Podcast Summary

  • Sustainability refers to an organisation's consideration of its environmental, social, and economic impacts, and how it can operate in a way that protects resources and ensures long-term viability.
  • Sustainability strategy has become more important as it provides a framework for prioritising and measuring sustainability initiatives, moving beyond ad-hoc activities to a more intentional and impactful approach.
  • Sustainability strategy is increasingly converging with overall business strategy, as organisations recognise the value it can bring in terms of brand, reputation, employee attraction and retention, and overall business growth.
  • The most integrated approach embeds sustainability at the core of the organization's purpose and applies sustainability considerations across all aspects of the business.
  • Key benefits of a sustainability strategy include enhanced innovation, top-line growth, brand value, and improved stakeholder engagement, though pitfalls include rushing into actions without proper planning and failing to effectively implement the strategy.
  • Effective sustainability strategy development should start with the organisation's purpose, followed by a materiality assessment to identify the most relevant issues, and a comprehensive implementation plan to embed the strategy across the business.

 

 

Transcript

Transcripts are auto-generated.

 

Announcer (00:01):

The Cambridge Marketing Podcast with Kiran Kapur brought to you by Cambridge Marketing College. See their range of courses and apprenticeships@marketingcollege.com.

 

Kiran Kapur (00:13):

Hello and welcome. Today we are going to be talking about sustainability and specifically sustainability and business strategy. And I'm delighted to welcome Victoria Hartley, who is a sustainability professional with over 20 years experience working in this area. And she's worked in a wide range of sectors and organisations in all aspects of responsible business agendas. Victoria, welcome. Can we start? Sustainability is a huge word. So what do you mean by sustainability?

 

Victoria Hartley (00:46):

Yeah, thank you. Absolutely. I mean, it's one that's very much come to the fore over recent years, so I think a lot of people have a quite strong environmental context to sustainability. But for this conversation, I think we're really talking about it in the broadest sense. So it's really a consideration that an organisation should give to address its environmental, but also social and economic impact, and both the good and the bad, how it can operate in a way that protects resources and treads lightly really. And I think increasingly it's very much part of the licence to operate for organisations, and it's about them being sustainable in the broadest sense and making sure that they're acting and operating in a way as an organisation that will ensure that they're here for the foreseeable future.

 

Kiran Kapur (01:45):

So rather than we would always previously just talk about growing the business, this is more growing the business with a bit more of a purpose. Is that right?

 

Victoria Hartley (01:53):

Absolutely, yeah, absolutely. Purpose beyond payback to shareholders. It's the broadest sense of purpose. Why are you there? What do you do? What impact do you have on the world? And how can you consider the negative impacts you have and how can you ensure that you are having the broadest and best positive impact?

 

Kiran Kapur (02:17):

And you said it was more than environmental. So before we get into strategy, I'm trying to think of the areas that I might be considering if I was thinking about strategy. So what, it's not just environmental, what else is it?

 

Victoria Hartley (02:32):

No, absolutely. And ESG is the terminology that has become quite popular over the last five, seven years, and that's really quite a helpful way. It is very much an investment and financial perspective on sustainability, but the E and the S and the G is environmental, social and governance. And that's a helpful way of thinking about the breadth issues that an organisation needs to think about. So environmental itself is obviously a huge and very pressing area at the moment. Social is really about from the positive impact you can have on local communities, but through to your people, your employees, the individuals and communities that are impacted down your supply chain rights, human rights, welfare, et cetera. So again, that's a big piece. And the governance is really, it's about a responsibility and a consideration to how you are operating as a business. So yes, it's a big pool, it's a big, and depending on the organisation, depending on the sector, those ebb and flow, there's certain, we talk a lot and I'm sure we'll come onto it about not being able to cover everything and considering which of those impacts are most relevant to you as an organisation.

 

Kiran Kapur (03:59):

So I think the one of those that always confuses me, and I know some of the students is governance. What does that actually mean?

 

Victoria Hartley (04:09):

So governance is how you ensure that you are running as a responsible business. So how the accountability for some of these areas, the structures within the business, how they're set up, the policies, how this whole area is really kind of monitored and managed and the businesses run in a responsible manner. So whether there's licencing issues or whether there's human rights, there's a social aspect to it. But again, that would sit across the piece with governance. So it's really the running of the organisation.

 

Kiran Kapur (04:50):

Okay, thank you. So you've very carefully described what sustainability encompasses. So why do you think a sustainability strategy is important and how has this started to develop? You said e ESG Hass come in the last five or seven years. It's obviously quite a moving industry.

 

Victoria Hartley (05:09):

Yes, the whole space is moved enormously. When I started in this space 20 years ago, the terminology was more about corporate social responsibility. Environment wasn't such huge topic and pressing topic that it is now. So yeah, the sustainability strategy, when I think back to that time, a lot of activity that was going on businesses when they talked about being responsible, they would set up an initiative or they would set up a campaign or they would have an employee volunteering programme or they would be doing some recycling and there would be these ad hoc activities, which are great, all very important, but ad hoc activities across the business, often driven by particular individuals who had an interest in those areas. And there was a sense there were businesses taking it seriously, absolutely. But there was a sense that a lot of this was a kind of nice to have.

 

(06:15):

It was a bit fluffy, some of it, or perceived as being fluffy by the business and very much kind of on the side bit siloed. And what we've seen is a development of a more strategic approach to sustainability, to responsible business. And the whole strategy piece has come out of that. So sustainability strategies, as with any other strategies, is really helpful in as much as it's a framework for the prioritisation of these activities. So it's encompassing them in a plan, it's a set of actions, it's a clear outline of intention and it gives focus. It allocates time, it allocates resources, and it really gives a plan of action. And what that means is that gradually it's become far more tangible. And as you start to create a strategy, you can then start to measure the strategy and you can then start to see the impact of what you're doing for the business, for society, for the environment. And I think it's been really key in bringing sustainability to be a serious consideration for the business. And it's sort of legitimised. You wouldn't run a business without a business strategy. So it's really kind of added an element of intention and measurability to it. I think that's

 

Kiran Kapur (07:48):

Really interesting. There was a definite view that sustainability was something that was just a little bit fluffy, a little bit something that you sort of did. You were just trying to keep people happy. It was like a bone that you threw at a dog. It wasn't anything taken seriously. So I love the idea that we're sort of pulling it together as a strategy. So you sort of said you wouldn't run a business without a business strategy. So what's the relationship between sustainability strategy and a business strategy?

 

Victoria Hartley (08:18):

So I think the two have gone very much side by side for a long time. So as I said, we saw businesses take a more strategic approach to formalise their commitments in an area as we've said, that was sort of historically siloed. And that as the conversation about sustainability has increased and that area and demonstrating that a responsible approach to your business and supporting your stakeholders. And we've seen a huge shift in drivers for sustainability. So from this kind of activist element of consumers to demands, even I think I would go as strong as saying demands from employees. So it's a big recruitment and retainment issue through to the increasing legislation around reporting, for example, and the interest from investors within the ESG agenda. So business has taken more of an interest. So where the two were running almost in parallel. And I think increasingly the sustainability strategy would start from the perspective of the business's purpose or the business's vision and flow out through a pathway of sustainability, more interest from the business.

 

(09:50):

And I think it's well recognised now that sustainability is really a kind of C-suite boardroom issue. So the two have almost converged as business has taken more of an interest in the sustainability agenda. I would say that's still very much in progress. There's a sort of intention action, bit of a gap there between the fact that a majority of businesses recognise how important sustainability is to their business, the growth of the business, the brand and reputation is a huge aspect of this. The intangibles around brand and reputation employees, as you mentioned, there's a very strong business case now, but actually the number who are starting to integrate sustainability seriously into business strategy is still work in progress. It's still probably minimal number who are really taking that step of going beyond aligning the two to actually what we can come onto, which is more about the leadership of integration.

 

Kiran Kapur (11:10):

Yes, one of our esteemed colleagues, Nigel Clark always says that it's always fifth or sixth on the to-do list for everybody, whether it's an individual, whether it's a company, because there's always something else that comes up in front, be it cost of living crisis or inflation or supply chain issues or whatever. It's always just that little bit further down. So I think you're very right. There is a difference between intention and actual action. So let's talk about how you get from one to the other. So what is a more integrated approach for business strategy and sustainability strategy?

 

Victoria Hartley (11:46):

So I think a more integrated approach very much starts from the purpose of the business. And there's a big piece of research, I think by globe scan that's done every year around leadership in sustainability. And as you see that the companies that come out in that ranking, there's been a real shift from those that are perhaps offering really strong products, but when they discuss what the factor is around what is leadership really about, it's shifted very much to being those with an integrated business sustainability plan. So it's those that really put the notion of sustainability being sustainable and why they are there, their purpose in the broadest sense, as we've discussed right at the heart of the business. And we see leaders in that space. So I think Patagonia has come out on top and we've got the Unilevers and those that are well known in this space for having very much integrated what was perhaps a separate sustainability plan into a very mainstream, they consider everything that they do, they consider their growth a plan for growth.

 

(13:18):

So that notion of sustainability, sustainable living plan is absolutely central to how they consider the business and the growth of the business. So it starts with purpose and then it's really about applying all these considerations to all aspects of the business. So understanding your impacts, but in the broadest sense. So right along the cycle of the business, not just the starting point that we picked up at the beginning around individual initiatives and things, but actually thinking through the whole life cycle, the whole cycle of where you source, how you develop. Then there's the main business, but then also the lifecycle. Where does your products go? How are you enabling behaviour change? So it's a huge consideration. So yeah, it's about really driving it through every aspect of the business.

 

Kiran Kapur (14:17):

So let's talk about a little bit about Patagonia, if that's okay. There are the sort of classic example that everybody holds up as getting it right. I mean for anybody that doesn't know who are Patagonia and what do they do? Why was it such a big change?

 

Victoria Hartley (14:34):

So Patagonia are a outdoor clothing brand. They were very much set up with sustainability at the core. So a very strong sense of responsibility within the way that their products were developed in the materials that they used. But also they've gone beyond that. So there's been some interesting things recently around their leadership talking about how you balance growth and profit. And actually that's not their main concern. They obviously want to profit, but you get beyond a point with growth where their core is around being sustainable, being responsible, and they've had some really interesting campaigns about not buying products. So they think quite differently about it, and they've actually just changed their financial model as well. So I think, and forgive me if I get the details, trying to give a very kind of quick account, but they've set up a trust and the ownership of the business has gone into, or that the business has gone into this trust, and that is all around protection of climate. So they've thought completely in the broadest sense about their financial model through to the very core of the business and how that can be put to positive use.

 

Kiran Kapur (16:09):

So it's a lovely example of a business that really has got a sustainability strategy is the business strategy that

 

Victoria Hartley (16:14):

Absolutely. Absolutely. And that's very unique and it's not something that I think a lot of businesses, sustainability is a journey and for a majority of businesses that's not a place where they could suddenly arrive at. But I think it's almost the end point of a journey of that process of thinking more strategically, thinking about the business value and moving beyond. I think what's still there for some businesses that feel that sustainability is a cost and an additional consideration. And actually if anything, it's not. It's about being efficient with your resources. It's about improving your brand and all these actions actually should reduce rather than cost. But yes, it's taking it into that more strategic

 

Kiran Kapur (17:09):

Place. So I want to finish up with looking at some of the benefits, but then also some of the pitfalls. So what are the benefits of doing it? We've touched on some of them, but what are the other benefits?

 

Victoria Hartley (17:23):

Yeah, we've touched on some. There's obviously, I think the benefits that come with putting a strategy to anything as we said. So it formalises the activity. It allows you to evidence what you are doing. It strengthens an internal business case and the idea and being able to evidence the value to the business, it gives accountability. There's roles, responsibilities, resource allocation, et cetera. It gives focus. And we touched right on the beginning about the idea of not being able to do everything. So there is a process called materiality, which a lot of businesses have started to use at the forefront of the strategy process, which is accepting that you can't do everything and you also don't need to do, depending on who you are as a business, as we said right at the start, there are issues that are more pertinent to you as a business. And materiality is the process of understanding which of those issues has most impact to you as a business, but also which ones are most important to your stakeholders. So there's that sort of double side.

 

Kiran Kapur (18:40):

And is there a set process that people go through with material?

 

Victoria Hartley (18:42):

Yeah, absolutely. So it's broadly a kind of research and consultation process where you gather an understanding of what is important, what is of those issues, which are going to have most impact on you, but also, which are, as I said, which are of most interest to your stakeholders. So there's all those kind of broad pieces, but actually there's growing evidence around that kind of business benefit. So it brings innovation, new ways of doing things, new ways of thinking. There is evidence that businesses that are operating responsibility do better. So there's a top line growth aspect to this now as well. Huge piece around brand value now and understanding that this part in that being a responsible business, plays in reputation and brand competitive advantage. We all know who Patagonia are because of this, and there's a lot of, perhaps Unilever is very much known for this and I'm sure it's a huge part for them in terms of the competitive advantage. And then other areas that we've sort of touched on. It's very important to employees, it's very important to stakeholders. So your engagement with whichever audience is there, whether it's consumers, fans, whichever it is, there's the attraction. There's a retainment of employees. So there's a huge breadth now in terms of why it's a good idea and then you are doing business better. There's that sort of very fundamental piece.

 

Kiran Kapur (20:23):

We all like the feeling that we're doing business better. So that was a really nice sort of overview as to why you should do it. Now let's talk about some of the pitfalls, because there are pitfalls in this area.

 

Victoria Hartley (20:36):

Yes, there are pitfalls. I think those pitfalls come with probably trying to rush into it. There was a big pushback on businesses not doing things properly, I think. So the claims around greenwashing that's moved to various other washing terms of businesses that have gone in and made claims or perhaps gone in and focused on one particular issue without this foundation understanding of what's important to them, what's important to their stakeholders, what really matters. And actually making sure that there is a strategy in place that addresses the internal and then addresses the external. So how you operate as a business is as important as the positive impact that you can have externally. And I think that balance has sort of shifted. There was a lot more focus on what you could be seen to be doing 10 years ago, 10, 15 years ago, but making sure that you are operating responsibly behind the doors is increasing is very important. So I think the pitfalls probably come there of assuming or rushing in wanting to be seen to be doing this and actually not taking the time to produce a strategy that's informed and planned. Yeah,

 

Kiran Kapur (22:10):

And I think you're right. This is all about sustainability strategy, doing that thought process, getting your strategy in place. So you've given us some great reasons as to why we should do it, and you've been very clear that what you need to really think about what you want to do rather than just go, oh, I can do this or I can do that, or I can just nip this off. And you've given us the process of materiality, which it gives you a way of starting. How else can a business start? Where does a business start?

 

Victoria Hartley (22:43):

Yes, no, absolutely. Yes, it can be. It's a daunting area. So yeah, I think starting being authentic in all of this is quite important. I know that's a word that gets used a lot at the moment, but starting as we've said with your purpose. So a strategy should be unique in as much as it's about the strengths and the culture of the individual business as well as the industry that it's in and that markets that it's operating in. So starting with that purpose of why are you here beyond making money, I think is a very important place. And then there's a process that you follow in terms of rolling that through sort of vision, mission values through to increasingly kind of tangible and practical targets and programmes and KPIs. So there's a framework that can be developed. The materiality is I think, very important in terms of shaping that framework and understanding what your key issues are, what your themes are that you should address, and then really working through that process. But I was thinking about this before the conversation. I think one thing that quite often gets missed is implementation

 

(24:08):

Of the strategy. So you can come up with the best strategy, it looks great, it's full of information, it's evidenced, et cetera. If you do not have a plan around implementation and actually engagement from the front end of this process, it just sits as a strategy. And that's something that I think a lot of businesses struggle with is a huge amount of effort that goes into creating the strategy. And it's a great strategy, but you need to be able to implement it. So I think really thinking from the beginning about who you need to engage business units, who's going to own this? Because the most efficient, effective way for a strategy to come to life is if it is embedded within the business. And then also thinking beyond the business. So it's not just you want the right people within the business to be driving and owning their areas.

 

(25:11):

And there's a whole piece that comes with making sure that people understand and are educated and have the tools to do that, but also broader engagement. So if you want to make an impact in the world, who do you need to be on board to make that impact? Is it your consumers who you want to change their behaviours? Are you educating about a certain issue? What's the bigger picture that you're looking at in terms of the kind of positive that you can have? And how can you bring this to life for them? How can you make sure that you embed it within lives and consciousness and thinking? And so I think that implementation is, it's good fun that bit, but it's really important. It has to be embedded, it has to be brought to life. So yes, that was one that I was thinking is the next step that's quite often about

 

Kiran Kapur (26:08):

Think. That's very, very solid advice and it's very easy to sit and have great plans and ideas, but they often hit the buffers with the implementation. Victoria Hartley, thank you so much for your time and for giving us insight into sustainability and why it's so important for business strategy.

 

Victoria Hartley (26:25):

You're welcome. Thank you very much, Kira,

 

Announcer (26:27):

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