Companies increasingly recognize they have a critical role to play in not only addressing complex and even wicked problems like climate change, but also in improving the world—environmentally, socially, and economically. They are also realizing the dependencies their businesses and markets have on properly functioning environmental and social systems.
As a result, sustainability is no longer relegated to its own silo; instead it is being integrated into core business units to simultaneously drive economic returns, of course, but also social impact across supply and value chains. This push is backed by business leaders, employees, consumers, governments, and other stakeholders who want companies to deliver profits with purpose.
But as sustainability investments expand to address corporate sustainability issues, a number of questions arise:
- What issues and opportunities should a company prioritize?
- Where should companies invest their time, resources, and money to drive the greatest sustainable impact through their business processes?
- When do corporate sustainability issues require companies to explore collaborations within and with other organizations to fulfil commitments and reach established goals?
To give companies a place to start, we’ve outlined 5 priority areas that will command sustainable business investment and action this year and beyond.
5 Key Issues for Sustainable Business Investments in 2022
A sustainable business strategy is not one-size-fits-all. A company’s sustainability investments will be shaped by the specific challenges and opportunities facing its supply chain, customers, stakeholders, and industry.
Here are 5 key issues companies should focus on to drive social and environmental impact as well as enterprise growth.
1. Supply Chain Transparency and Traceability
It’s nearly impossible to build a truly sustainable business without supply chain transparency and traceability. This has been predominant among corporate sustainability issues.
Without a clear picture of a product’s journey from raw materials to point of sale, a company cannot make assurances around sustainability. And it cannot take meaningful action without first mapping what needs to be done and where.
But it’s not just a matter of environmental risks and commitments.
A sustainable company must also take aggressive action to eliminate complicity in modern-day slavery and make good on fair labor commitments. This can only be done by shining light on parts of the supply chain that are often hidden (even, at times, to the companies themselves).
To that end, one of the major sustainability issues in business and across sectors is the growing demand for accurate, better, and inclusive data that describes and gives standing with equity and fairness to all people impacted by a company's reach, not just those who by mere virtue of their geography are typically represented.
A promising initiative is being developed by the recently established Global Partnership for Sustainable Development Data. This dynamic, global network brings together over 650 different organizations including governments, UN agencies, private companies, civil society organizations, and many others. The network goal is to leverage the power of data to change minds, policies, and lives for the better, with an ultimate aim to ensure that data can be put to good use to achieve the UN Sustainable Development Goals (UNSDGs).
Companies with global supply chain imprints upstream and downstream should be focused in the near and long-term in improving accuracy and equity in data and enhancing transparency as critical first steps to improving conditions for all their stakeholders.
2. Diversity, Equity, and Inclusion (DEI) Across the Business and Value Chain
In the years ahead, companies will be increasingly ambitious in redefining what it means to be committed to Diversity, Equity, and Inclusion (DEI). But, like most issues that matter, DEI cannot be meaningfully addressed through one-off actions or investments.
Instead, DEI principles need to be integrated across the business—from HR to community engagement and sales, to redirecting the economic power of their purchases to create opportunities for diverse suppliers across their value chains.
One emerging trend that has been gaining traction to address corporate sustainability issues around DEI is how to operationalize within organizations and across supply chains processes that promote and leverage inclusive innovation.
Alongside inclusive data as previously described, inclusive innovation is about ensuring access, standing, and influence for those who have been traditionally excluded from the development of new goods and services mainstream; particularly the billions living on the lowest incomes.
This is one area where Resonance is committed - finding ways through collaboration and partnerships to bring inclusive innovation to companies to address sustainability issues and drive impact. In this way, DEI is not merely about checking a box; rather, it can bring immense benefits to companies in creative problem solving and solutions design.
3. Net Zero and Scope 3 Emissions
Resonance has this year gathered mid to high-level sustainability leaders across sectors to discuss some of the most critical corporate sustainability issues they are facing.
To act on climate change, they note, companies are under increasing pressure to back up net-zero commitments with a transparent and actionable strategy (if they haven’t already). This requires companies to set quantifiable, timebound science-based targets and have a plan with clear milestones and a way to track progress.
But doing this right also means accounting for, and dealing with, scope 3 emissions (or, mainly, the indirect emissions generated across a product’s life cycle or as a result of business activities). This may be one of the most complex challenges companies are facing this year and in the near future, particularly with uncertainty around the SEC and pending regulatory guidance.
To address these complexities, we see leading companies looking beyond their direct business operations and partnering with their suppliers in new ways, to advance more climate-friendly value chains.
We also see companies exploring cross-sector and even pre-competitive collaborations, either via deep forum discussions and sharing of best practices, to formal pre-competitive and cross-sector partnerships. What we are learning from company sustainability leaders about their most pressing sustainability issues in business: most believe they cannot go it alone.
4. Circular Economy Principles
One way to look at scope 3 emissions and address other value chain impacts is to build circular economy principles into the business. Circular economy business models look to design out waste and pollution, keep materials in use, and regenerate natural systems.
Many of our clients and the company leaders who have been sharing insights about dominant corporate sustainability issues say circularity is conceptually an area of exploration regarding scope 3, particularly for those in sectors where ag inputs are central to their production (i.e., food, beverage and apparel).
Companies are increasingly advancing the circular economy, rewriting their relationship to some of today’s biggest sustainability challenges—from climate change to plastic waste to soil degradation. Those leading the way are also bringing an inclusivity lens to their work—integrating social impact elements into circular initiatives and strategies.
5. Nature-Positive Approaches and Regenerative Agriculture
In 2021, the G7 Leaders called for the world to become net-zero and nature positive. A nature-positive economy asks considerably more of the private sector—not just to do less harm but to take action to boost the resilience and health of natural systems.
What does this mean for businesses in practice? While there are many ways for companies to embrace a nature-positive approach, we see two prime areas for action:
- Surpassing “no-deforestation” to invest in ecosystem restoration within and beyond the value chain.
- Embracing regenerative farming practices to create agricultural systems that restore soils, safeguard biodiversity, and sequester carbon.
These two sustainability initiatives allow companies to address multiple, intersecting goals for climate action, biodiversity, and ecosystem restoration.
Prioritizing Sustainable Business Investments to Drive Greater Impact
For companies looking to move forward on their sustainability journey, the 5 issues outlined above are a sound place to start. Each represents an area of growing demand, innovation, and opportunity—and most are (or will soon become) expected practices for sustainable business leaders.
Companies interested in learning more about sustainable business strategy should get in touch with a Sustainable Impact Strategist to get started.