EY: ‘Doing enough’ is not enough
Stephen Prendiville (EY) takes us through the EY 2021 State of Sustainability and explains why ‘doing enough’ on sustainability is simply not enough.
Although the findings show that there is widespread understanding of sustainability, many are overlooking the opportunities of value-led sustainability.
• 61% of respondents said there was good or complete awareness of sustainability across their organisations
• Compliance is the driving force for efforts; 53% say compliance with government regulations is sufficient
• Just 22% have adopted a science-based target to guide them on their decarbonisation journey.
It is time for organisations to consider why sustainability matters to them. If it only matters because Governments and pressure groups are telling them they need to improve their environmental performance, then the war is already lost, not just for them but for the planet.
It may sound somewhat cliched, but organisations that are not part (and playing an active part) of the solution, really are part of the problem.
53% of respondents believe compliance with government regulations and requirements on sustainability is sufficient, while similarly more than half (54%) do not utilise any form of recognised standard or benchmark to measure their sustainability performance.
So to boil it down, the majority of Irish businesses, with predominantly Irish customers and operating in Ireland, see the Government as the standard setters, and are then reporting their own performance against their own set of standards.
Our survey was conducted prior to the publication of the latest report from the Intergovernmental Panel on Climate Change and the subsequent Met Éireann, Marine Institute and Environmental Protection Agency report on The Status of Ireland’s Climate, so it is encouraging that the factor cited most often as being the driving force for organisations is the desire to do good (22%) with compliance coming in second (16%).
So too is the finding that just under a quarter (22%) of Irish medium sized businesses have a science-based target to help guide them on their sustainability journeys.
While initially this could be cause for concern, setting science-based targets is a significant undertaking in of itself, and we are hearted to see such an uptake among Irish businesses to embrace this approach to setting their sustainability journeys. Increasing this uptake over the coming 24 months will be a defining feature of our sustainability readiness as a nation.
Despite these green shoots, there is a lingering sense that organisations are overlooking the opportunity presented by taking a value-led approach to sustainability.
There is a view still held in some quarters that sustainability actions add cost and reduce business efficiency. This needn’t be the case. Indeed, it shouldn’t be the case.
Sustainability actions properly implemented in the right place, at the right time, using the right approach, can reduce costs, improve efficiency, enhance a company’s brand, and make it more attractive to investors, customers and employees. This is what we call: value-led sustainability.
Value-led sustainability turns sustainability into a business, as well as a moral, imperative. Many companies that embrace value-led sustainability increase their earnings, and therefore their total value. These companies have sustainability embedded within the organisation’s strategy and have a business plan to support it; they see sustainability as an opportunity to find new customers and increase revenue and market share; and they have clearly articulated the value of sustainability to internal and external stakeholders. Those companies that do value-led sustainability best, seek to imbue sustainability in their culture and principles.
Achieving superior sustainability performance is not as great a challenge as many people might think. The approach required is nothing new. It has been used for many years in Lean organisations.
The same approach of questioning why everything is done and empowering everyone in the organisations to look for improvements in every aspect of what they do will deliver immediate and lasting sustainability gains.
That requires accurate and verifiable sustainability metrics. What gets measured gets done but, in this instance, there is a dearth of such metrics. While 62% of organisations say they have management systems in place to record sustainability-related data, less than half (46%) say their sustainability reporting is aligned to recognised frameworks and standards.
Employee buy-in is another prerequisite for value-led sustainability.
Without employees at all levels embracing sustainability, understanding the targets and their importance, and believing in the organisation’s commitment to it, the objectives will be almost impossible to achieve.
One third (33%) of respondents claim to have a sustainability-related employee incentive scheme in place. That low figure may represent an exaggeration of the true position as there is likely to be some confusion with employee benefits such as the Bike to Work scheme. This presents a huge opportunity for organisations to leverage a powerful cohort, who will be pivotal to the success of their sustainability efforts over the coming years as we approach 2030 and then later 2050 sustainability targets.
Overall, the findings contained in the EY State of Sustainability 2021 suggest that the majority of Irish organisations could be missing the point when it comes to action on sustainability.
Doing enough is no longer enough, in fact it’s simply not viable anymore and the time for procrastination is over.
Now is the time for every business to convene its senior leaders to urgently assess the real risks posed by climate change in the immediate, medium and longer term. A value-led sustainability mindset is needed in every function from operations, to finance, from HR to marketing. Organisations that fail to take a proactive approach to the issue and embrace value-led sustainability will find themselves struggling in the wake of competitors who do.
Final thoughts from Stephen: It is not too late for Irish companies to share in the rewards and opportunities posed by the sustainability transformation ahead, but time is running short both for them and the planet. The trajectory that should be followed is an acknowledgement of the scale of the crisis, accountability and responsibility at an individual level and a commitment to take real action.