Sustainability, a strategy employed to address risk and simultaneously create opportunity from that risk, is not a new concept. At a business level, it ensures that an entity can function profitably, including creating competitive advantages, fostering innovation and mitigating risk. The methodology fares best via a systematic approach, such as when it is ingrained into cultures that span every department within a business, and further beyond to its stakeholders. However sustainability might be defined, the concept is integrated daily. Today though, both markets and policy demand the concept move through its next evolution: defining its purpose composition.
Sustainability today involves long-term planning with heavy emphasis on environment and social welfare – an incredible leap from a hundred years ago. Given the advancement of technology and increasing knowledge of biology and social well being, sustainability as a whole attempts to ensure that decisions made today will mitigate long-term risk. It’s a big shift in a society or company to plan well ahead into the future, but if your company plans on being in business for multiple generations, why not create a rough map for the long-term?
What will your company be in 50 years? What are some major risks your company faces in the long-term? To make this a practical exercise, because of the many ideas one can have for the future but can only speculate what it may entail, we begin with where we want to be at the end. Envision 50 years in the future; what will the company and industry potentially look like, and what should your company look like? You then ask what would need to be achieved at the halfway point, 25 years, in order to be on track to the 50-year goal. Cut the 25 years in half, and then do it again and again, and you end up within a year or two from present day. This strategy of “backcasting”, which is a tool of The Natural Step, a non-profit addressing sustainability for the last 25 years, allows a company to make big goals for the future, then break them into digestible segments and timeframes.
Every aspect of a sustainability strategy, or plan, should incorporate risks that will significantly impact the company’s finances. As trends change in resource availability and regulations, externalities, many of which are not accounted for today, may need to be accounted for at great expense to those who do not plan in advance. It is also important to acknowledge that not everything can be easily quantified or translated into dollars. Goals and projects that do not distinctly appear in the bottom line can create tremendous value.
Direction for the plan can be taken from multiple resources, none maybe more important than the business itself. How well do you understand your business or department? What data are you collecting and how are you analyzing this data? Internal communication, organization and planning are essential components to successfully implementing long-term sustainability. It is also important to have leadership and assigned roles dedicated to the effort. Sustainability can be a daunting challenge and therefore its implementation requires ample resources. As these components fall into place – goals, roles, responsibilities and actions to be taken, the organization can produce, as most addressing sustainability do, a Sustainability Report, or Corporate Social Responsibility (CSR) report.
This report ensures monitoring of progress towards goals and continued focus on important issues in the present and future. It can be seen as half strategy map, and half measurement and verification tool. Additional value from this report is derived through its creation of engagement with stakeholders outside the company, a communication channel that can allow for proactive instead of reactive positioning. Sustainability reporting fosters industry evolution as well, as organizations use the data to benchmark against each other, in addition to leveraging data to create policy and guide industry innovation – benefits to all stakeholders.
One challenge to sustainability reporting involves standardization of measurement. There are multiple software companies offering sustainability tracking and reporting, all with slight variations of how data is manipulated. Different products also exist that are industry, process, or entity size, specific. To find what may be best for your organization, it is best to reach out to your industry associations engaged in sustainability. One place to start may be the MMTA’s Thinking About Sustainability beginners’ guide for SMEs.
For an understanding of what sustainability reporting generally entails, two established organizations that provide reporting frameworks include the Global Reporting Initiative (GRI), and B-Corp. For metals, numerous companies are tackling sustainability issues and reporting – some addressing the issue through CSR reports, and some including the subject in their annual reports. There you can find their goals and benchmarks, progress, certifications and qualitative endeavors. Especially with the recent downturn in metal commodities, organizations may want to look into what it would take to create a sustainability roadmap and reporting process.
Sabrina Dias, a CSR consultant in the mining and metals industry who, as one aspect of her job, travels across the globe to bridge the gap between mining companies and stakeholders at the mining site, spoke about her experiences in sustainability. She recently produced a sustainability report for precious metals company.
Her perception is that sustainability in the metals industry is going to expand, as it is a powerful framework for mitigating risk. Increasingly, she is seeing stakeholder engagement in business plans, and companies and organizations defining and implementing long-term sustainability. Her perspective is that companies with a systematic approach, as opposed to one that is linear, create the most value.
A 2015 study published by physicists at the University California, Berkeley, estimated that 1.6 million people in China die annually because of air pollution. In almost the entire eastern half of China, the small particulate matter is at higher concentrations than that of Madera, CA, the city in the United States with the highest concentrations. And recently in the news, there have been reports of factories in China almost fully automating their production facilities, with the exception of a few workers to monitor computers. Although this is nothing new, Mercedes and other top global manufacturers have had fully automated robotic assembly lines for some time, it reveals a little more about what the future may be, and asks what we want it to be.
A manufacturer, looking at this from a sustainability perspective, may think about the possibilities of fully automated facilities in the next 20 years in order to stay competitive. If so, where and how would they procure the energy for these types of operations? Would they have to pay for their carbon emissions? How would this impact their workforce of human labor and what would the adjustment look like? When should they begin investing and planning for these challenges? How will the community and government perceive these changes?
Benefits of Sustainability
- Cost savings, long and short-term
- Reduced market risk and volatility
- Better defined and more apparent opportunities
- Proactive instead of reactive market participant behavior
- Shared best practices through standards and reporting
- Long-term industry and business vitality
- Branding / marketing opportunities
- Financing opportunities
- Increased competitiveness
Currently, industry is at a crossroads of embracing innovation and change. It’s a push that will come internally, or will be forced at great expense, externally. The definition and criteria need to be broadened and cultural integration must increase.
Investments towards the allocation of resources into sustainability programs should be expanded. Companies that are proactive and execute long-term goals will have a better opportunity to create legacies.
Bryant Dulin, MMTA Sustainability Working Group