How can companies address the climate crisis from a corporate point of view?

In November 2020, the University of Cambridge Institute for Sustainability Leadership (CISL) published the report: “Leading with a sustainable purpose”, which compiles the vision and experience of four international companies leaders  -Unilever, Interface, IKEA and DSM- about how their organizations have managed to align and integrate their corporate strategy to aim for a sustainable business model objective.

The report highlights a set of recommendations on how to incorporate a goal aimed at addressing the climate crisis in the broader corporate community.

Considering that the purpose of a company answers the question: why does the organization exist?, The report aspires to become a guide for the future direction of the business, while a “good purpose or objective” should focus on the distinctive contribution that the company makes to society and the world. In addition, the state of emergency in the current pandemic context, with the challenges it imposes for organizations, represents an unbeatable opportunity for corporate strategies to be aligned to move towards a long-term transition towards a sustainable economy.

The biggest challenge will be those organizations that depend especially on unsustainable business models, which may require significant changes to adapt their business model to the new reality. Therefore, if the internal support and commitment of senior management is lacking, it will be difficult to evolve towards a model that combines: an evolving objective + corporate strategy + sustainable and sustainable approach over time.

In an organization seeking to align and integrate its purpose and strategy with a sustainable economy, those leading this transition must be able to select, adapt, and combine practices so that they fit the organizational context and aspirations.

This report pThe biggest challenge will be those organizations that depend especially on unsustainable business models, which may require significant changes to adapt their business model to the new reality. Therefore, if the internal support and commitment of senior management is lacking, it will be difficult to evolve towards a model that combines: an evolving objective + corporate strategy + sustainable and sustainable approach over time.

In an organization seeking to align and integrate its purpose and strategy with a sustainable economy, those leading this transition must be able to select, adapt, and combine practices so that they fit the organizational context and aspirations.

This report provides ten principles to guide the organization on the path to its transition to sustainability: rovides ten principles to guide the organization on the path to its transition to sustainability:

Adopt an “outside in” vision that involves external stakeholders -stakeholders. By incorporating an outside perspective into strategic planning, the company can consider the fullness of its value chain and a broader understanding of current and future issues, particularly in relation to social and environmental impacts.

Adopt an “inside out” vision that involves employees. Employees are vital sources of knowledge for the organization. Right from the start, integrating your perspectives and engagement will help improve business results. In this way, the commitment of the personnel to the purpose, strategy and value of the organization will be facilitated.

Expand senior management involvement to align corporate purpose and strategy. This is necessary to ensure shared understanding and greater participation and is in line with emerging best corporate governance and compliance practices. Each CEO will have a clear role and responsibilities over the strategic areas aligned with his function, which will make integration and his leadership more efficient and effective.

Align purpose with strategies and setting specific goals. In this way, there is an integration between the individual and the collective purpose, which provides commercial solutions that impact internally for the benefit of the entire value chain, consumers and interested parties.

Align rewards and incentives. The alignment between corporate purpose and strategy must translate into individual rewards and incentives. This will cause the purpose or objective to act as a guide for employees, since incentives provide greater meaning to their work and mark a clear line of vision between their work and the purpose of the organization. It is key to stimulating creativity, motivation and staff performance.

Align purpose with good business practices. Core business practices need to be dynamically adapted and modified to reflect corporate purpose and strategy. These changes must be supported by both leaders and employees. Good business practices should prioritize product and service innovation, and it is this innovation that plays a leading role in transformation.

Develop knowledge and expand employee training. The new purpose and strategy will require a new mindset – more decentralized, more agile – on the part of both leaders and employees. For this, it will be necessary to implement the identification and development of new capacities within the organization. In turn, purpose can be used to decentralize decision-making, allowing for a more agile culture.

Select and build strategic external alliances. After establishing its purpose and strategy, the organization will need the input of external partners who can bring experience, influence and ability to execute the corporate strategy to feed its value chain. The alliance with potential partners or third parties will allow solving shared challenges. This task of requiring new capabilities and understanding the influence of the company will have a positive impact on the entire value chain. This process deserves a control of third parties that follow the best practices.

Integrate the purpose in the disclosure of parameters and objectives. Stakeholders – internal and external – related to the organization should be aware of the decision-making around its corporate purpose and strategy. This will allow them to assess progress that builds trust and attracts new potential partners. Therefore, it is important to disclose progress, showing how financial value should be subordinated to social and environmental issues.

Integrate the purpose into the corporate positioning and communication strategy. For the purpose of the business to have a successful influence and impact on its reputation and performance, how the organization communicates its purpose to stakeholders is crucial. The report points out that authenticity emerges when what the organization intends ends up aligning with what the organization says and does.

At G5 Integritas we can help you in the independent control and review of the best corporate governance and compliance practices that every organization must carry out for the benefit of all links in the value chain, which includes the control of third parties. We invite you to contact us at contact.ba@g5integritas.com For more information, visit our website: www.g5integritaslatam.com