Closing the gap between sustainable strategy and implementation
Increasingly, organisations are adopting sustainable strategy as a management approach to build organisational value while protecting natural and social capital. However, a sustainability performance gap has developed between leadership's sustainability vision and organisational adoption and implementation. As a result, benefit realisation is not fully captured. Project management practitioners can be part of the solution for addressing barriers to adoption and developing a road map for success. Best practice includes creating a culture of sustainability in order to drive organisational change in people, process, and policies.
Keywords: sustainable strategy, sustainability journey, sustainable culture, and sustainability performance gap
Sustainable strategy considers the impact of organisational decisions and actions on natural, social, and financial capital. Increasingly, organisations are adopting sustainable strategy because of the benefits, such as reduced resource utilization, increased innovation, new market opportunities, improved employee engagement, better risk management, increased access to capital, and improved operating performance. However, a gap exists between management's sustainability vision and organisational adoption and integration. In order for the organisation and its stakeholders to reap the benefits of sustainable strategy, it must become part of an organisation's core values and be integrated into organisational culture. One-off projects that create a green organisational image without creating a significant change in organisational priorities, policies, people, and processes are ineffective. Becoming a sustainable organisation is a complex change management programme that requires holistic organisational effort, commitment and dedication.
THE SUSTAINABILITY JOURNEY
Creating a sustainable organisation is a journey, as depicted in Exhibit 1. It begins in the exposure stage with drivers from regulatory or customer compliance requirements. Projects in this stage tend to be classified as “low-hanging fruit” and represent siloed projects that address a specific challenge or requirements such as measuring an organisation's carbon footprint.
Exhibit 1: The sustainability journey.
As management becomes more comfortable with the benefit realisation of a sustainable approach, the organisation enters the integration stage. At this point in the journey, sustainability is seen as adding value to the business process through cost savings, improved efficiencies, and better stakeholder relations. Management identifies material impacts that sustainability has on its operation and the impacts its operation has on natural and social capital. Sustainability champions sponsor programmes and projects that drive systemic change. Stakeholder engagement includes both internal and external stakeholders, such as customers, regulators, and resource providers.
The pinnacle of the journey is the transformational stage, where there is alignment and integration between business and sustainability, thus creating sustainable strategy. Sustainability is a foundational organisational pillar, as leadership formulates long-term vision, organisational priorities, and asset allocations.
Unilever's Sustainable Living Plan is a transformative strategy that aligns business practices with natural and social capital goals. Unilever's sustainable strategy is to double the size of their business while reducing their environmental footprint and improving their social impact(Unilever, 2015). Successfully embedding sustainability into organisational culture requires transformative change within people, process, and policies.
In order to garner the resources required to bring about this change, the C-suite needs to understand the benefits of a sustainable approach as well as their organisational readiness for sustainable change.
According to the Accenture and United Nations Global Compact CEO study, the top drivers for CEO adoption of a sustainable strategy are brand trust and reputational protection, potential for revenue growth and cost savings, and customer demand (Accenture & United Nations Global Compact, 2013). These top drivers are the same market factors that drive core business strategy. A driver with increasing importance is employee engagement. In fact, CEOs cited customers and employees as the most influential stakeholder groups over the next few years. Senior leadership of global organisations is increasingly recognizing the benefits of a sustainable approach, but reaching the transformational stage remains a challenge for many organisations.
This gap between sustainability vision and realised benefits is the sustainability performance gap. It arises because management has not been able to inculcate sustainability into their organisation's culture.
BARRIERS TO ADOPTION
The structure of an organisation impacts the ability of management to work collaboratively to effect change. Functional organisations are more siloed in terms of decision-making, resource allocation, and collaboration. Engaging management in meaningful conversations on sustainable strategy is challenging without an incentive to utilize their functional areas’ time, talent, and budget. Often, an organisation's measurement of performance is driven by quarterly results. Sustainable strategy is a long-term approach and key performance indicators (KPIs) and compensation are tied to short-term performance. Other barriers include insufficient information, lack of competencies, expertise, and knowledge. A significant barrier is that sustainability projects are siloed and are not the responsibility of key business drivers and decision makers. Baking sustainability into an organisation in order to realise the economic, social, and environmental benefits requires creating a culture of sustainability
CREATING A SUSTAINABLE CULTURE
In order to create a sustainable culture, it is important to assess the organisation's overall culture and its readiness for change.
Organisational culture is comprised of vision, shared values, and attitudes and beliefs. Culture is reflected in how work is done, the workplace environment, decision-making processes, communication techniques, and compensation. An organisation's culture has a significant impact on its ability to adopt sustainable change. Creating a sustainable culture requires broad based stakeholder engagement, alignment of business and sustainability goals, consistent internal and external messaging, and modification to policies and processes in order to embed sustainability into employees’ daily functions. Defining sustainable values in terms of environmental, social, and business goals provides a road map for the entire organisation.
ROAD MAP FOR SUCCESS
The key to transformational change is creating alignment between business and sustainable strategy and then effectively implementing the strategy. Project management professionals offer part of the solution through methodologies and structure for planning and implementing programmes and projects that drive organisational change. A recent survey of project management practitioners indicated that while organisations are increasingly adopting sustainability, project managers (PMs) feel that additional skills are needed to more effectively manage sustainability projects. Barriers include lack of strategic planning and cross-functional coordination, weak organisational support, and insufficient sustainability training for both the project managers and the workforce (Baker, Echeverria, & Kohl, 2015).
Forging relationships with key business leaders through identifying the impact that sustainable strategy has on their areas of responsibility is an effective means of forging alliances and creating organisational sustainability champions.
Engaging the C-suite from a business value creation perspective improves the likelihood of success. Demonstrating the value of including sustainability criteria in the portfolio component selection process drives sustainability further into an organisation's core processes.
Incorporating sustainability criteria in the portfolio selection process embeds sustainability into all projects not just sustainability projects. These might include requirements for reporting key sustainability metrics, incorporating climate change risk, or selecting vendors that meet supply chain sustainability standards.
Gaining sustainability expertise in areas such as product life cycle assessment, product stewardship, and supply chain management provides project management practitioners with subject matter expertise. Identifying material issues through evaluating an organisation's product value chain provides perspective on the full impact of operations on natural, social, and financial capital. Selecting sustainability standards for reporting, such as those from Sustainability Accounting Standards Board (SASB) and Global Reporting Initiatives (GRI) provides a framework and common language for engaging both internal and external stakeholders.
Expanding stakeholder engagement to include internal and external stakeholders and incorporating techniques to identify and gather requirements from a diverse stakeholder group provides a more holistic approach. Through effective stakeholder management, project management practitioners are better able to identify operational, financial, and reputational risks arising from its own operation as well as its value chain.
From a project team perspective, consider the wide array of organisational resources. Human capital professionals can be strategic allies in the process of transforming an organisation's culture toward sustainability. They are the keepers of organisational culture and experienced with change management and communication. In addition, human capital professionals provide a key link to changing behaviour through education, training, and incentive alignment.
Developing an organisational structure that supports cross-functional teams and aligns the decision-making process with resource and organisational support creates a successful model for sustainable change adoption. Creating a body of knowledge and housing it as a shared resource such as the Office of Sustainability provides a knowledge base for sharing of lessons learnt, best practices, and subject matter expertise.
Creating a sustainability project management office provides a resource for project management practitioners to access and allows for aggregation of reporting and tracking of key metrics that align organisational vision with sustainable strategy. This resource helps project managers move their organisation forward on its sustainability journey.
The keys to bridging the gap between sustainability vision and performance include:
1. Creating an organisational structure that provides decision-making and resource support for a sustainable strategy
2. Developing a body of knowledge that provides a resource for project managers to effectively plan, manage, implement, and control their sustainability-related projects
3. Selecting material industry issues and recognized standards in order to develop a common language of sustainability with clear goals and defined metrics
4. Developing a stakeholder map and effective engagement strategy for each stakeholder group
5. Creating training programmes to educate the workforce on the organisation's sustainability vision and mission, including their role in the process
6. Developing an effective communication plan that delivers consistent messaging to both internal and external stakeholders
In order to realise the benefits of a sustainable strategy, sustainability must become part of an organisation's core operations. As agents of change, project management professionals are well positioned to drive sustainable change within an organisation. Many project management methodologies and techniques support driving this magnitude of change; however, new skills, knowledge, and techniques are required to transform into a sustainable organisation. Combining project management methodologies and techniques along with new skills, knowledge, and tools will help project management professionals drive the level of change required to transform into a sustainable organisation.
ABOUT THE AUTHOR
Kristina Kohl, MBA, PMP is a principal of HRComputes, a consulting firm providing strategic guidance for corporate clients. Kristina leads the Sustainable Strategy practice, providing strategic guidance to senior management on the value proposition of sustainable initiatives. She is the author of Becoming a Sustainable Organization: A Project and Portfolio Management Approach. Kristina is a speaker at industry conferences and universities, including PMI, SHRM, Wharton Leads Council, and La Salle University. She is a Wharton MBA.
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Accenture, & United Nations Global Compact. (2013, September). The Accenture-UN global compact: CEO study on sustainability. Retrieved 15 January 2015 from www.unglobalcompact.org/library/451.
Baker, T., Echeverria, P., & Kohl, K. (2015, July 2). The voice of project managers on sustainability projects and requirements. Retrieved 15 January 2016, from http://www.projectmanagement.com/white-papers/303957/The-Voice-of-Project-Managers-on-Sustainability-Projects-and-Requirements.
Unilever. (n. d.). Sustainable living. Retrieved 29 December 2015 from https://www.unileverusa.com/sustainable-living/
© 2016, Kristina Kohl
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain