Business & Sustainability – How They Fit Togather

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Bridging the Gap between Sustainability & Business 

There are 5 good reasons why many business owners and managers are driving more strategic sustainability approaches in their businesses:

  • Because their current competitors are thinking about it
  • Because their clients and customers want them to do it
  • Because their next significant marketplace competitor is already doing it
  • Because it makes business sense and is the right move to make
  • Because they realise their cash flow, profit and future growth will suffer if they don’t!

For many Organizations today, sustainability is the business.   Their founders and leaders have deliberately positioned themselves either in the blind spot of thier competitors or have a clear strategy to differentiate themselves from other sector suppliers by appealling directly to consumers who value ethical and socially responsible products (i.e. Unilever’s domestic cleaning products), services (Green Tariff energy suppliers), or who wish to associate with organisations that mitigate issues of environmental or social concern they are alert to (i.e. Patagonia’s recycled sea plastic clothing range). 

Why develop a Sustainability based Business Plan?

In all cases, these businesses possess a strategic sustainability in business model that:

  • Reflect a societal concern within the consciousness of consumers
  • Delivers a competitive edge over existing incumbent rivals within their market sectors
  • Stimulates a ‘relationship’ between the business and customers
  • Drives innovation within existing products and stimulates the development of new longer-term replacements
  • Increase the motivation and ‘feel good’ engagement with their employer amongst staff; and as importantly
  • disrupts the market share of established suppliers .

The Risk of Remaining Unsustainable in Business

If a business wished to continue holding faith in more traditional business models and management approaches, then they have to ask themselves the question ‘Why are so many businesses changing course?’ and ‘Why are so many leading Business Schools exploring sustainable alternatives as the economic way forward. 

What has propoelled the rise of Sustainability in Business so far up the Boardroom agenda, and in many of these Boardrooms why are they valueing the addition of sustainability into risk, governance and strategy debates.  The upshot of this is that there is now a clear demand for business leaders and managers who have an understanding of sustainability issues and risks, comprehend responsible management and who are able to take accountability for sustainability initiatives within the business agenda.

All organisations ultimately derive their economic activity from the exploitation of the natural environment and its resources. You may be an IT or Financial sector player, or a Property Asset Manager, but ultimately what you in and on has at its basis the need for primary environmental resources such as

  • food (including seafood and game), crops, wild foods, and spices
  • raw materials (including lumber, skins, fuel wood, organic matter, fodder, and fertilizer)
  • energy (hydropower, biomass fuels)
  • water purity
  • biogenic minerals
  • medicinal resources 

Climate Change & Economic Exploitation

It should be apparent to most organisational leadership groups by now that climate change and future global resource constraints will place limitations on future economic growth rates within some sectors, whilst the exploitation of sustainable resources, such as renewable energy and hydrogen, holds out the possibility of freeing up others.  The critical issue is to what degree will they and thier choosen sector be impacted upon.

The strategic sustainability challenge that many early adopters are addressing is how to replace or secure continued access to the valuable, rare, difficult to imitate or non-substitutable resources they require!

These are some of the forward-thinking leadership challenges that have elevated sustainability from the operational risk domain of QHSE and organisational green teams green and upwards into the Business Planning and Enterprise Risk Management domain of the C-suite.

Bridging the Leadership gap

Business owners or executives, with the support of their own management teams, are the people best placed to bring about organisational sustainability changes within their organisations.  These individuals and teams are the ones who most clearly understand the existing business, the challenges it faces and to undertake the analysis of issues and scenarios.  They are also the people best placed to lead any change programme for sustainability.  Consultancies, such as Leading Green, have the capacity to advise and support, but from experience as a corporate executive in industry and government, they lack the networks and insights required to overcome internal blocks. 

Key Sustainability Leadership Functions Leading Green Training Courses

Stepping up into a Sustainability Leadership mindset? Identifying your Core Values
An Introduction to Sustainability leadership
Developing an ethical leadership style
Taking the first steps in Corporate Social Responsibility
Providing the strategic direction for the Organisation as a whole Building Your Sustainability Plan, Prioritising and Setting Goals
Building & Delivering Your Company’s Sustainability Vision
Getting Your sustainability Strategy and Policy right Making the Business Case for Sustainability
– Building & Delivering a Sustainability Strategy
Developing Position Statements on Sustainability Issues
Making Sustainability Happen internally Integrating sustainability within Corporate Plans
Assigning Leadership Accountability & Establishing Responsibility onto Your Organisation
Capturing Senior Leadership Commitment & Engagement for Sustainability
Systems Thinking – Organisation and Re-organisation to align with business goals – ISO14001 and the Leadership Challenge – Closing the Loop
Building Your Sustainability Plan, Prioritising and Setting Goals
– Building a Sustainable Business – Improving on existing sustainability performance
Releasing the corporate spirit, building the brand and engaging with employees Leading Sustainability & Change in Organisations
Strategic Communication Skills – Getting your message across
– Promoting Innovation through Sustainability
Relating your organisation to other organisations and society as a whole – Stakeholder Analysis and Management
– Megatrends, Horizon scanning & Benchmarking to Improve Performance
Supporting Your CEO & their Decision-Making Around Sustainability  
Developing Tomorrow’s leaders – teaching and leading by example Sustainability Leadership in Business for new managers
 

Business & Sustainability – The management of intangible risk

Sustainability issues are not significantly different from many of the day to day issues that business leaders face.  They impact just as readily on long-term cashflow, profitability, growth, procurement, management, competitiveness and regulation as much as any more traditional management issue.  What sets sustainability leadership and management practices apart is a greater focus on governance, the long-term strategic needs of the business and a watching brief over many more intangible risks than are usually overseen through financial risk management.   Those e s that can rapidly engulf a business and its management team. 

The management of intangible risks has as its central focus issues of leadership and behavioural risk.  Often derided as ‘soft’ risks, these can have brutal consequences for a business in terms short sightedness as to product life cycle (cradle to grave product type), managerial incompetence in the face of change, s ‘group think’ or ivory tower mind-set and arrogance on the part of management, ethical misjudgement, inability to integrate management, mismanagement of reputation risks, mismanagement of value conflict, poor public relations, ineffective corporate governance, and so on. 

Case Study: H&M Conscious Collection derided in the press for greenwashing and for not giving the consumer precise information about why these clothes were labelled as sustainable. The furore attracted unwanted regulatory interest . The lesson to be learnt – consumers are more environmentally and sustainably conscious than ever and companies should think twice before making greenwash marketing claims.

In leadership terms, we can be clear that if a sustainability issue becomes material to business success or survival, then only the foolish would ignore it as an issue.  What is material will depend on the wider mindset of the leadership team to risk management, the specifics of the industry sector and the degree of dependency in specific supply chains or service providers.  The lesson to be learnt is that sustainability and its management must link to and align directly with how the business operates, its expenditure and material flows, its governance and strategic planning processes, and importantly how the leadership team and organisation views its mission and desired approach to business and its customer base. 

To continue viewing sustainability as an ‘add-on’ or cost to the business, keeping it separate from core business decision making and long-term business planning remains a common mistake amongst many business owners and managers.  Limiting the scope of sustainability management to marketing, branding and the management of direct environmental impacts can eventually be a costly mistake.  

Sustainability and Responsible Management

Sustainability has developed close links with leadership theories promoted by many leading Business Schools regarding responsible management, transformational and ethical leadership practices and Governance within Boardrooms and senior leadership teams.  It is rapidly shaking off the old misconception of a ‘doing good, but not core to the business’ managerial activity.  Environmental Management Systems (such as ISO14001) have over the last three decades provided organisations with a solid administrative base from which middle and lower tier managers can control bio-physical risks, waste management and act as a policy platform for other localised or industry specific issues, but has continued to struggle through lack of leader engagement to become a strategic tool in business.  Hence the revision of the ISO14001 standard in 2015 to place a greater emphasis on the visible (auditable) commitment to and engagement with the system by the organisation’s leadership team.

How Inspirational Leaders Bridge the Gap Between Sustainability and Business

I have worked with several visionary business and sustainability leaders — people who inspire and set the culture within their organisations, permanently changing how they conducted themselves professionally.  They have all had several things in common.

First, they don’t hide out in the management suite – they walk the floors, engaging with employees across all functions talking about their aspirations, vision for the organisation and what they are working to achieve.  They also use these floor walks to gain business & sustainability insights.  Dropping in on teams they repeatedly ask penetrating questions regarding current issues, behaviours, scenarios and encourage open feedback by encouraging staff to tell them about what they are concerned with, the practical issues and realities of life on the shop floor, the perceptions of front line staff on their client future needs and wants, and critically how engaged with the business the staff and the organisation’s repeat purchase customers are! 

Secondly, they work internally across the business’s boundaries and reporting lines, helping themselves (and the teams they lead) build up a wider business mindset of organisational activities and issues.  This helps them maximise information flows and to determine options.  They also encourage their teams to follow a similar open-door approach and to working in collaboration with other teams – a rare attribute in some organisations where internal discord and intra-executive competition stifle productivity. 

A third skill is an inherent understanding of systems thinking, the ability to simplify and integrate different systems, and a curiosity that extends further than just understanding business systems and processes into innovation and problem solving.  Inspirational leaders have the gift to mentally and linguistically breakdown issues in their strategic communication skills and actively encouraging:

  • Cross-silo working and the linking of internal operational activities to deliver mutually beneficial goals;
  • Challenging and examining individual function and corporate objectives to determine inter-relationships and the potential for unintended consequences; and
  • delivering business outcomes (including sustainable cash flow) in a way that supports the characteristics of a sustainable organisation.

Fourthly, they create strong teams that foster a wider sense of corporate engagement, intellectual curiosity, and cross-functional collaboration than colleagues that focus exclusively on their core administrative, professional, technical or business support roles.

Finally, transformational business and sustainability leaders and take accountability and responsibility for their duties.  They actively lead their managerial portfolios and direct them back into the organisation’s primary purpose or business objective. 

The Future

There is now a proven body of research that identifies clearly that Businesses with strong environmental and social sustainability leadership approaches commanding greater customer brand loyalty and higher stock valuations.  This is of credit to the individual executives and managers who have brought about these changes in organisational culture over the last decade.   

One of the most interesting recent trends has been the movement in many Boardrooms to actively engage sustainability risk management approaches as a means of testing the strength in Corporate Business Plans and strategic programmes.  Increasingly many are integrating Sustainability and Responsible Management practices with their existing Governance, Enterprise Risk Management and Economic Sustainability activities – as all share a common focus on business longevity.  The objective being to provide a clearer boardroom picture on the tangible and intangible factors influencing cash flow, profit, strategic growth, risk and to map emergent trends in organisational culture, consumer and stakeholder relationships.   

This willingness to embrace sustainability as a Boardroom parameter, reflects a greater understanding that an organisation’s profitability is now a key driver in its valuation.  Previously the greater percentage of a company’s ‘value’ was linked directly to its tangible assets (property, assets, etc).  Today in some of the larger corporations less than 20% of share price value can be directly attributable to financial performance and physical assets, the remaining 80% reflecting intangible assets such as brand, customer base, future market risk, intellectual capital and whether a business has a ‘future fit’ business model aligned to responsible management & sustainable business practices. 

This has encouraged many business leaders to adopt a more active and hands on role in the management of organisational sustainability practices, rather than just advocating responsibility down to their QHSE teams, increasingly business sustainability leaders and their Boardrooms are identifying why and when a sustainability issue needs to be addressed, and the functional and green team managers then respond in how the business should adapt.

The full range of Leading Green training courses can be accessed at https://www.leading-green.com/

Good luck in your Sustainability Leadership journey.

Responsible Business: Jeans & the Circular Economy – Automobiles & the Old Economy

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I was interested to read that several of the world’s leading jean brands have been working with the Ellen MacArthur Foundation to lay down a set of Jean Redesign Guidelines based on circular economy principles.  The new redesigned jeans will enter the shops next year.  The new principles, in addition to focussing on the health, safety, and rights of workers in the fashion industry present minimum requirements for:

  • Recyclability: Jeans made with greater than 98% cellulose fibres, designing out or minimising metal rivets, and all additional materials should be easy to disassemble.
  • Material Health: Jeans fibres sourced from regenerative, organic or transitional farming methods; free of toxic chemicals and conventional electroplating; the banning of techniques such as stone finishing, potassium permanganate, and sandblasting.
  • Durability: Jeans able to withstand a minimum of 30 machine home washes while still meeting minimum quality requirements and have labels with clear information on product care.
  • Traceability: Confirmation of how elements of the guidelines will be made available, compliant companies will be able to use the ‘Jeans Redesign’ logo, and an annual review of the logo annually based on compliance with the reporting requirements.

Participating ‘denim’ organisations in the scheme currently comprise

Brands:  Bestseller, Boyish Jeans, C&A, Gap, H&M Group, HNST, Lee, Mud Jeans, Outerknown, Tommy Hilfiger, and Reformation

Manufacturers:   Arvind Limited, Hirdaramani, Kipas, and Sai-Tex.

The initiative represents an interesting case study of organisations adopting a responsible leadership approach to address unsustainable supply chain practices, build trust and co-operating in advance of any need for governmental regulation.  It also demonstrates how even a long existing product such as your pair of blue jeans can be redesigned to add new value & continued economic growth within an existing industry, and ultimately recycled back into new jeans at their end of use.

In contrast this week, it looks as if the Alliance of Automobile Manufacturers, a political lobbying trade group (motto – Driving Innovation!) representing 12 of the world’s largest car manufacturers (BMW, Fiat Chrysler, Ford, GM, Jaguar Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi, Porsche, Toyota, Volkswagen Group of America and Volvo USA) have been lobbying the Trump administration to rewrite existing laws to lower fuel efficiency and fines for missing emissions targets.

Three interesting issues struck me in this case:

  1. Jaguar Land Rover whose range is almost 80% diesel powered have been lobbying the UK government hard for aid to help switch their range over to electric vehicles and to maintain jobs in the UK, but who seem to aspire to other ethics abroad.
  2. The absence of Honda from the group – who are well on with their fleet conversions towards mileage efficiency, lower air emissions or electric power, and finally
  3. The lobbying groups concern for the harm that non-compliance fines for fuel inefficiency would have on auto manufacturers, workers, and ultimately consumers – as opposed to the harm poor urban air quality already has on innocent members of society – which when last checked also included auto manufacturers, workers, and ultimately consumers!

In the wake of the VW-emission rigging scandal and under President Obama, The US National Highway Traffic Safety Administration (NHTSA) was on track to effectively treble the cost of fines levied against vehicles that did not achieve their claimed mileage efficiency.   In February, the Trump administration broke off talks with California’s clean air regulators, and last Friday, the administration said that NHTSA would be issuing final rules suspending these regulations.  Eighteen US states, including California, have responded by vowing to sue the Trump administration if the vehicle emissions requirement freeze becomes finalized.  Now the Trump administration seems to be trying a different tack by rewriting the rules to lower fines for missing emissions targets.

The two scenarios represent two very different approaches to the challenges that signal whether these companies have a strong enough organisational culture to demonstrate to the marketplace that they are modern responsible businesses and responsible players within their respective marketplaces. 

It has been clear for many years concerning the global impact that cheap non-recyclable clothing and fossil-fuel based power-train automobiles have been having on our world.  The evidence has been there for years, and companies have had time to prepare their responses to the social and environmental challenges faced.  Whilst it looks as if the clothing industry is now actively waking up to the challenge of new economic models and consumer values, the automotive industries within the western world, still reliant on their technologies of the past and unable to effectively manufacture many of the future components of tomorrow’s vehicles , still exhibit a worrying tendency to remain in the past.  

Two trends I can see myself being affected by in the future:

  • Within 10 years effectively ‘hiring’ my clothes from a trusted retailer who will take them back for recycling at their end of life
  • Within 3 years obtaining an electric/hybrid vehicle whose parts and technology primarily originates from the Far East.

At Leading Green, our approach to sustainability in business consulting and training encourages our clients to look closely at their own internal leadership strengths and goals.  Helping them adopt an inquisitive state of mind and supporting them in how sustainability can support their long-term business strategy.

8 Tips for New Sustainability Managers – The First Week, Month and 90 Days

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Your first few days in a new job are always daunting, especially when you have been recruited to develop the existing culture towards greater sustainability by enacting a change in the organisation towards a business model that will be new, challenging and will need even the most obstructive manager to change pathways.

One of the first major environmental roles I took on was withina large Scotttish Power Utility with growing interests in England, the US and in the water utility sector.  They had decided to recruit a new environmental team to support organisational and operational activities within thier Technology Division.  The interview to say the least had been a strange experience, as for over an hour they asked few questions but talking directly at me listing issues they now recognised to be threats to the business. I nodded and looked wise, but was rarely asked how I would seek to handle them if employed. There was clearly no predetermined job description, role or even defined set of environmental accountabilities for the team they were seeking to recruit.  There was no compelling company vision for the environment and we were unlikely to receive any further advice from the senior executive in charge of us.  His instructions on our first day were simply ‘Go and do something Environmental!’

Well we certainly achieved that, with ScottishPower becoming the first UK utility to gain ISO 14001 subsequently in both Scotland and England, winning numerous CSR awards and developing a strategic approach to environmental impact assessment that is still a successful model 30 years later.

Yes, the first few days are incredibly stressful and daunting for the newly hired sustainability manager, especially when joining a business with little organisational maturity or leadership in that area, or with an undefined sense of what it is seeking to achieve through your employment – resource management, regulatory safeguarding, risk governance or a solid platform for future sustainable growth and value.  You have the knowledge, but how are you going to get started applying your talents is the first order of the day. 

So here are a few simple tips that I wish I had received back then to get me started as quickly as possible.   You have the skills for the role, your mission within the first few weeks is to start integrating and embedding yourself in the organisation and within the awareness of its key players.  Start to make friends and allies, ask questions and understand the mood within which strategic decisions are made, and what issues will be receptive targets for your audiences.

Week 1 – Show your face – Talk to everyone and Listen!

1 Learn the company’s language.

Talk to the organisations employees in a style and manner that resonates with them.

2 Get your hands dirty.

Spend your first few days in the office getting acquainted and being available to meet others. As soon as you can, get out into the field, factory, other locations and experience how the organisation is implementing its CSR and environmental policies. Is there a vision or mission statement – is it a living reality of just ‘greenwash’?

3 Meet with the crucial internal staff as soon as possible.

Arrange informal conversations with the key managers and staff whose support and influence will be critical in delivering any future initiative.  These are best arranged within the first few weeks into the job. 

Listen, listen, listen whilst gauging how positive or negative they are about how your role can improve business growth, values or risk management internally.  Are these allies or blockers:

  • what ssues currently are of concern to them;
  • what will they be minded supporting;
  • what advice can they provide re threats and opportunities, market trends: etc.†

Month 1 – Establish your personal credentials, start to prioritise your findings and develop your future strategies.

4  Don’t be critical of your predecessors

As a new leader or manager learns more about the way an organisation thinks, functions or behaves, there will inevitably be surprises.  No matter how strong the urge to question previous policy, initiatives, etc resist the urge to say anything negative about the previous managers who have sought to implement environmental or sustainability systems.  It will be some time before you identify who has done what, and who their internal friends, allies and supporters are.  It is simpler just to be positive about the efforts you encounter (which will have been supported by others internally) as the critical building blocks for your own changes that will arise latter. 

5  Know your own weaknesses before criticising the organisations. 

Seek to identify where your strengths lie and where personal development, training or mentoring/coaching is still needed to enhance your effectiveness in the new role.  At the interview you may have promised the earth, those impressions are what you were recruited on and now is the time to reinforce and build up your leadership traits, understanding and in particular – change management skills

6   Prioritise and align

Prioritise what you uncover in terms of tangible business benefit and value, rather than intangible environmental risk.  In prioritising what needs to be done, be realistic about what is and isn’t achievable, and consider how they can align with the corporate plan (and its planning cycle) and seek advise on how to incorporate your future agendas into the planning cycle.

 Who can you turn to for support— perhaps an internal mentor, other senior managers or even the chairman of the board?  Don’t try to do it all on your own – that is a weakness! 

90 Days in – Start setting out your personal vision and ideas for alignment, growth and value through sustainability

7   Build a diverse circle of advisers.

New leaders in any organisation need to surround themselves with a variety of viewpoints, ideas, and temperaments as they build up a mental template of how the cogs and wheels of the organisation turn – and at what speed.  This is critical as your role will often require more in the way of advocacy instead of ‘power’.

Help develop ideas, strategies and approached through the use of these networks. Seeking to win thier support and patronage if matters have to be referred upwards to other executives, or brought into operational activities if beneficial changes can be enacted quickly by mutual agreement with other managers.

8   Have a Personal Vision

Seek to rapidly acquire a vision of what you want to happen, building this up from the solid foundation of ‘viewpoints, ideas, and temperaments’.  You must own the vision and inspire others.  Sustainability visions developed by committee tend towards aspirational and consensual, yours must be viewed and admired for being results orientated!

When building a visison, one tip is to start with the end in mind, by making the future direction of travel clearly outcome focussed – others can rapidly acquire a fully understanding, help guide strategic planning approaches and join in thier voices in nspiring & directing others in the organisations realignment towards greater sustainability.

Getting started is hard work, no wonder they say it takes an employee 3 years to understand how an organisation operates and thinks. Leading Green‘s coaching and mentoring services can provide essential support as you build up the confidence to start changing an organisation’s culture towards greater sustainability performance and social responsibility.

Responsible Construction requires Responsible Management practices (Part 1)

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Responsible Management is the leadership approach that many in the construction industry are using as the springboard to get them attuned with the many ‘Responsible Construction’ programmes that sprung up over the last decade. 

The hard days of being a start-up or one-man business are long gone, your hard work and ambition has built the business into a successful local construction player with an expanding portfolio and an increasing wage bill! 

The days of day-to-day on-site hands on management practice have receded, with a new tier of supporting managers and partners now sharing responsibility for the business.   The downside – lack of fresh air and a growing list of business administration practices and new organisational problems as structures and responsibilities stretch and expand across the business.  The purpose of some are clear – financial accounts, payrolls and asset logs form a distinct tangibl links to assets, employees and business practice and ultimately profits & loss accounts.  However there are others whose purpose seem vague and confusing. You recognise that some of the more intangible ones are important, but it is easy to put them off as you are uncertain about how exactly they add to the bottom line of the business. 

Amongst this growing intangible portfolio of ‘other stuff’ terms such as corporate social responsibility and sustainability seem to be regularly occurring issues.  The days of adding a simple 1 page A4 ‘Environmental Policy statement’(usually cribbed from another source) into tenders are becoming a distant memory as clients no longer accept simple EHS assurances and now demand proof of commitment within invitations to tenders and on-site audits.  The language within your trade journals and business networks has also started to change with new terms increasingly entering the dialogue such as ‘corporate social responsibility’, ‘responsible construction’, ‘climate change’ and ‘sustainability’ and you are beginning to consider more and more whether these are threats or opportunities:

  • What do they mean for your business? 
  • Will they hit profits? 
  • Are new hires required? and importantly
  • How do you respond in a manner that continues to build the business?

An introduction to Responsible Management

Furthermore, the concept and meaning of corporate social responsibility (CSR) within the construction sector and in particular amongst its SME businesses remains largely undefined, highly fragmented and wide open to interpretation.  CSR can cover a myriad of meanings, issues and definitions that are both daunting and confusing to leadership groups within SME businesses –  terms such as:  stakeholder management, governance, corporate  ethics, responsible  sourcing, environment  and  sustainability,  human  resource  management,  supply chain sustainability, circular economy, discriminatory  labour practices, equality and human rights, corruption and modern slavery – sound expensive to address and resource. Despite a lot of information out there, conflicting CSR messages to SMEs in the construction sector suggests that little practical organisational support has been directed towards helping SMEs map out and address CSR as a wider business tool or aid understanding how CSR practices can aid continued growth in a manner aligns with their often limited or yet to be developed resources.

The long list of issues above is slowly starting to coalesce and morph into what is now commonly termed ‘responsible management’ practices within the Construction company boardroom.  A simpler handle that allows businesses to focus on key areas where they may be exposed to risk or deem opportunities to exist.

Responsible Management is the leadership approach that many in the construction industry are using as the springboard to get them attuned with the many ‘Responsible Construction’ programmes that sprung up over the last decade. 

Responsible management requires that construction companies, their suppliers, consultant and contractor support services take responsibility, and act to make the construction sector more responsible in its business management practices.  Within individual SME construction firms Responsible Management can take a variety of forms and can be characterized as a business leadership team that has seized the opportunity to differentiate itself from many of its competitors by taking into consideration elements such as:

  1. How to minimize any negative environmental, social and cultural impacts its activities can have on its clients and its local community;
  2. Generating greater economic benefits from the business by improving retention and working conditions for staff, developing a brand as a good employee and local business;
  3. Safeguarding natural and cultural heritage and protected species, and possessing the skilled staff to act responsibly on behalf of the business when issues are encountered on site;
  4. Addressing diversity, access for physically challenged people or opportunities within the local community;

Responsible Management represents a mix between safe and responsible business activities during site preparation, construction, transportation to/from site, material usage, design and local community relationships.  Whilst many construction companies still view these as potential obstructions to ‘time, cost and quality’, more established firms view these more in terms of brand, local reputation and employee benefits that they can use to grow their business while providing differentiation between themselves and other local competitors, help safeguard works from delays, additional costs and adverse PR and further contributing to the brand’ that has been built up over so many years.

Responsible Management in the construction sector should help underpin the core business strategy or specialisation by promoting a high quality service for future customers and clients – by respecting all the regulations regarding nature and HR management; safeguarding long term relationships through good communication with local authorities, which can pay back significantly in times of economic downturn or mishaps on site.

In the boardroom it involves:

  • being aware regarding main environmental regulations, laws;
  • implementing and raising awareness within the board, as well as amongst staff, regarding what responsible management implies in the business’s daily activity;
  • facing difficult tasks and problems by offering the right solutions for the staff and clients;
  • being informed of the available trainings measures and sector-specific educational trends;
  • being oriented to results optimization.

The next part of this blog will look at how the boardroom within a Construction SME can get started in starting to lay a preliminary foundation for responsible management within the business, and align its outcomes with other strategies to continue business growth and performance.

Responsible Construction

Increasingly SME companies within the construction sector are seeking to build in business strategies that, through choice or through client requirements, build in Corporate Social Responsibilities (CSR).  Leading Green can provide strategic and operational support to Boardrooms & senior leadership teams on topics such as Responsible Management, Sustainable Construction, Governance and CSR that are essential on BREEAM and LEED registered projects.

Your Business Approach to Climate Change may soon affect your Credit Score

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My company Leading Green is based on my strong belief that Business leaders and organisations that integrate sustainability into their business thinking and leadership culture will benefit in the long-term through a better strategic mindset for future growth, higher investor interest, capital investment delivery and ultimately a lower corporate risk profile that delivers long term financial value with innovation and market branding. 

It was therefore of interest to read in a recent edition of GreenBuzz that Moody’s, one of the world’s leading credit rating agencies had proposed a scoring framework for assessing carbon transition risk.  This will be of interest in evaluating the transition towards a low carbon future of some of the more energy intensive or dependent sectors, and especially those past investments are at risk of being stranded as the implications of climate change extend into the most world’s most obstinate boardrooms.  

Impact Assessment (IA) professionals have for many years grappled with the problem of how one multi-$billion or $million investment will impact on a region’s or society’s air quality or climate change footprint, looking at proposed investments in terms of their solo contributions, and struggling to truly evaluate their cumulative impacts.  Tools such as Technology Impact Assessment allow us to evaluate with greater visibility and transparency the global benefits or negatives of technology as we shift towards a lower carbon economy.

The move by Moody’s is of interest to IA and ESG professionals in that it could herald the start of an investment trend that better identifies credit risk, business strategies and capital investment opportunities with an ESG’s financial value assessment.  Many ESG and IA assessment approaches & models are at risk of focusing too much on the identification of social & ethical values rather than a more comprehensive evaluation of an investors or multi$ project proponent’s understanding of how environmental and social factors impact on the core financial objectives of the project.  If you want a case in point look at the global investments for large hydro-power schemes and how far apart the early assessments of project costs are from their final ‘constructed’ costs (often by factors of $billions) and how often their project timescales were delayed (>years).  A reflection of the investor and lender’s reluctance to assess environmental and social risks earlier in the investment cycle and to clarify the upstream linkage between social and environmental parameters and financial risk.

Carbon transition within investment portfolios, organisations and within technology/marketplace sectors must become, and is increasingly likely to become, a core parameter within the global society’s climate change adaptation and how the continuing flows of investment capital will impact on future growth and carbon release.  If organisations and government are slow to react to risk and carbon transition, then perhaps a more risk adverse appetite amongst financial lenders and investors will prevent much of the downstream arguments between society and business that prevent capital projects and asset investments gaining the one thing that they all require – consent to build the proposed asset. 

It was of interest to read in the article that Moody’s defines carbon transition risk as the implications of the policy, legal, technology and market changes that are likely to affect a company in its transition to a lower-carbon economy.  These are the often the intangible vales that lie outside traditional boardroom thinking and rarely make it into formal financial risk analysis, credit ratings or creditworthiness.  Moody’s propose a 10-point scale across four key components that seeks to identify an organisations credit risk and transition towards carbon transition.  The will help reflect 4 key parameters:

  • its current business profile (survivability in the current marketplace);
  • its technology, market and policy exposure (risk of stranded assets, exposure to disruptive technology and societal megatrends);
  • its medium-term response activities (is its boardroom awake to the risks!); and
  • its longer-term resilience (potential for value and growth).

This is a move to be welcomed as the development of comprehensive ESG models is still in its infancy, as is the marketplace’s understanding of them and their ability to drive better financial decision making.  In addition, it starts to position IA and ESG as ‘active’ tools that enhance decision-making rather than their often perceived ‘negative’ image as blockages to investment fluidity and choice.  It also starts to open to the marketplace the maturity of some boardrooms towards social, environmental and carbon/climate risks and how they are perceived.  Many ESG reports often contain performance data on ESG issues that masks any real cultural or leadership change towards sustainability in business and environmental risk management.  If you want evidence on this, just look at how many organisations there are out there who have held environmental certification under ISO14001 for many years, but who are now struggling to re-certify to the new standard that requires auditable proof of linkage within their organisations between the executive leadership groups and their organisation’s environmental risk performance.

So, the takeaway message is what is the long-term strategic value for organisational leaders in better aligning sustainability, environmental risk or carbon adaptation/transition strategies within their core corporate and investment planning strategies.  It is becoming increasing clear to sustainability advisers, chief financial officers, some CEOs and their Boards that in the future organisations with higher ESG ratings and a strategic mindset to sustainability in business are likely to experience lower exposure to disruptive market risks, protect asset investments or at least minimise stranded asset investments within portfolios avoiding large drawdowns, and lower risk within their sector or marketplace. 

If Moody’s initiative is a success it will also reinforce these benefits through lower cost of capital and higher investor interest, in particular the type of investor who is likely to take a longer, rather than a shorter, term interest in your organisation’s financial health and growth.