New Zealand Trade and Enterprise has set out ways Kiwi brands can embed sustainability into their businesses.
Sustainability is about taking a long-term, intergenerational view. A successful and sustainable business model is one that’s commercially viable, offering a desirable and profitable product or service. It’s future-ready to succeed in an evolving world with rising commodity prices and changing regulations. It also contributes toward a sustainable society and economy that delivers social progress within environmental limits.
The economy, society and the environment are interdependent – none can thrive in isolation. In Aotearoa New Zealand, this way of thinking is integral to te ao Māori, the Māori worldview, in which everything living and non-living is considered interconnected. The tangata whenua (people of the land) have a role as kaitiaki (guardians) to preserve and protect the natural world now and for future generations.
Sustainable Business Model Benefits
- Strengthens your brand and reputation with customers and stakeholders. IBM’s Meet the 2020 Consumers Driving Change report noted that over 70% of global consumers would pay a premium for sustainable and environmentally responsible brands.
- Reduces inefficiencies and areas of risk exposure within your supply chain. Sustainable businesses = resilient businesses.
- You stay ahead of regulation changes in a rapidly evolving, disruptive and increasingly technologically connected world.
- Helps attract, engage and retain employees. 86% of New Zealanders say working for a socially and environmentally responsible company is important.
- Opens up access to investment and capital. Sustainable investing is on the rise: sustainable investment assets now total US$17.1 trillion, equating to 33% of total US assets under professional money management – a 42% jump from 2018.
Regardless of where your business sits in the value chain, your level of business maturity, or who you sell to, sustainability is no longer ‘nice to have’ or an added extra. It must be prioritised in your business, and it requires leadership buy-in, two-way communication with your teams, and an understanding of your environmental, social, cultural and economic impacts.
How to Embed Sustainability in Your Business
- Consider your purpose – why do you do what you do?
It’s vital to hang your sustainability efforts off of your purpose and focus on areas that are most material to your business. Best practice is to conduct a materiality assessment to take stock of the positive and negative impacts of your business.
Consider environmental, social and economic factors, and look at your whole value chain. This could include energy and water use, employee rights and benefits, governance, emissions, waste and packaging. As you do this, you’ll find areas where you’re doing well or could do better and areas of risk (financial, competitive, reputational) that you need to manage or control.
Having mapped out these opportunities and risks, figure out what really matters to your customers, employees, investors and other stakeholders. As an exporter, this means looking at your international markets as well. The sustainability landscape varies hugely from place to place, depending on environmental and social situations, laws and regulations, and consumer preferences – knowing your market is crucial.
Once you have this information, you then analyse it. Plot each issue based on importance to your stakeholders (vertical, or Y axis) and the significance of the sustainability impacts (horizontal, or X axis). By putting all the issues into this framework, you can spot recurring themes and identify areas of high importance and high impact so you can focus on the right areas first.
If you’re time/resource-poor and a materiality assessment isn’t an option, start by focusing on the areas of the biggest concern for your industry. For instance, if you rely on a coal-fired boiler for production, it’s logical to focus on energy; if you’re a tech business with a large contracting workforce, you might focus on employee wellbeing.
- Familiarise yourself with the United Nations’ Sustainable Development Goals (SDGs)
The SDGs are a collection of 17 interlinked goals designed as a blueprint to achieve a better and more sustainable future for all. These goals cover the breadth of sustainability from climate action to decent work opportunities and gender equality. To help determine your key areas of impact, consider how your business contributes towards these goals and map out where you are having an impact across the supply chain in its entirety.
- Assign a sustainability lead
Once you have your focus areas, you can begin taking action. Assign someone to lead sustainability efforts and determine your core stakeholders. Who this is will depend on your organisational structure and your focus – it may be finance, operations, procurement, HR etc, but it should always include the CE and board.
- Measure the current state of play before setting targets
What you measure will depend on your focus. It could be carbon, waste or community engagement, for example. Having measured your baseline, you can set some targets. It may help to see what targets your international competitors are setting and use these as a guide for benchmarking. If you’re setting carbon targets, consider a science-based target aligned to climate targets for global warming.
- Communicate your efforts to stakeholders
The final and crucial step is to communicate what you’re doing to your stakeholders. Take your employees, your board and your customers on the journey with you. You will undoubtedly have champions in your company – sustainability is a personal passion for many – learn from these people and harness their enthusiasm.
To discover more about how to set your sustainability priorities, watch the video below. For more information, visit the NZTE website.