With global economic and geopolitical events creating volatility and uncertainty, how are corporate sustainability leaders maintaining focus and accountability for positive impact?
Earthquakes shake Turkey and Syria while war rages on in eastern Europe. Here in the United States, tech companies continue to lay off huge numbers of employees while the worst avian flu outbreak in history ravages egg supplies. Inflation slowed down in January, but only by a fraction of a percentage point, and remains high. Economists predict recession, but overall unemployment remains low.
Some might say that companies should cut sustainability budgets when war, inflation, and the possibility of recession loom large. Maybe you lost a member of your sustainability team or found your headcount budget for that future project manager sent to the chopping block.
Because today’s conditions only increase the complexity of making a positive impact as an ESG leader, here are 8 tips to make wiser decisions and position your organization more strategically on sustainability challenges in the face of uncertain economic conditions.
How Corporations Can Be More Sustainable
First, rethink your approach to impact by increasing collaboration:
1. Create a safe space to listen, learn, and discuss
Today’s uncertainty means now is the time to ask questions and connect more deeply with your employees and external stakeholders:
- What do they care about most?
- Where are their deepest linkages to the surrounding community?
- What would it mean to be a truly diverse and inclusive organization?
These critical discussions can occur in a number of forums. Third Partners has helped many leadership teams take the pulse of their workforce while responding to global moments. We use organizationally-appropriate channels to create consensus, build community, and produce results through employee engagement.
Examples of our services include:
- Creating a strong charter for an ad hoc committee
- Coaching senior executives on how to convene a meaningful town hall meeting
- Designing and deploying custom employee engagement and ESG surveys
- Curating formal ESG working groups
2. Consider pooling budgets from cross-functional teams
For more ambitious initiatives, consider pooling budgets from cross-functional teams, such as risk and legal, brand and marketing, and operations.
Inter-departmental collaboration is a powerful tool for making progress on ESG goals, especially when dedicated budgets have been reduced or eliminated. After all, ESG work cannot be done in silos, so try to identify a task force-based project that has a singular purpose with multiple value streams and broad buy-in.
3. Modernize your traditional philanthropy efforts
Modern impact programs combine core product innovation and philanthropy (typically a cost sink) to make a positive change while driving sales and valuation. Third Partners has worked with some of the world’s most iconic brands to design impact programs that tackle contemporary crises, such as ocean plastic pollution. By positioning incremental product sales alongside social impact investments, strategic cause-related marketing partnerships can drive the top line without sacrificing the bottom.
Make strategic investments that strengthen the core:
4. Focus on sustainability and ESG activities that align with core business strategy rather than peripheral green initiatives.
- Sustainable packaging redesigns can reduce costs, improve impact, and drive incremental sales
- Research and development investments, such as product life cycle assessment, can be capitalized over several years while supporting growth into new markets
- Supply chain mapping and risk assessment projects bolster business continuity while protecting brand equity
5. Break down big projects into smaller pieces
Split up large and ambitious projects into more manageable tasks using the results from materiality assessments to prioritize and allocate budgets. Just because a project has a smaller scope or a shorter timeline does not mean it is not strategically important. The opportunity cost of not acting now may be high.
6. Eliminate expenditures that are cost sinks and invest in longer-term, ROI-positive solutions
When it comes to clean energy and decarbonization, avoid RECs and offsets, which offer no long-term ROI. With fossil fuel and energy costs projected to remain high relative to renewables, now is the time to explore on-site renewables and power purchase agreements (PPAs). Other efficiency projects can be accomplished off the balance sheet, such as using operating leases for on-site solar or performance contracting for retrofits.
7. Take advantage of new sustainability incentives
From heat pumps to carbon capture, take advantage of new incentives for making your company’s operations more sustainable. The Inflation Reduction Act (IRA) presents numerous tax credits and deductions designed to spur innovation and move the American economy towards a cleaner, greener future.
You can earn tax credits for purchasing electric vehicles and infrastructure to support on-site EV charging for commercial fleets and employee commuting. If your suppliers are located in the U.S., the IRA presents a new opportunity to achieve bona fide reductions in your product carbon footprint, with zero cost to your organization. Learn more about what the new IRA means for corporate sustainability here.
Outsourcing sustainability support is easier than it sounds:
8. Outsource sustainability
In these uncertain times, many CFOs and sustainability directors prefer outsourcing. The business case for hiring a boutique sustainability consulting team like Third Partners is even stronger if your sustainability team is struggling to get the budget or headcount it needs for critical projects.
Our personalized approach offers tremendous advantages for agile, cost-effective project management, helping you avoid the bloat, complexity, and scoping headaches of working with larger consulting firms.
Contact us today if you are in need of extra bandwidth to advance your impact objectives. We can provide you with the flexible support you need to maintain momentum for your ESG program in these turbulent times.