We all know it. It’s tough to be in-house in sustainability for most right now. Whilst needed for system transition, the EU transparency requirements and subsequent Omnibus-gate have turned CSRD and related compliance lingo into an unspeakable loser’s language in many businesses. Insist on speaking and you’re a walking dead.
Find a more business-friendly language focused on creating commercial value, and you might just make it.
Rethinking what matters in an age of volatility
The shift from long-term thinking to immediate commercial benefits is hard to miss.
At the blink of an eye, the main obsession of many corporate sustainability professionals has turned into the very thing you need to distance yourself from, to show that you are fit for the new world order and the well-known reality of corporate cut-throat competition.
For good reason, C-suites are worried about the geopolitical struggles of those with hegemonic status vs. aspirations, and the related risks of disruption of the competitive landscape, trade and supply chains, the political persecution of ESG in the New World, the renewed focus on security and defence, and what have you. All real, all relevant.
In particular, for the shorter-term thinking, which is back in full force.
On the horizon, the viability of longer-term market success in a boiling and burning world of global warming is still as relevant to shout from the rooftops. However, it is not easy to convert that reality into short-term actions and investment budgets that would match the challenge of weaning current business models off their hydrocarbon and virgin materials addiction.
Roundtable of sustainability leaders and investors
At Nordic Sustainability, we sat down this month with a group of corporate sustainability leaders and investment executives to discuss what works and what doesn’t work in sustainability right now, representing industries ranging from renewable energy, industrials and finance to consumer goods and electronics.
Based on what we heard from the participants and see in our work with leading businesses across the Nordics, here are some insights and top tips that we would like to share with you.
Top tips for strengthening your sustainability strategy under short-term pressure
It might have been left behind when compliance with incoming regulations was a killer argument, but it’s back to the basics of the business case for corporate sustainability.
Be clear on commercial materiality. What customers really require in terms of sustainability beats compliance arguments any day of the week. Moreover, track sustainability-linked revenue (or RFPs). The drive may also come from business partners or investors.
Use a sustainability value creation framework as an internal development and engagement tool to sharpen your thinking. The new value creation framework from Principles for Responsible Investment (PRI) is helpful with some adjustments.
Get sharper on the financial and commercial risks of inaction, quantified for multiple scenarios. You might be the only one with the headspace to talk about the longer-term transformation needed. However, without numbers on the table, you’ll be in dire straits. Figure out and balance what to quantify and what to keep as qualitative value-add propositions. Don’t get stuck trying to get to the perfect numbers.
C-suites will still see sustainability as very broad and overwhelming, even when reduced or sharpened in focus in a renewed strategy that many are undertaking now. Showing them what you won’t be doing anymore may consequently build trust.
Additionally, remember that it is not only about climate and carbon, but also about resource dependencies in order to be resilient long-term. Therefore, consider integrating geopolitics, security and supply chain in your arguments for decarbonisation and transformation.
Investors still care about decarbonisation and material dependencies even though the rhetoric has changed overseas. As such, climate solution financing will remain key, but it is too narrow a focus to satisfy investor risk-adjusted return expectations.
Going forward, there will be a stronger push for climate transition plans that deliver on science-based targets coming from investors with grey to green allocations and tangible decarbonisation in focus. That also means less focus on artificial portfolio decarbonisation by divestment and more focus on requiring real-world decarbonisation plans that you can leverage in your internal business case presentations.
Clients zero in on the hard numbers behind sustainability
The guidance ahead closely aligns with what clients now turn to Nordic Sustainability to explore and resolve. We see a big pick up in requests for:
- stronger GHG and materials inventories
- climate transition plans and related cost-benefit calculations of decarbonisation levers
- climate risk assessment and financial risk quantification
- sharper integration of sustainability into commercial strategy
- more meaningful ways of setting portfolio transition targets for investors
Ready to embark on your new way forward?
To learn more, reach out to:
Co-Founder & Managing Partner, Sven Beyersdorff, sbe@nordicsustainability.com
Head of Strategy, Troels Børrild, tbo@nordicsustainability.com
Discover more
- A step-by-step guide to develop a Climate Transition Plan
- Our latest webinar on climate risk assessments from our experts
- Recent updates on the Omnibus
Author details
Troels Børrild
Head of Strategy
