Five key strategic sustainability drivers in 2024

With sustainability reporting in the spotlight, thanks to the Australian Government's plans to roll out mandatory reporting from as early as 1 July this year, there's been no better time to consider a holistic approach to organisational sustainability.

From understanding stakeholder drivers, assessing and addressing relevant risks, and pairing sustainability activities with the overall strategy, successful organisations view sustainability as an opportunity to create value, not just a compliance requirement. Brand reputation, talent retention and attraction, employee engagement, and access to capital and markets can all be positively impacted by developing and embedding a sustainability program that aligns with the organisation's purpose and values.

Here, we highlight five key sustainability challenges Australian organisations should have on the radar to address in 2024.

1. Take a holistic view of the sustainability strategy

Incorporating a sustainability strategy into the overall business framework is critical. Such integration not only aligns the company's operations with increasing regulatory requirements and societal expectations for environmental stewardship and ethical conduct, but also enhances the company’s reputation among stakeholders and communities.

By adopting sustainable practices, companies can achieve significant cost reductions and efficiency gains through the conservation of resources, waste reduction, and process innovations. This proactive approach to sustainability helps in mitigating risks related to environmental impacts, regulatory compliance, and community relations, ensuring the company's long-term viability. Furthermore, focusing on sustainable practices opens up new opportunities by appealing to consumers and partners who prioritise environmental and social responsibility. It also plays a crucial role in attracting and retaining a workforce that values sustainability and wants to contribute to positive environmental and social outcomes, reinforcing the company's commitment to making a meaningful impact.

2. Focus on capital investment and cost management

Despite easing inflation, costs remain high - especially for energy and the workforce. Smartly integrating capital investment and cost management with sustainability goals is crucial for long-term profitability and risk management.

Investing in sustainable technologies and practices, such as renewable energy and efficient resource management, can offer immediate operational efficiencies and long-term cost savings by reducing energy expenses and minimising environmental impact. This strategic approach not only helps in adhering to increasingly strict environmental regulations but also enhances the company's reputation and market position by aligning with the growing demand for responsible business practices. Moreover, focusing on sustainability can attract ethical investments and open up new business avenues in environmentally conscious markets. Prioritising investments that foster sustainability can prove to be key in securing financial stability, regulatory compliance, and a competitive edge in the evolving global economy.

3. Identify and manage sustainability risks 

It's nearly impossible to address sustainability risks in isolation from the rest of the business.

The risk landscape is complex, and leaders must demonstrate how investments that address one risk area will add value to the business while also ensuring value is not eroded elsewhere. Ensuring sustainability risks are considered within a comprehensive, organisation-wide scenario planning and framework development can help to guide overall prioritisation and identify any potential trade-offs or compromises required. 

4. Engage with the community

While much of the current market and regulatory discourse focuses on climate-related disclosures, sustainability doesn't stop at the environment. For many organisations, there is an enormous opportunity to enhance trust with the local communities in which they operate through transparent operations and demonstrating broader societal commitments.

Successful community programs vary depending on the community's needs. Achieving a social licence to operate is much more than sponsoring the local footy club. Instead, organisations can engage in trusted partnerships to generate social value outcomes.

Defining what ‘social value’ means to the community requires a collaborative and co-created approach. Demonstrating non-financial value to communities will require a long-term value-creation approach and commitment to accurately achieving, measuring and reporting societal outcomes. 

5. Prepare your approach to climate change

The Government's landmark Climate Change Bill, passed in September 2022, signified its commitment to emissions reduction targets - including 43 per cent by 2030 and net zero emissions by 2050, which are now set in law. Coupled with the incoming mandatory climate-related reporting requirements, now is the time for organisations to develop a plan to address climate change issues.

With an accurate understanding of their current state, organisations can formulate a realistic decarbonisation plan supported by a framework to monitor progress for continuous improvement.

Investing in renewable energy sources and technologies to reduce greenhouse gas emissions in 2024 can build the foundations to prepare for climate-induced operational challenges and support the ambitious national and global targets to address climate change. 

In summary

Whether the catalyst for change in your organisation stems from leadership, incoming mandatory reporting, stakeholder demands, or a shift in broader market expectations, sustainability is a business imperative that's here to stay.

A clear understanding of both the organisation's current and expected future states, when aligned with the company strategy and purpose, can provide an excellent starting point to establish your sustainability priorities and develop an execution roadmap to the future.

Here to help

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

• Assessing your current state
• Developing and executing a materiality assessment
• Identifying and assessing your ESG risks and opportunities
• Developing an aligned sustainability strategy, generating value for your stakeholders
• Creating a 'plan on a page' outlining key ESG priorities
• Developing a sustainability roadmap bringing your strategy together with organisational transformation.

Contact us today.