Why sustainability should be integrated into all business functions

27 November 2024 - In this blog, Oliver Dudok van Heel, CISL Fellow and course lead of the Sustainable Business Foundations self-paced online course, discusses the benefits of understanding sustainability as a cross-functional business opportunity to drive its agenda.

Unless you’ve been living deep inside a cave, you will have experienced, or read about, a range of climate and nature crises over the last few years. Extreme weather events, soil erosion, water scarcity, threats to species and ecosystems and growing inequality, to name a few.

The reality is that none of these exist in isolation. They are all part of a flawed system that is largely driven by the market demand for infinite growth in a world of finite resources. In constantly striving to grow our economies, almost at any cost, we are turning a blind eye to the consequences of that growth.

Ultimately, this is driven by markets and policy-makers creating the conditions for business to thrive. In other words, the main negative consequences of our drive to grow our economies are the result of business operations and supply chains needing access to resources to enable them to deliver profits to their shareholders.

For more, read CISL’s CEO’s ESG is dead paper.

Why does sustainability matter to business?

Many companies are recognising that they also have a responsibility to address some of the human and environmental impacts of their actions. In fact, it is out of this sense of responsibility that businesses are starting to redefine their purpose and understand their role in rewiring our economies to deliver more sustainable outcomes.

The good news is that doing so can present a commercial benefit too, both increasing opportunities and reducing risks.

Good sustainability management can drive opportunities for companies, generating revenue for sustainable and low-carbon products, increasing operational efficiency, attracting the best talent, increasing employee productivity and reducing the cost of capital.

Managing sustainability can also reduce the risks that could impact business operations, supply-chains and markets, both directly and indirectly.

The direct impacts might be seen in the loss of access to raw materials and key markets: for instance, crops failing as a result of drought or disruption to supply-chains due to extreme weather events.
The indirect impacts are often the result of legislation and changing stakeholder expectations, for instance, mandatory carbon markets internalising the cost of carbon, investors seeking to minimise their exposure to carbon risk or customers seeking products that are aligned with their values.

For many years, there has been talk of a transition to a more sustainable, low-impact economy as an aspirational place where we might arrive one day, if things go to plan. The truth is that we will get to that place at some point because of the physical impossibility of continuous growth on a finite planet. What is less certain is what the road that takes us there will look like. Will we plan ahead and reduce our global footprint so that we are able to manage with the scarce resources of our planet, or will we continue at full pace on our current path, only to hit the brick wall of a 3-4oC world, depleted soils and global civil unrest?

That is the question our political and business leaders need to answer.

Read more about CISL’s Business Leadership: changing the story work.

Why should sustainability be integrated across the business?

If a company wants to take this responsibility – and opportunity - seriously, it needs to integrate sustainability within the entire business. A sustainability team, however expert and committed, will never be able to turn a business around, as no one team will have the resources or internal influence to make this change happen. Instead, all business functions need to understand the role they play in delivering their company’s sustainability strategy and achieving its targets. This starts with the C-suite, where accountability for sustainability needs to sit, ideally with the CEO. The leadership team sets targets for the business which are then cascaded into the different functions of the business who have full responsibility to deliver these targets. The sustainability team has a key role to play, as an internal ‘centre of excellence’ that will provide key advice to the functions while also handling business-wide activities such as strategy and reporting.

What this means is that an understanding of sustainability and how it impacts business is required across an organisation, and its functions need to be able to interpret the sustainability agenda in a way that is relevant to their purpose. Each function will have different questions to answer, for example:

Operations: How can we decarbonise operations? How can we ensure employee wellbeing?
Procurement: How can we have visibility over our supply-chain to ensure we are compliant with regulation? How can we ensure my suppliers are able to help the business deliver its targets?
R&D: What innovations in business models, products and processes will make us a more sustainable business?
Marketing: Are we driving offerings to the benefit of society, and mobilising stakeholders to support sustainable practices?
Finance: How can we ensure that a commitment to sustainability adds financial value to the business? How can we quantify the business case for sustainability?
HR: How can we recruit and retain the best talent through a commitment to sustainability? How can we enhance employee productivity through values alignment and a greater focus on wellbeing?

Answering these questions isn’t easy and may not be in the core skillset of these functions. This is where sustainability education comes in. Providing employees with access to professional development opportunities around sustainability will ensure they are able to ‘think sustainable’ as they go about their jobs, gradually embedding sustainable thinking and behaviours in everyday practices. And by doing this simultaneously across business functions, you also enable greater collaboration between these functions, leading to more systemic, and therefore better, outcomes for business, people and planet.

CISL’s Sustainable Business Foundations online, self-paced course can help you get started. It is a compact programme that can be completed in 6-8 hours and can help you familiarise yourself with this agenda and start understanding how you can play a part in making your business more sustainable.