Activating organisational sustainability

Our sustainability webinar series aims to break the complex world of sustainability down into digestible pieces to help you get on top of the fundamentals and start driving change in your organisation. At our March 2024 event, Aletta Boshoff shared some key insights and considerations for activating sustainability at your organisation. Here, we share the key takeaways.

Understanding sustainability

Sustainability is the practice of assessing and attempting to minimise an organisation's negative impact on the planet and its people while trying to improve its positive contribution.

At BDO, we approach sustainability through the universally recognised ESG framework, which considers matters from the environmental, social, and governance perspectives. This approach helps to unpack and categorise the wide-ranging risks and metrics, including the common factors that businesses tend to acknowledge below, depending on the importance of each item to the organisation's strategy and stakeholders.

Some factors are heavily interlinked or may fall under multiple buckets. Regardless of this diagram, the matters your stakeholders and risk assessments identified as important should drive the factors addressed in your sustainability plans.

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Common drivers of sustainability activity – Strategy and compliance

Leading with compliance

For organisations driven by compliance, the coming two to three years will likely see significant shifts in sustainability focus and eventual reporting.

The International Sustainability Standards Board (ISSB) introduced its new IFRS® Sustainability Disclosure Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2) in mid-2023. Since then, the Australian Government has been developing, engaging, and finalising its plans to introduce mandatory sustainability reporting in Australia. For some organisations, that plan suggests compliance requirements will commence from as soon as 1 July this year. While the legislation has yet to be finalised, many organisations are now preparing for the pending change.

Leading with strategy

Other organisations are taking a strategic approach to sustainability – with some looking to get ahead of their compliance obligations or seeing a competitive advantage. On the flip side, some organisations are driven by the disadvantage they expect to face by not taking an interest in sustainability, as access to capital, markets, and people becomes more problematic.

• Access to capital – Investors have long evaluated the risks of the entities they invest in. However, the list of risks they might now evaluate is increasing to include climate risks, modern slavery, supplier risks, other ESG metrics, and aligned reputational risks.
• Access to markets – Whether considering the end customer or participation in a supply chain, organisations often must meet specific requirements to continue their 'licence to trade'. Some are clear compliance requirements, and others are based on the expectations and values of the organisation you're partnering with. For example, organisations that don't measure their carbon footprint could find limited access to customers when purchasing decisions are sustainability-driven or restricted access to supply chains, where partner organisations have mandatory reporting requirements to meet.
• Access to people – Individuals often weigh up the organisations they're willing to work for based on the activities and actions that align with their values, be it community, environmental, economic contribution, gender pay equality, flexibility, well-being, and so on. There are many reasons why people initially decide to work for organisations and continue to work for organisations. A transparent approach to sustainability helps to communicate those messages within the workforce – current and future.

Considerations for a sustainability strategy

Like a business strategy, a sustainability strategy should outline the decisions and actions an organisation expects to make to achieve its goals and objectives.

There are three particular areas where a sustainability strategy intertwines with the organisational strategy:

1. Meeting customers' needs – Ultimately, knowing what the customer wants (be it the products or services offered, accessibility, operational activities or communication) and having a plan to meet or address those needs can also be a competitive advantage.
2. Risk management and governance - Critical components of an organisational strategy that play to the heart of sustainability strategy. But, they can't be viewed or managed in isolation – a sustainability risk is a business risk and should be managed as such.
3. Short, medium and long-term thinking – It would be difficult for many organisations to implement meaningful change to achieve carbon neutrality overnight. The road is long; however, the need for change in the short term is high.

Ultimately, a sustainability strategy should outline how the organisation plans to generate social, environmental and economic value for stakeholders through its operations, products and services, and management of risks. .

Getting started with sustainability 

Getting started can bring up a lot of practical questions. Who needs to be involved? What resources, information and deadlines do we have? What do we want to achieve? What risks are we trying to address? What decisions do we need to make to achieve our long-term goals? The list goes on.

So, who does need to be involved?

While each organisation is different, it's critical to have leadership support.

In your organisation, accountability could ultimately sit with the board, the executive team, or a board sub-committee (like the risk and audit committee), with operational responsibility allocated to the Chief Sustainability Officer or Chief Financial Officer. But regardless of the formal lines of responsibility, sustainability impacts every part of the business, and each employee has a part to play. Embedding sustainability within the organisation's cultural fabric can have a significant impact, and communication will play a key role.

And how can you get started?

Whether starting with a compliance or strategic imperative, it's essential to understand the current ecosystem within your organisation and articulate the needs of your business and stakeholders' drivers for setting sustainability in motion.

Like any project, breaking the process down into steps and milestones helps to make it achievable:

1. Assess the current state of ESG activities within the business
2. Prioritise the key matters to address through a materiality assessment
3. Commit to the initiatives to deploy to support your strategy
4. Measure your current maturity to establish a baseline and conduct a gap analysis
5. Prepare an initial sustainability report
6. Continue to monitor performance and make improvements.

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Here to help

No matter where your organisation is on its sustainability journey, our national sustainability team can support you with:

• Assessing your current state through an 'ESG health check'
• Developing and executing a materiality assessment
• Identifying and assessing your ESG risks and opportunities
• Developing a sustainability or decarbonisation strategy
• Creating a sustainability roadmap.

Contact us today.