directive) is an EU directive regulating sustainability reporting for a range of companies of a certain size. CSRD replaces the current EU directive NFRD (Non-Financial Reporting Directive) and will change and tighten the requirements for companies’ sustainability reporting. The reporting will focus on the three areas of ESG: Environmental factors, e.g., adaptation and mitigation of climate change, resource consumption, pollution, circular economy and biodiversity; Social factors, e.g., equal opportunities and rights, good working conditions and human rights and Governance, e.g., business ethics, corporate culture, management and supervisory bodies and risk management systems.

It can be a good test of the strategy to see if it is possible to report on the ambitions and ‘must wins’ you currently have in scope - and whether they are in line with the legislation and whether the necessary data exists or can be obtained. Inviting the company’s relevant specialists into the strategy process can even be a productive idea, even if they are not born members of the inner circle. We find they bring value with a particular look at dependencies and consequences of what the executive board is aiming for or what the authorities already have or are expected to legislate on.

Make it concrete and action-oriented

As mentioned, the strategy must be action-oriented. It’s a big deal for us. We have reached a point where it is not enough to mention some of the SDGs you, as a company, want to work with. There must be specific and measurable ambitions and a plan for how the company will get from the current situation to the desired ambition. The plan can then consist of many activities, projects or changes that must be implemented.

Making your strategy action-oriented will also make it easier in terms of follow-up and communication with stakeholders. It will become more accessible and closer to everyday life in the organisation when the strategy is clear and easy to understand rather than abstract and extraneous.

Our experience is that the companies’ executive boards appreciate that the strategy can be directly used to start the implementation. Starting yet another process to implement a light strategy can be exhausting and mentally demanding. So better make the strategy more concrete from the start.

From our view, entering into partnerships is also essential in preparing and implementing the sustainability strategy – this can be with companies, consultants or organisations. Partnerships can strengthen knowledge of opportunities and solutions within the company. Still, it can also involve suppliers and customers who are part of the company’s value chain but over which the company has no direct control. The partnerships can be used both to obtain inspiration and make demands to each other in the area of sustainability. In this way, the commitment to the partners can help speed up and encourage the rollout of the strategy.

As a CEO once said: "Our strategy must be so clear that all our customers, employees and business partners can easily see how our daily tasks are connected to our overall vision." We could not have said it any better ourselves.