Sustainability and corporate strategy starting to go hand-in-hand
By Chris Henson
Companies are increasingly aligning their sustainability strategy with their business strategy according to our latest Webranking research. Communicating proactively about sustainability and demonstrating that it is fully integrated into the corporate strategy helps position a company as an attractive investment and employer.
Companies need to demonstrate alignment between their sustainability and corporate strategy. Sustainability is now a fundamental part of how a business runs, and there is an expectation that corporate websites will not only have a dedicated sustainability section, but that sustainability content permeates the whole company story.
The latest season of Webranking shows that Europe's largest publicly listed companies are communicating how they integrate sustainability into their business strategy more than we've ever seen before. Of the 500 ranked websites:
90% have a sustainability strategy
67% have a sustainability strategy that embeds the company's sustainability activities within the overall business strategy
In a 2016 IMD study, 62% of executives considered a sustainability strategy necessary to be competitive, while 22% thought it would be needed in the future. The fact that four years later 67% of companies are going one step further in aligning their business strategy and sustainability demonstrates how important this issue is today. Company executives are now very aware that sustainability needs to be a core part of a modern business, both for the benefit of society and to meet the standards that stakeholders expect.
The results also show that Europe's 500 largest companies are accelerating the pace of their sustainability efforts. The number of companies stating that sustainability is now built into their business strategy has risen by 10% since last year. This shift is significant as it shows a move towards more prioritised sustainability efforts.
The sectors leading the way in this shift are either primary or secondary industries, which is no surprise considering that companies extracting or utilising natural resources have the potential for the greatest environmental impact. By contrast, companies involved in tertiary industries, providing services to consumers, are not as naturally inclined to engage with sustainability. Some still strive to meet the criteria to be included in indices such as the Dow Jones Sustainability Indices (DJSI) and FTSE4Good, as well as funding green bonds, but more could be done to align the strategy with these initiatives.
Sectors with the highest integration of sustainability into strategy
Basic Resources 84%
Sectors with the lowest integration of sustainability into strategy
Travel & Leisure 40%
Sweden and the UK lead the charge
In our review of the sustainability content of the Europe 500 websites, Sweden comes out on top, with 18 of their 20 largest companies presenting the sustainability and business strategy as intertwined. This greater engagement may be due to operating in a lot of primary industries, the country's culture, or more likely a combination of these and other factors. Another high scorer is the UK, with 17 of their 20 largest companies incorporating sustainability into the business strategy. A recent Telegraph study of the UK's corporate social responsibility showed that sustainability has become extremely influential in corporate decision-making, with companies understanding the reputational risks and recognising the growth opportunities available.
Different ways to tackle integration
Companies are presenting their sustainability integration in many different ways, so we've picked out a few good examples covering a range of sectors. This provides an insight into the variety of approaches to effectively communicate sustainability messages.
1) British Land
UK real estate company British Land describe how sustainability is central to their mission, making it clear that this approach is based on recent reflection. Their strategy states: "The way we think about sustainability has changed. For us, it must be ‘business as usual’. This means ensuring that every decision taken by each of us at British Land every day is environmentally and socially intelligent, as well as making sound financial sense. For us, this is central to creating Places People Prefer."
2) Galp Energia
Portuguese energy company Galp Energia introduce their integrated approach to sustainable value creation with a statement from their CEO, which adds weight to the strategy. His input makes it clear that sustainability is not merely integrated into the business objectives, but also into the corporate values of the entire organisation.
"We incorporate the principles of sustainability and good governance into our strategy, culture and values, ensuring the safety and protection of our people, the environment and our assets, whilst fostering innovation and the development of outstanding human capital." Carlos Gomes da Silva, Galp Energia CEO
Dutch brewing company Heineken refer to the 'natural synergy' between their long-term business goals and the long-term needs of society. Their sustainability strategy states: "We don't see the two sides as separate: sustainability can be a great driver of business success and business can be a positive force for change. By being more efficient we can increase our profitability while decreasing our impact on the environment; by making a meaningful contribution to local communities and wider society, we’re able to develop successful brands that people around the world trust." This nicely summarises the advantages of positioning sustainability hand-in-hand with commercial objectives.
Ensure your corporate strategy can withstand scrutiny
With such rapid progress in the number of companies viewing sustainable and corporate objectives as one and the same, it's important to assess whether your sustainability content goes far enough to meet modern expectations. Companies need to go beyond empty declarations of how important sustainability is to their company strategy and provide meaningful and credible evidence of their strategy in action. Examples include case studies, testimonials and performance data that explain how the strategy is creating value for stakeholders.
Learn about how the Webranking report can bring clear direction to your content priorities and get in touch to see how we can support you with your sustainability communications.