How Frontrunners Turn Societal Topics into Business Opportunities

Seven practical steps to avoiding the Reporting Trap
How Frontrunners Turn Societal Topics into Business Opportunities
Publ. date 4 Sep 2015
At the World Economic Forum 2016 the launch of the full scale attack on global food waste “Champions 12.3” was announced. Its aim is to halve global food waste and reduce food losses per capita by 2030. The involvement of CEOs of major companies DSM, Nestlé, Rabobank, Tesco and Unilever demonstrate how a materiality matrix and data can be used beyond reporting purposes. Of course, reporting and rankings such as the Dow Jones Sustainability Index (DJSI) are important to demonstrate your sustainability performance towards stakeholders. But in the end it is not the holy grail, as frontrunners show how they are capturing value from sustainability today.

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Currently, too much time is needed for reporting and rating activities and too little time is available for generating considerable impact. Sustainability leadership is only achieved by getting strategy into action and peers aligned. Quoting Unilever's Paul Polman, “If we achieve our sustainability targets and no one else follows, we will have failed.”

Materiality assessment has matured

Systematic materiality analysis and industry-level standardization of sustainability issues have rendered non-financial reporting more professional, but also more complex. While an accountant’s lens with a ‘checking boxes’ risk mitigation perspective typically ensures that sustainability information is being collected in a methodical manner, it contains the risk of falling into the reporting trap, where publication of the sustainability report itself becomes the final objective.

In contrast, there is the investor’s lens. Investors such as BlackRock and Apax are increasingly looking for frontrunner companies that report transparently on material risks, but also on how these companies leverage opportunities in order to ensure and enhance long-term economic returns. For these frontrunners, sustainability is an integral part of the strategic focus and helps drive long term value creation by addressing unmet needs for instance through ‘greener’ product design, improved social impact or by turning waste streams into valuable resources.

This kind of innovation often starts with the design and implementation of new business models that require strong capabilities for value chain collaboration and strategic partnering. Next to a value creation focus on material issues, jumping the reporting trap requires supplementary skills – particularly in the area of innovation and partner development.

RobecoSAM 2014 data show specific opportunities in different industries

By analyzing Dow Jones Sustainability Index 2014 data from industry leaders in the four sample sectors (chemicals, pharmaceuticals, food and telecommunications), different approaches for effective execution have been identified:

  • Chemical sector: Finding opportunities for strategic collaboration and partnering to demonstrate societal relevance
  • Pharmaceutical sector: Adopting digitalization and innovation, while ensuring greater transparency
  • Food sector: Towards more balanced food consumption and nutritional offers
  • Telecommunication sector: From passive provider to active entertainment and convenience contributor

The growing burden of engaging in sustainability reporting and benchmarks increasingly makes sense when companies look beyond the risk mitigation of material issues – avoiding the reporting trap. Interested to read the report? Download a free full PDF copy of "Avoiding the Reporting Trap" study at the top of this web page. 

Learnings from "Avoiding the Reporting Trap"

  1. Which arguments to consider when deciding which ratings and reporting are worthwile to invest time in
  2. How to make a shift from reporting as an end goal towards new opportunities and value creation from sustainability
  3. Why strategic partnering and collaboration in the value chain is essential for competitive advantage 
  4. How to generate more impact from your sustainability efforts with investors and other stakeholders

Kick start your value creation from sustainability

 

Image source: OpenIDEO

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