Our first article in this series on Getting Started in Sustainable Business Planning (SBP), Key concepts for planning teams, set out the reasons why businesses need to integrate sustainability information and initiatives into their day-to-day planning activities. In this follow-on article, Sophie Schlachter runs through some steps you can take to make your SBP journey as smooth and effective as possible.
These are:
- Getting familiar with sustainability concepts,
- Avoiding duplication of effort by working cross-functionally, and
- Identifying the most impactful sustainability areas to focus on.
These steps are useful for anyone currently engaged in business planning who wants to understand sustainability-related impacts. They’re also useful for anyone responsible for setting and achieving sustainability targets.
1. Getting Familiar with Sustainability Concepts
Sustainability is likely to be a new subject area for many people, who may not have been introduced to the wide variety of disciplines that constitute sustainability science during their formal education. As a result, many will view it as outside the ‘mainstream’ of business practice, dealing with fluffy, subjective concepts that are a matter of personal (or political) opinion.
It may then be surprising to learn that sustainability science has some well-established objective principles on which most practitioners agree, and which can be readily applied to every business. Not only that, but many of these principles have already been enshrined in mandatory regulations at a global, national and local level in a remarkably consistent fashion.
However, there is a lot of information to absorb, as sustainability covers so many subject matter areas. This means that an important first step is to allow for an initial discovery phase, in which teams are familiarised with the foundational concepts and frameworks that are being used in sustainability today. This helps the team to feel empowered to ask the right questions, and find their own ways to reflect these principles in a new ‘to-be’ business planning process.
Important Foundational Concepts in Sustainability
The easiest way to understand how sustainability affects business is to consider the flaws in the standard economic model. We are taught in schools, colleges, and all the way up to MBA level that the goal of economics is to ensure the efficient allocation of resources. It does this using the price signal. We rush to buy cheap products, pushing the price up as their availability diminishes, and to sell expensive products (‘profit-taking’), pushing the price down as the market saturates. Nowhere is this more evident than in the stock market, but the same economic ‘rules’ apply to all markets for goods and services.
But what about natural resources like coal and trees? They are available ‘free’ from Mother Nature, spurring ever-increasing demand as the price never rises to bring demand into equilibrium. And how about pricing social welfare? We want our kids to become bankers rather than teachers because there’s far more money in it. But does society really benefit from an army of bankers and no teachers?
Ecological economics has evolved to reflect these wider considerations. Economics in a Full World is the foundational text of this discipline and is well worth a read for those coming from a traditional economics background . It’s very short and succinct.
In the 30 years since this paper was published, many alternative models for a more sustainable economic framework have been proposed. The most contemporary and approachable discussions around sustainability are best represented in the theories/concepts of:
- Doughnut Economics – see this short video, or their very comprehensive website.
- The Circular Economy – another short video, and website of the Ellen Macarthur Foundation, who are thought leaders in this area.
- Degrowth or Post-Growth – watch this short video, or deep dive with lead thinker Timothee Parrique.
Each of these models recognises:
- the limits of our natural environment to provide resources and absorb waste, and
- the importance of maintaining a strong foundation of social welfare.
They also all model for the impact of using resources in a system, not just their availability or financial cost. The recognition of the wider implications of the mode and impact of accessing, using and sharing resources is the core of a new definition of economic equilibrium. It is also the core of a sustainable business planning model.
In this initial discovery phase, teams should be encouraged and supported to explore these theories, as well as take a deep dive into the climate, biodiversity and social inequality polycrisis which is a symptom of the unsustainable system we must all work to remodel.
Linking Theory to Practice: An Example
This may all sound terribly theoretical, so let’s look at a real-world example – the use of water in a large multi-site manufacturing company – to see how we would model a more sustainable business process.
In a traditional Sales and Operation Planning (S&OP) model, your operational data and bill of materials tell you that you use water to make your products, and to cool your equipment down. You therefore plan to ensure sufficient water to meet those needs, based on your projected product demand and required production. You measure how much water you are likely to consume, and compare it to how much water you have access to.
In an S&OP model informed by the core concepts of sustainability, you consider the wider implications of how your organisation interacts with water resources. Supply planning becomes more multidimensional, and considers a wider range of questions…
A dashboard monitoring these inputs might alert planners that, because of shifting weather patterns or prolonged drought in a certain region, the proportion of total water inputs coming from a water-sensitive environment has exceeded a pre-determined sustainable limit. The decision is made to relocate the production of the most water-intensive products to another location, and an assessment of the theoretic risk of water pollution at three alternative locations helps to locate where that production should go. The operations team is notified that there is a need to upgrade the efficiency of the water-cooling system at the impacted facilities, as a matter of urgency.
Scenario planning for both initiatives reassures teams that this is tenable from an operational and cost perspective and will bring the proportion back within an acceptable threshold. This holistic approach to supply planning works to ensure that your access, usage and sharing of a critical resource like water, is sustainably managed.
2. Avoiding Duplication of Effort by Working Cross-Functionally
It’s important to note that the supply planners in this example are not working alone. Sustainable Business Planning (SBP) is a trans-functional effort in which teams work in partnership to ask the right questions, gather the necessary data, and develop the right planning tools to generate holistic guidance. To put together a sustainable water management plan, planners require information from the Community Engagement, Environmental Management, Operations and Maintenance, and Product Management teams.
Of course, in many areas of Australia, water use is already regulated and rationed for industrial and agricultural use. So, this will not be a completely new way of thinking, and there may already be a team working on some of the sustainability planning questions raised above.
In fact, you may find that teams in all areas of your business are already engaging with sustainability in one way or another, even if they wouldn’t give it that name. Finance departments are grappling with the reporting required to ensure compliance with new sustainability regulations. Some executive teams have integrated sustainability considerations into their company mission and strategic planning and are pushing ahead with Science Based Targets. Engineers are designing more efficient machinery, and marketers are dreaming of greener products.
So, take a step back and realise that you’re probably not alone. Start with published reports (internal and external). From these you can assess:
- Is sustainability something we are talking about to our stakeholders?
- If yes, what is the company measuring and reporting on already?
- Have we committed to any targets?
- What initiatives have we launched to help achieve them?
The next step is to identify the types of data that are needed to produce such reports, and consider:
- Where that data is coming from?
- Which teams are already involved?
- What kinds of planning do those teams do in their day-to-day work?
- Where are the obvious linkages between that planning and the sustainability data they’re gathering for reporting purposes?
The point here is to avoid reinventing the wheel when scoping out what the initial phase of a company’s SBP journey might look like. With some initial investigation and open conversations, it will be evident where the most natural entry point is for planning teams to contribute to an organisation’s sustainability progress.
3. Identifying The Most Impactful Sustainability Areas To Focus On
Environmental and social sustainability encompasses a vast array of subject areas. As an example, there are 17 UN Sustainable Development Goals, which together identify over 160 distinct targets that must be achieved to ensure the global population can live well, and in harmony with nature. Some of those targets will be more relevant to a company than others. Our third suggested step is to determine what those targets or sustainability areas are, so that planning efforts can be directed effectively.
It may be that what is relevant or material to the organisation has not been fully articulated. Fortunately there are many resources for a desktop-based review into what is likely to be material to your industry.
Starting at a high level, international reporting bodies like the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative provide industry-specific guidance on the sustainability-related information that is material to an industry and should be provided to stakeholders. These standards are an excellent starting point and will help to ensure that your SBP models simultaneously support reporting requirements as well as helping to achieve impactful sustainability targets.
A finer grain of detail on materiality for an industry can be found in the work produced by your industry’s peak body or relevant governing association. These groups dedicate resources to providing guidance to their sector participants on many topics, and an increasing global focus on sustainability has spurred the development of industry-wide sustainability targets and strategies, to build sectoral resilience and reputation.
If your company produces physical products, check to see whether a Life Cycle Assessment (LCA) has been conducted for that product, or an Environmental Product Declaration (EPD) is available, either from your own company, an industry peer, or a research group. LCA’s are highly detailed ‘cradle-to-cradle’ assessments of the impact of producing physical products and will provide guidance on where in the product’s life cycle the most impact is occurring, for a range of sustainability-related topics. EPDs are simply the commercial communication of the results of an LCA, with company-sensitive data removed.
The below diagram demonstrates the results of a desktop survey of materiality for the example of a concrete manufacturing firm.
This initial stage of materiality assessment is to determine which sustainability-related areas are important for a business to engage with. The second stage is to explore the relative contributions of different business activities to a single impact area. For example, a concrete manufacturer could plan to put solar panels on their office roof to reduce their impact on climate change (UN SDG no. 13) but emissions from office-based electricity usage may not be material to the overall climate change impact of firms operating in that sector.
To be effective in bringing an organisation closer to operating sustainably, planning efforts should be orientated to the most impactful areas of the business.
Every data point gathered in an enterprise’s information system is relevant to sustainability in some way, but you will need to be mindful of materiality to use your resources wisely. The role of the planning team is to work with the wider organisation and subject matter experts to identify and model the material impacts of a business’ activities, and to enable informed short, medium and long-term decisions.
What Next?
Hopefully this article has given you a few ideas on where to start your Sustainable Business Planning journey, and some useful areas for further research.
What next? A common challenge facing sustainability projects is a lack of prioritisation against competing initiatives, resulting in insufficient time, money and people power to drive the project forward.
In our next article, we discuss how to build a successful business case for integrating sustainability into a connected planning tool, with the aim of securing executive buy-in and building motivation and support throughout the organisation.
Read more: Getting started in Sustainable Business Planning: Part 1 – Key concepts for planning teams
To start your sustainable planning journey, contact us.
Better Planning. Better Planet.
About the author – Sophie Schlachter
Sophie Schlachter is a Business and Sustainability Analyst at Zooss Consulting. She holds a Masters of Sustainability from the University of Sydney, and has previously worked in regenerative agriculture and waste management, most notably for OzHarvest and the Taronga Zoo Conservation Society. She has completed Life Cycle Assessment software training (SimaPro) and is a certified Anaplan Model Builder.
About Zooss – Sustainable business planning that connects to the world we live in
Zooss Consulting is passionate about pioneering Sustainable Business Planning. We are a team compelled by curiosity, constantly seeking new ideas and fresh perspectives on the best-practise and innovative use-cases for SBP. By embedding environmental and social sustainability into traditional business planning, we aspire to lead our partners into a more inclusive, equitable and regenerative future.
We are a purpose-led organisation and have donated 50% of our company to the Onyx Foundation. Onyx is a not-for-profit organisation providing long-term funding to biodiversity conservation and regeneration projects around Australia. Ultimately, Zooss’ purpose is to protect our natural world for the next generation, both through Onyx and through the positive impact of our client’s SBP models.
Our highly experienced team are leaders in the field of connected planning, and have successfully delivered complex implementations for large organisations across finance, sales and operations, workforce planning and promotions management. Combining our expertise with formal sustainability training (three of our team hold a Masters of Sustainability) gives us a unique set of skills, and the ability to build, iterate and reiterate, SBP models for our clients.