We’re at the start of a huge transformation setting towards a sustainable economy. Sustainable business has evolved into a core business imperative, with companies worldwide recognizing the need to integrate sustainable practices into their operations. Achieving sustainable business maturity is not only an ethical obligation but also giving a strategic advantage. We are just beginning, and that’s ok. To illustrate this, you can look at the Sustainable Brand Index in The Netherlands (by SD Insights AB). Number 1 on the list, Tony’s Chocolonely, has 114 out of the 200 points. A great accomplishment, yet still some big steps to take. Let alone the rest of the list. So, at this point, the most important thing is that we actually take those steps towards sustainable business. To be able to take a step you need to have a clear view on where you stand. This blog explains a method to determine your Sustainable Business Maturity (SBM)
A truly sustainable business is adaptive, responsible, long-term focussed and distinctive (read this blog for more detail). The SBM creates clarity on your ability as an organisation to become a sustainable business and where you are in this journey. Having a common understanding enables you to determine when and where you want to take the next step and what your ambition levels are. It makes the journey less abstract and more concrete in business language.
The SBM defines 3 phases of sustainable business maturity, each containing two levels.
Level 1: Sustainawhat?? Focussed on executing current value and short-term objectives.
Level 2: Necessity to do something Sustainability is used in communication and there are some initiatives.
‘Impact focused’ phase
Level 3: Active engagement You see the world changing and try to follow the market and regulations on sustainability.
Level 4: Enthusiasm You have a distinctive long-term vision and minimize negative impact.
‘Positive impact’ phase
Level 5: Go the extra mile Being a frontrunner in sustainable business, having it as an integral part of your organization.
Level 6: Leading the way Leading in the transition, having a regenerative ecosystem of value production.
How mature you are in these levels is determined by two elements:
the extent to which you have already realised sustainable business. This is the practical side of sustainable business and is measured by ‘sustainable practice levels’.
your ability as an organisation to create a sustainable business. This is the more transformational side of sustainable business and is measured by the ‘sustainable business ability’.
Sustainable practice levels
Sustainable business practices show up differently in your commerce, operations, and organisation. Each of these have their own activities. Sustainable commerce is, amongst other things, about your propositions, sales approach, customer relationships and channels. For sustainable operations we talk about the impact of your production, IT setup, R&D, etc. Sustainable organisation is about your HR policies, procurement, facilities and finance. You read more about sustainable commerce, operations and organisation in this blog. For each of these areas you can define at what level of sustainable business you are operating at the moment. Providing immediate insights in potential areas of improvement.
Sustainable business ability
Knowing what you are already doing well and where improvement is possible is one thing, the ability to actually make it happen and root within the company is another. It determines the difference between creating a truly sustainable business versus implementing sustainability initiatives. Thus, making it a true transformation instead of a couple of well-intended initiatives. This ability is assessed by the ‘sustainable business ability’ and based on a score on 7 elements, each explained below.
Vision A sustainable business is supported by a clear view on the distinctive role you want to play in this society as a company. A vision should have a long-term perspective on the value that you create, now and in the future. Having a strong, clear, and explicit vision serves as a strong base for all (strategic) decisions made and a culture that enforces change.
Strategy The extent to which responsibility (triple value business) is embedded in the strategy is determining in how serious it is taken within the company. If it is not explicitly mentioned, it will probably not be considered in decisions. You can have ‘sustainability’ as one of your strategic pillars, which is a step in the right direction. Eventually, responsible business should be seen as a competitive advantage and integrated in all strategic focus areas.
Contextual awareness Having a strong vision, strategy, and business model, does not mean that it will stay that way. Your success is merely determined by how relevant you are in the context. That context is changing faster and faster. So, to be adaptable, you need to have a clear view of what happens around you. And frequently challenge yourself on how relevant you still are. This mechanism should be embedded in your organisation.
Attitude to adapt Knowing that you need to adjust (due to a change in strategy or a changing context) is one thing. The ability and attitude to change is another. Companies organized around flexibility and that foster a culture of innovation and continuous improvement stand out compared to their peers, since they have stronger ability to seize the opportunities and mitigate the risks that the changing context creates.
Responsible mindset ‘Culture eats strategy for breakfast’ is a widely used quote and is absolutely true. To be able to create a true sustainable business, it must be in the mindset of employees and (especially) leadership to take responsibility for the impact of their actions. It requires a multi-stakeholder view. This mindset can vary from ‘focus on short term revenue and greenwashing’ to ‘creating a truly regenerative business’; often implicitly present in the organization, but extremely powerful.
Reporting What you make explicit in numbers drives decision making. Even more so when targets are set on these metrics. That goes for external reporting (the CSRD in this case) as well as internal reporting (your KPI framework). So, the extent to which you have a mature ESG reporting in place, the extent to which you calculate your impact (company vs ecosystem), and how these metrics reflect in your internal KPI-system, are big denominators of behaviour and decisions.
Ownership A last important element is the ownership that is felt within the company to make a change and the governance to support it. This ownership is fostered by a culture of empowerment and a governance that explicitly articulates who is responsible for what. It is the combination that makes it strong. Only a culture of ownership may result in effectiveness and avoid an overkill of initiatives, only an explicit governance can result in siloed acting.
By determining where you stand on each of these items, you create an overall view of your ability to create a truly sustainable business. You also have concrete focus areas which need to be taken to the next level.
Assessing your organisation on the ‘sustainable practice levels’ and the ‘sustainable business ability’ determines your Sustainable Business Maturity. It provides you with a lot of insights on where you stand and where you can improve. Each organisation has its own SBM, due to the type of industry, legacy, leadership, etc. Therefore, your actual maturity level is less important than what you are going to do about it to get to the next level.
To be able to structurally move towards sustainable business and take the next step, you need to know where you stand. Are you curious where you stand as a company and what should be the next steps? Let’s determine your Sustainable Business Maturity!