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  • A Guide to Activating Your Sustainability Journey

A Guide to Activating Your Sustainability Journey

16 September 2021

BDO guides our clients along their sustainability journey with a practical approach focused on value creation and material risk management

BDO's  - A Guide to Activating Your Sustainability Journey publication (scroll below to download) helps set out the fundamental market drivers and necessary steps an organisation needs to know to activate their sustainability journey.

‘Sustainability’ presents a challenge due to its breadth and complexity. According to the Oxford English dictionary, the definition of Sustainability is ‘the ability for something to be maintained at a certain rate or level’ and /or ‘avoidance of the depletion of natural resources in order to manage ecological balance’. Companies use this blanket term as essentially a catch-all phrase to mean ‘do better’.

The vernacular, terminology and even the meaning of sustainability has changed over time. For business we have seen it evolve from ‘corporate social responsibility’ which generally refers to the practices and policies that a company adopts to promote positive impact, to ESG (Environmental, Social, Governance) which is a metric-based reporting process that promotes the ongoing process of assessing, monitoring and improvement.

Given the breadth and depth of scope that sustainability entails, our objective is to provide a brief overview of ESG and outline how a company can approach incorporating sustainability practices into its business to drive value across the organization.

Sustainability parameters are setting a new tone for all businesses going forward.

Recent government announcements across the globe aimed at meeting the Paris Agreement (below 1.5-degree target) and the UN Sustainable Development Goals are having huge impacts on the current business landscape. In addition to growing government intervention, business and institutions are also taking a role in transforming unsustainable production and consumption patterns.

Below are a few examples, that further illustrate the broad nature of sustainability on how shifting policy and practices are reshaping the business landscape.

Energy Transition - The EU has dedicated 30% of the EUR 2021-2027 budget to fight climate change and a new EU climate law which aims to transform political promises that the EU will become climate neutral by 2050 into a binding obligation. 

Circular Economy - Walmart, the world’s largest retailer has set the goal to become a regenerative company with net zero emissions by 2040.

Gender Equality - The largest bank in Norway recently terminated their business contract with one of the most respected law firms because they could not document nor prove a positive change in gender equality amongst their equity partners.

Sustainable Finance – The SDFR (EU Sustainable Finance Regulation) requires asset managers to disclose information about the ESG risks in their portfolios, and how they address them.

Time to rethink our approach to business.

It is imperative that we rethink how our businesses operate and behave if we are to ensure our systems and foundations are resilient and fit for a sustainable future.

We believe that all elements of a business can be viewed through a sustainability lens – and for a business to create resilience and long-term value, a sustainable business model should be adopted. Right now, it is not a question of whether a company ‘should’ do anything - because doing nothing today is not an option - the question is how companies will respond. We also believe it is the right thing to do.

Covid-19 and extreme climate events remind us how interconnected our economies, environment and societies are, and that our individual success is largely driven by societal success. We believe, as individuals and employees we have a role to play in promoting responsible and sustainable business.

In addition to being the right thing to do, a variety of research and studies show that sustainability creates value for businesses. It suggests sustainability improves financial performance, builds customer loyalty and attracts and engages employees. A recent study of publicly traded companies in the U.S. noted 70-90% of a company’s value was attributable not to the physical and financial assets but was embedded in what are described as intangible assets, which can include intellectual property, customer loyalty, employee engagement and productivity, labor relations, community goodwill, brand reputation and analysts’ perceptions.’¹  This indicates how businesses behave, how they engage their stakeholders and their overall purpose is driving value across the organization.

By rethinking our businesses through the sustainability lens, we have the opportunity to unlock value and create positive change. At BDO, we aim to inspire, educate and lead an unstoppable movement for sustainable business practice in our markets.

DOWNLOAD BDO's Guide to Activating Your Sustainability Journey by clicking on the link below.