We often hear that the world is interconnected—that we need to treat our environment as a whole if we hope to ensure its long-term health. Well, the same could be said for a company’s approach to its Corporate Social Responsibility (CSR) policy. A holistic sustainability strategy is the new standard, as The Harvard Business Review writes in a new report titled, “The Performance Frontier: Innovating for a Sustainable Strategy.”
“By now most companies have sustainability programs. They’re cutting carbon emissions, reducing waste, and otherwise enhancing operational efficiency. But a mishmash of sustainability tactics does not add up to a sustainable strategy. To endure, a strategy must address the interests of all stakeholders: investors, employees, customers, governments, NGOs, and society at large. To do that, it has to increase shareholder value while at the same time improving the firm’s performance on environmental, social, and governance (ESG) dimensions.”
According to the study, creating a successful CSR strategy depends on a company first prioritizing its most “material” ESG issues— the ones that have the greatest impact on a firm’s ability to create shareholder value. These priorities can be as wide ranging as emissions, water and energy use, waste management, labor practices, community development, employee safety and executive compensation.
Next, a company must assess the impact that improvements in each priority area will have on financial performance – whether it’s cost-reduction, revenue growth or both. The goal is to identify synergies between sustainability improvements and the bottom line. This is achievable by monitoring specific changes in financial results:
“Companies can make an informed estimate of the slope of the performance-frontier curve for any pair of ESG and financial variables by determining whether each incremental improvement in ESG performance causes a corresponding positive or negative change in financial results—or has no impact.”
Finally, after deciding which issues to focus on, the study recommends determining how your company compares to its peers on these specific priorities.
“If your firm’s performance in an area—say, energy use or labor practices—falls short of industry benchmarks, getting it up above par is a first priority. At the very least it will mitigate your risks, since stakeholders tend to focus on industry laggards in campaigns aimed at increasing corporate ESG performance. Many improvements, such as reducing manufacturing waste, involve minor or moderate innovations that can enhance efficiency and, therefore, financial performance. Those sorts of innovations are increasingly necessary (but not sufficient) to ensure competitiveness.”
Large and growing companies are under increasing pressure to develop CSR strategies and create economic value in ways consistent with the interests of customers, employees and society. This puts extra pressure on companies to develop a holistic sustainability strategy, structured methodically and communicated effectively to the broader community.
This places pressure on communications professionals as well. Communications and public affairs agencies must take the same comprehensive, integrated approach as their clients. A holistic CSR strategy requires a holistic communications approach in which we’re closely involved with client companies at each stage of this process, helping develop CSR priorities and messaging consistent with bottom lines, mother earth and a public increasingly interested in seeing companies do what is right for our environment. Interestingly, some agencies are evolving their own CSR practices to put sustainability in the forefront of their own business models.
Such developments have intriguing implications. As Andrew Last, CEO of the PR firm Salt, observed in a Guardian op-ed titled, “Using PR as an agent for change in corporate sustainability”:
“What if public relations’ role was not about managing reputation or winning favour for past acts of philanthropy but engendering positive future change and accelerating progress on key sustainability issues?… This is where public relations may have a more dynamic role; as an agent for change rather than to gloss up reputations.”
Learn more about Nyhus’ Corporate Responsibility philosophy on our website.
