Chulendra de Silva and Charith Jayasundera Co-Founders and Partners of InterBalance – a consultancy company that provides Sustainability and Risk Management solutions to corporate clientele, spoke at the well-attended Members Meet evening organised by The Management Club, on 3 July, to a forum of TMC members and guests.
Chulendra and Charith very eloquently and clearly explained in-depth the concept of sustainability which was introduced formally in 1987 by the Brundtland commission. However, an array of interpretations and definitions of what it is still lingers, which has led to many misinterpretations of the philosophy and hence the various methods of practice within the corporate world.
In the most simplistic forms of explanation they emphasised that, “Sustainability is the consideration of an organisations’ impact on its stakeholders and vice versa”. Here the intent is to reduce or eliminate the negative impact whilst increasing the positive impact.
The more mature organisations have realised that Sustainability is increasingly becoming a key management process that is required to be carried out within organisations. While most organisations understand the tangible benefits that come about by monitoring non-financial sustainability data, many companies face challenges in implementing a relevant and robust management process to drive and entrench sustainability within its business strategy.
The usefulness of sustainability to provide critical non-financial management information for decision making for its leadership, is what makes a Sustainability Management Framework an essential management process in driving an organisation’s vision and strategy.
This Sustainability Management Framework can be utilised to track information ranging from procurement practices, material usage, energy, carbon footprint, water footprint, waste management, effluent discharge, biodiversity impacts, environmental damage, employee data, attrition, occupational health and safety incidents, pay levels, diversity of management, maternity and return to work rates, gender diversity, human rights practices, ethics and corruption, risk management, corporate social responsibility initiatives data, quality control, and other product stewardship performance.
The starting point of the framework is in the identification of the issues of both internal and external stakeholders. The key issues are then prioritised for sustainability performance tracking and management.
The development of Policies and Management Approach of the material topics identified come next. These act as the ‘rules’ by which the organisation strives to manage the negative impacts it causes.
With the material topics identified, and the ‘rules’ established within the organisation, it is now time for the performance to be monitored which leads to the development and tracking of Sustainability KPIs . Whilst an organisation can develop their own KPI for the material topics identified, use of frameworks such as GRI Standards, the UN SDGs, the UNGC Principles and the IFC Performance standards amongst many others enable companies to not only track their performance, but also easily self-assess their performance against peers.
Chulendra stressed that in most instances the journey of sustainability data collection begins on a humble MS-Excel spread sheet. However, as companies mature, locations increase, the need for real-time data increases, requirement arise for audit trails, data verification and development of customised reports, etc., organisations soon realise the need for enterprise wide sustainability IT systems.
With sustainability performance being tracked on a timely basis, the organisation now can compare its own performance with that of its peers. Here, bench-marking of performance on a ‘per intensity factor’ assists companies to establish where it is (baseline), and where it strives to be (target), within a given period.
This gap analysis is what then leads to the selection of a company’s sustainability initiatives. In many instances, sustainability initiatives are chosen by organisations based on a fad or feel good factor, purposes of PR, individual passion, and unfortunately, also for purposes of green washing. This leads to organisations spending good money on sustainability initiatives that will yield less value in terms of managing its material impacts, and therefore will be less effective in managing its triple bottom line risks. This is when sustainability is considered a cost to an organisation and less strategic!
Charith pointed out that, sustainability initiatives chosen based on the gap of the current sustainability performance and its internally established targets, will immediately see itself investing its funds that enable an organisation to meet its strategic goals. Thereby, truly aligning its Sustainability with its strategy.
Reporting is the final stage in the Sustainability Management Framework, where, with all the previous stages now complete, the report becomes a by-product of the Framework. In most cases, the annual report drives the sustainability agenda in organisations. While this is possibly a motivator for organisations to commence its sustainability journey, it is by no means the best approach to obtain the true value addition that sustainability brings about.
They concluded their presentation with a thought provoking message – sustainability which is a true investment that is imperative to survive, needs to be implemented as a top down approach with a clear structure and a rigorous change management process for a successful implementation.