How to Build a Successful Sustainability Roadmap: Five Foundational Steps
If you ask consultants and practitioners what the ideal sustainability roadmap is, they will all have a different answer for the “right way to do things.” The order of the roadmap can vary depending on what’s happening within the company, but in general it’s usually a mix of the same components. Fundamentally, we should think of these as foundational pillars that every roadmap needs to have. In this blog article, we’ll unpack each element of the sustainability roadmap and show you how to build a successful, right-sized process for your organization.
Step 1: Relevance
ESG Review
The first step is an ESG review. Take stock of what you are already doing on sustainability. Also assess which (upcoming) legislation may be relevant to your organization, and what stakeholders are likely to request from you.
A lot of times when companies are at the beginning of their journey they will try to do a little bit of everything, often lacking focus and rationale. Upon review, you might find that your existing sustainability initiatives are a mix of ad hoc responsive approaches, corporate social responsibility programs, and organically grown pockets of 'sustainability champions' that single handedly try to make the business greener, cleaner, and more efficient.
Indeed, what we often hear is that when companies go out and scan different areas of the business, they find they are doing much more on sustainability that they even realize.
In your review, consider what your competitors are doing, and your sector/industry at large. How do you fit in; are you leading or lagging on sustainability efforts?
Materiality Assessment
Once you complete your ESG review, it’s important to work out what is really important to your organization from a sustainability perspective. You can’t do everything, nor should you. So getting a view on what the most important sustainability matters are for your organization is a fundamental step early in the process.
Conducting a materiality assessment will help you uncover which sustainability-related impacts on your organization and stakeholders matter most. Through engagement with your stakeholders you also get valuable insights on what they expect from you. What at the most salient impacts your organization is having on people and planet? Likewise, which are the most important risks and opportunities your organization is facing? You may already have a view on this, but don’t too easily discount the valuable new insights you can glean from your employees, investors, and clients. Engagement with them can help you get a clear picture and focus on the relevant ESG topics that matter specifically to your value chain, that way you can avoid spending time, money, and resources trying to move the needle on areas that aren’t really important.
There are a few different approaches to conducting a materiality assessment. You may have heard about financial materiality, impact materiality, and double materiality. Whereas double materiality is rapidly becoming best practice, make sure to identify the right approach for your organization.
Upon completing a materiality assessment, you will have a clear view which sustainability matters have the most significant impacts on your organization and stakeholders.
Compare the findings of your materiality assessment (ie. your material topics) against the initial review of your existing initiatives, policies, programs, and reporting requirements. This way you conduct a gap analysis that will help you inform steps 3, 4 and 5 of the sustainability roadmap.
Step 2: Building Support
Sustainability is not a siloed function, it should be everyone’s responsibility and embedded across the entire organization. Every department has their own budget (lines), it shouldn’t be any different for sustainability. Every department, or part of the organization, plays a role in delivering, implementing, or tracking the relevant sustainability policies, initiatives, and metrics.
Consider the following ways to build internal understanding, support and capacity around ESG and sustainability in your organization.
Engage with Internal Stakeholders
Meet and engage with a wide variety of internal key functions, even if ESG isn’t considered their area of expertise – or interest for that matter. Listen for concerns, share insights around sustainability that could be relevant to their roles, functions, and deliverables. Keep circling back, you won’t convince everyone upon the first engagement.
Spend time in individual conversations with the executive team to deeply explain why sustainability is important to them. If you have a sustainability lead or cross-functional team leading the sustainability charge, you are likely going to need more powerful voices on your side to make waves with the leadership team. Find a few executives who can help champion this project and get these sustainability targets approved.
Education and Change Management
Get buy-in from executives on educating the organization properly on ESG and sustainability. Once educated, internal stakeholders (ie. your workforce) will be more likely to help you drive the sustainability agenda if they see the benefits for the business at large.
Build the ESG Business Case
ESG is not just a checkbox exercise, so frame sustainability around the Triple Bottom Line: how can we do business that benefits people, planet, and profit? Frame sustainability as a value proposition rather than a cost center.
Step 3: Set Strategy
The strategy setting phase is where you get down to key priorities. Make sure to inform your strategy progress with the material topics you identified earlier in your materiality assessment. These topics give you focus and help you set a direction for your strategy, but you may want to consider further narrowing down to find your real priorities.
Prioritize your Impacts
Generally, an organization will only be able to have real (positive) impacts on less than a handful of topics. Try to identify up to three material sustainability areas where you will strategically aim to drive real impact. Remember, strategy is the art of deciding what not to do.
Governance and Oversight
Other key parts of the strategy setting process are determining sustainability and ESG governance systems. Who will provide the relevant oversight; in what way and frequency? Does your board have an ESG Committee or need to consider one? Do existing risk management processes include sustainability and climate-related risk? How will ESG information and sustainability priorities be managed and communicated up and down governance functions, leadership team, and business operations?
Prepare for Compliance
Understand what compliance requirements you will have to meet, and what you’ll do voluntarily in addition. Keep in mind that even if you aren’t subject to compliance requirements right now, they might still impact you due to data requests from suppliers or clients who do need to adhere. Sustainability legislation is evolving and moving rapidly, creating an urgency for many organizations to ensure they have visibility on both existing and emerging compliance requirements. The single most important advice any sustainability professional will give you is: regardless of when you may be affected by legislation, start today. Use the time you have as a ramp up, a stepping stone, and a process to learn, build capacity, and capability.
Goals and Targets
Set your ESG goals and targets, but also consider board and executive KPIs to ensure you’re meeting the goals. These goals should be measurable, attainable, and timely.
Once you’ve set the strategy then it’s time to take action.
Step 4: Take Action
By now you know what’s material, you have selected a couple of key sustainability priority areas, and formulated a strategic plan for the next one to three years. Moreover, you’re engaging actively to build internal support, have started to put in place a governance mechanism, and may have some objectives, targets and goals defined. Altogether, the foundation is in place and it’s time to put all the planning into action.
This phase is all about making ESG and sustainability practical. You can do this by creating an annual ESG Roadmap. Note that this is the longest phase, the majority of the year you’ll be taking action; in other words, this is where you integrate your sustainability strategy into an actionable ESG Roadmap that helps you embed sustainability to make it part of business as usual.
Build and Implement Annual ESG Program
What actions do you need to take around your material and priority topics and compliance requirements? In line with your sustainability strategy, map out key initiatives, design programs, and start putting in place the day-to-day frameworks to embed ESG and sustainability into the organization’s operations as much as possible across the entire value chain.
If your priority is employee training to improve workplace safety, then you need to take out your project management skills and break down who needs to do what, when, and how to deliver training to your employees. Who’s going to host the training? How do you get employees to sign up? How will you measure, track, and capture progress and outcomes? All this should be part of setting your ESG Roadmap
Create a Working Group to Manage ESG
With an ESG Committee at the Board governance level, it’s now time to ensure there’s a cross-functional ESG working group that drives the implementation. Siloing the sustainability function does not yield great outcomes. Get key players across the business involved and set clear expectations, responsibilities, and accountability.
Pathway for Meeting Compliance Requirements
Understand what compliance requirements you will have to meet, and use this to start building data collection systems and procedures.
Allow Time for Action to Have an Impact
Success does not come overnight. Many companies rush directly from strategy to reporting - forgetting the hard work that needs to be done in this phase. For instance, if your strategy defines that Human Rights are a key priority area (and you’re starting from scratch), it will take a number of iterations and learning (over a couple of years) to really embed Human Rights considerations into all your operations. Remember, impacts take time – whereas inputs and outputs are easier to measure and report in the short term.
Step 5: Report Progress
Whereas some companies start their sustainability journey with reporting, often through a compliance imperative, it’s best to end your annual ESG Roadmap with reporting. By now you’ve taken all the steps to identify what’s important, developed a strategic plan, implemented relevant actions to make progress and collect performance data, and all that’s left is sharing this with the world and your stakeholders.
Report Material Disclosures
Ensure a clear reporting plan is in place that is the right size for your business and focuses on your material ESG topics and disclosures. Think about what you might have to comply with and what’s coming your way this year or in the coming years. Think about which standards you need or want to follow and how that shapes your reporting requirements. Do you need to report yearly? In what form or shape? And don’t forget interim reporting – what does your board or management need throughout the year to stay informed and provide effective oversight?
Make a Reporting Plan
Establish a realistic timeframe and resources for reporting. Reporting can take a long time, so plan accordingly and seek external support if needed. Plan backward: if your report is due at the end of the calendar year, work back from the deadline and determine when you need to start the process. Don’t wait until the last minute.
Be Proactive and Strategic Rather Than Reactive
Remember, reporting is the final step; it is the output of all the other steps. Think about reporting broadly. It is absolutely critical that you drive transparency to your stakeholders. If you don’t do any reporting, then they won’t know what you’re up to. If you try to commit and report on too much, you won’t get any actions done throughout the year because you’ll spend all of your time reporting. You have to find the right-sized approach for your organization, which can change and grow year over year. Focus on the key data that your stakeholders need. They want to see that you are running a responsible business, one that addresses the key sustainability impacts, risks and opportunities.
From Glossy Marketing to Non-Financial Disclosures
Sustainability reporting (on non-financial metrics and disclosures) is rapidly being elevated to the level of financial reporting. Gone are the days of glossy sustainability reports with more color than substance, created predominantly as a marketing exercise. Today, sustainability reporting is all about robust, comparable, investor-grade data points that demonstrate how well your business is driving toward the triple bottom line.
Actions to Get Started and Improve
Conduct a double materiality assessment
Engage your stakeholders annually to identify and validate sustainability-related impacts, risks, and opportunities and their connected ESG topics.
Make sustainability everyone’s business
Embed ESG across the entire organization - don’t pile it all on one person’s desk.
Reporting is the last part of the (annual) journey - remember there’s a lot more to do!some text
Assess, review, build support, set strategy, take actions, then disclose.
Create a right-sized approach for your business - you won’t be perfect overnight
Talk to an expert if you need help designing the right fit for your organization.
Be proactive, don’t wait for compliance
There is a lot of value to gain from “better business,” don’t leave it on the table.
If you enjoyed this article, please watch the How to Build a Successful Sustainability Roadmap webinar here.
