Organ­i­sa­tion­al Must-Haves To Suc­ceed in the Year of Sustainability

UAE declares 2023 the Year of Sustainability

UAE Pres­i­dent His High­ness Sheikh Mohamed bin Zayed Al Nahyan has declared 2023 the Year of Sus­tain­abil­i­ty, which will cul­mi­nate in Novem­ber with the UAE host­ing the 28th ses­sion of the Con­fer­ence of the Par­ties (COP28) of the Unit­ed Nations Frame­work Con­ven­tion on Cli­mate Change (UNFCC).

A sig­na­to­ry to the Paris Agree­ment, the UAE was the first coun­try in the region to issue a Nation­al­ly Deter­mined Con­tri­bu­tion (NDC), lay­ing out its plan to address cli­mate change, and to pledge to tran­si­tion its econ­o­my to net zero by 2050.1

The UAE also played an impor­tant role in the cre­ation of the 2030 Agen­da for Sus­tain­able Devel­op­ment and the 17 Sus­tain­able Devel­op­ment Goals (SDGs), adopt­ed by the Unit­ed Nations in 2015 as a uni­ver­sal call to action to deliv­er peace and pros­per­i­ty for all peo­ple and pro­tect the plan­et by 2030.

“Effec­tive cli­mate action requires a shared vision and col­lec­tive will. As host of COP28, we are com­mit­ted to ful­fill­ing our role as a glob­al con­ven­er and will con­tin­ue to sup­port action and inno­va­tion in the field of sus­tain­abil­i­ty,” said Sheikh Mohamed bin Zayed Al Nahyan.

Why is cor­po­rate sus­tain­abil­i­ty crucial?

Sus­tain­abil­i­ty has become a business-critical issue for organ­i­sa­tions seek­ing to man­age a vari­ety of emerg­ing chal­lenges, risks, and oppor­tu­ni­ties while cre­at­ing stake­hold­er val­ue. Here are some rea­sons why busi­ness­es should make ESG a key pil­lar of their cor­po­rate strategy:

1. Expand­ed access to capital
   Enhanc­ing ESG per­for­mance allows a com­pa­ny to low­er its risk pro­file, there­by attract­ing insti­tu­tion­al investors and access­ing sus­tain­able finance. Banks are also increas­ing­ly embed­ding ESG con­sid­er­a­tions into their risk assess­ments and will look to pri­ori­tise com­pa­nies that have an ESG strat­e­gy in place. This auto­mat­i­cal­ly enhances a company’s ESG rat­ing which enables it to access cap­i­tal at low­er cost.
2. Reg­u­la­to­ry demands
   So far, about 140 coun­tries have set pro­posed net-zero tar­gets. (Net-zero means cut­ting green­house gas emis­sions to as close to zero as pos­si­ble, with any remain­ing emis­sions re-absorbed into the atmosphere.4) As more coun­tries enshrine net-zero com­mit­ments into leg­is­la­tion, these efforts become legal­ly binding.
3. Con­sumer awareness
   Con­sumers are increas­ing­ly turn­ing towards prod­ucts and ser­vices that are pro­duced in a respon­si­ble man­ner, tak­ing soci­etal and envi­ron­men­tal impact into account. More than 8 out of 10 con­sumers report pur­chas­ing green alter­na­tives to reduce their car­bon footprint.6 Sus­tain­able busi­ness prac­tices can also improve pro­duc­tiv­i­ty and reduce costs.
4. Busi­ness continuity
   Busi­ness­es that fail to embrace sus­tain­able prac­tices risk becom­ing irrel­e­vant in their respec­tive mar­kets. This is espe­cial­ly evi­dent with younger con­sumers, who favour engag­ing with sus­tain­able busi­ness­es. Com­pa­nies that embrace sus­tain­able prac­tices can play a lead­ing role in their sec­tor by devel­op­ing prod­ucts and ser­vices that dri­ve the tran­si­tion to a more sus­tain­able economy.
5. Tal­ent retention
   Sus­tain­abil­i­ty is increas­ing­ly becom­ing impor­tant in hir­ing as well. 82% of glob­al work­ers want to work for com­pa­nies that align with their val­ues and active­ly seek to meet sus­tain­abil­i­ty goals.

The organ­i­sa­tion­al ESG must-haves in 2023

Embed­ding ESG can there­fore deliv­er a com­pet­i­tive edge and cre­ate long-term stake­hold­er val­ue. To max­imise the ben­e­fits, busi­ness­es should adopt a sys­tem­at­ic and holis­tic approach to inte­grat­ing sus­tain­abil­i­ty into every aspect of their busi­ness models.

Com­pa­nies must be pre­pared to reassess how they do busi­ness and trans­form their oper­a­tions where nec­es­sary. These are the four “must haves” to get started:

One: A clear ESG strategy
A clear ESG strat­e­gy allows an organisation’s key stake­hold­ers (includ­ing share­hold­ers, employ­ees and cus­tomers) to ral­ly around a com­mon vision and mis­sion for a sus­tain­able future. The ESG strat­e­gy should include the fol­low­ing key criteria:

• Encom­pass the organisation’s core val­ues, prin­ci­ples, and pur­pose, and set out an action plan to improve envi­ron­men­tal and social impact.
• Be embed­ded into over­all cor­po­rate strat­e­gy and day-to-day decision-making and actions. This includes a change man­age­ment process and gov­er­nance poli­cies for implementation.
• Set clear goals and objec­tives that are mea­sur­able to gauge progress over time.
• Define how the com­pa­ny reports and com­mu­ni­cates progress to key stakeholders.
• Allo­cate the resources and build the capa­bil­i­ties an organ­i­sa­tion needs to achieve its goals
• Include a com­pre­hen­sive approach to risk management.
• Address how the organ­i­sa­tion will engage with stake­hold­ers, includ­ing cus­tomers, sup­pli­ers, com­peti­tors, investors, and com­mu­ni­ties, to build trust and cre­ate a pos­i­tive impact.

Two: Under­stand­ing what matters

Com­pa­nies must devel­op a clear under­stand­ing of the ESG fac­tors that are most mate­r­i­al to their busi­ness. Ide­al­ly this should focus on dou­ble mate­ri­al­i­ty.  This means under­stand­ing which ESG top­ics have the biggest impact on their busi­ness, as well as how their busi­ness impacts the econ­o­my, the envi­ron­ment, and soci­ety in general.

Three: Mea­sur­ing cur­rent performance

Before chart­ing a path for­ward, it is vital to have a clear under­stand­ing of how the com­pa­ny is per­form­ing rel­a­tive to peers and best prac­tices. Putting in place process­es to gath­er data is an essen­tial first step towards set­ting goals and steadi­ly improv­ing progress over time.

Four: An action­able net-zero plan

Cli­mate change is the sin­gle great­est chal­lenge of our time and a pri­or­i­ty for all stake­hold­ers. Com­pa­nies must be able to mea­sure their green­house gas emis­sions before con­sid­er­ing actions to align them­selves with net-zero com­mit­ments. Ensur­ing they com­plete a com­pre­hen­sive green­house gas inven­to­ry and imple­ment­ing sys­tems to accu­rate­ly mea­sure emis­sions is a crit­i­cal step in the net-zero journey.

Organ­i­sa­tions should have a robust action plan in place to meet their net-zero tar­gets, which includes a clear time­line for imple­men­ta­tion, a bud­get for invest­ment, com­mu­ni­ca­tion and report­ing plans, and per­for­mance man­age­ment mea­sures. The plan should also be informed by an under­stand­ing of the lat­est tech­nol­o­gy and approach­es for reduc­ing emis­sions. It should include an assess­ment of poten­tial risks and oppor­tu­ni­ties asso­ci­at­ed with tran­si­tion­ing to net zero.

How Renoir can help

Renoir Con­sult­ing sup­ports organ­i­sa­tions to devel­op com­pre­hen­sive ESG strate­gies and make the shift towards achiev­ing net zero. Our ser­vices include:

1. Sup­port­ing organ­i­sa­tions in defin­ing their sus­tain­abil­i­ty state­ment and roadmap
2. Con­duct­ing stake­hold­er engage­ment and mate­ri­al­i­ty assessments
3. Defin­ing sus­tain­abil­i­ty strat­e­gy with pil­lars, objec­tives, ini­tia­tives, and KPIs
4. Build­ing GHG emis­sions inven­to­ry and devel­op­ing a net-zero plan
5. Pro­vid­ing the nec­es­sary capacity-building support
6. Man­ag­ing organ­i­sa­tion­al cul­ture and change to ensure effec­tive implementation

Con­tact us today to learn more about our ESG trans­for­ma­tion, imple­men­ta­tion, and man­age­ment strategy.