In December 2020, a survey of sustainability reporting from 5,200 companies found that 80% of businesses worldwide now report on sustainability, with a significant majority linking business activities to the UN Sustainable Development Goals.
Environmental and social governance (ESG) issues are increasingly spotlighted in the business world. And while this is great news, there can be a big difference between making commitments and taking meaningful action to drive sustainable impact.
With more and more companies trying their hand at sustainable business, what distinguishes the leaders of the pack?
8 Success Factors for Sustainable Business
When we look at some of the most sustainable companies in the world, we see 8 key success factors that give them a leading edge.
1. Their Leadership Team is Committed to Sustainability
Businesses cannot lead in sustainability if their own leaders aren’t fully on board. Committed leaders can see the big picture, are more willing to take (perceived) risks, invest big, and transform their companies to meet critical sustainability targets. Further, such leaders tend to grasp the interplay between ESG issues and core business goals, helping them articulate a clear business case for impact and to inspire action across the company.
2. They Integrate Sustainability with Core Business Strategy
Too often, leaders say they prioritize sustainability, but then they silo the work in an isolated (and often, underfunded) department. Leading sustainable companies integrate sustainability into their core business strategy—making clear how sustainability-oriented investments connect to business risk, opportunity, and growth. These companies also embed sustainability and social impact targets into the KPIs of business leaders and across business units like procurement and manufacturing.
3. They Know Their Purpose
Why does sustainability even matter at a company? Answering this question is, in large part, about articulating purpose. It’s much easier for leaders to prioritize sustainability—and put in the needed time, money, and resources—when it’s clearly defined in the company’s mission, what it values, and its larger purpose for existing. This is something the most sustainable companies get right.
4. They Back Sustainability Efforts with a Solid Business Model and Strong Governance
Companies need to balance incremental progress with long-term business model transformation to realize sustainable business goals. That requires patience, focus, and an ability to learn and adapt as sustainability initiatives get underway.
To do this well, a company needs to have its own house in order. That means strong governance and a sound business model that affords it the opportunity to make the necessary—and often significant—investments to make progress.
5. They Are Clear on Sustainable Business Priorities
A business can easily have dozens of impact goals, but the most sustainable companies are those that have gotten crystal clear on their priorities, linkages to their business operations, and the required investments for success. This is crucial because a company may see very little progress if it spreads itself too thin, underinvesting in too many disparate sustainability initiatives.
A good place to start? Know how sustainability initiatives are material to your core business strategy (see above):
- What are your key areas of risk and opportunity?
- What are the challenges, geographies, and stakeholders most central to your business?
- What are the areas in which your company is primed to make the greatest difference?
Sustainability priorities should also tie back to the company’s mission and purpose—this helps gain greater buy-in from the wider team, helping them clearly understand why and how the company is directing its impact investments.
6. They Collaborate for Impact
Companies that are truly ambitious know that they need to develop partnerships to meet their commitments and to scale solutions for greater sustainable impact. This is why we see many leading sustainable companies turn to partnerships, including:
- Cross-sector collaborations with other ecosystem players
- Partnerships with key stakeholders like suppliers and farmers
- Pre-competitive and industry-related partnerships with other companies with overlapping supply chains.
When done right, strategic partnerships let diverse actors pool their networks, know-how, and resources to create and grow solutions beyond what any could have done alone.
7. They Invest in Innovation
Solving complex sustainable business challenges means getting creative. Leading sustainable companies promote innovation, reward learning, take risks, and build these values into the company culture. They invest in open innovation, to find new ways to solve problems and build sustainability into their value chain. Whether it’s helping farmers and suppliers use more regenerative agriculture practices, embracing circular economy models, or backing social enterprises with bold new solutions, the most sustainable companies are doing all of this and more.
8. They Match Talk with Action
At the end of the day, the most ambitious commitments don’t matter unless there’s an actionable strategy to execute. At leading sustainable companies, leaders back up their lofty goal setting with a budget and team ready to act, with quantifiable and time-bound targets and milestones, and a plan in place to track performance. And then these companies are willing to pivot and adapt as they learn what’s working and what isn’t.
Even the most sustainable companies don’t have all the tools or answers. Here, they turn to partnerships with third-party specialists — like CDP, WWF, Earthworm Foundation, Verité, and others—who can help companies design and implement sustainability initiatives and track their progress.
Go Further: Taking Steps to Lead in Sustainable Business
Sustainability is increasingly critical in today’s business landscape. And there’s a big—and easily discernable—difference between just checking boxes and becoming a truly sustainable company.
Leading sustainable companies share some or all of these 8 success factors—but they didn’t get there overnight or without deliberate investment and intent. By drawing on the success factors above, you can help take your company’s sustainability efforts to the next level, to advance purpose, resilient growth, and sustainable impact.
Businesses should get in touch with a Sustainable Impact Expert to learn how to integrate these success factors into their corporate sustainability program.