The practice of improving sustainability is rapidly moving from a phase in which companies made broad, aspirational commitments to a detailed, hands-on implementation phase that is affecting every domain of business. As a result, the need to adapt and optimize processes to achieve sustainability outcomes has become more urgent.
As this transition takes place, stakeholders such as investors, business partners, and consumers are increasingly making decisions about which companies to do business with based on public sustainability metrics. Every company is both being evaluated on its sustainability performance but also continually evaluating existing and potential partners and suppliers.
What is sustainability in business? The process, returns, KPIs and everything you need to know
How you are measuring and advancing your most sustainability critical KPIs –– like reducing carbon emissions or improving gender diversity — is now a key factor in creating and maintaining business relationships.
According to Harvard Business Review, “ESG measures such as reducing waste, strengthening relationships with external stakeholders, and improving risk management and compliance are good business hygiene. In many industries such efforts are now table stakes for enterprises wishing to remain competitive.”
In other words, business must always be fighting two battles: One to improve business performance and another to increase and maintain sustainability. As the HBR quote points out, often these are the same battle. To drive real impact on both fronts, start with your processes. By building sustainability into your existing processes, you’re already on your way to making significant, permanent change.
Adopting a mindset that prioritizes sustainability is the foundation of an integrated approach. According to the UN Global Compact, “executives have a responsibility to make sustainability central to their organization’s culture, strategy, and leadership.”
Instead of taking one-time actions to cut emissions or waste costs or boost social impact, you can achieve lasting gains by embedding sustainability into your business goals and existing processes. This sets you up for the best chance to both thrive and scale sustainable improvement across your organization.
With this mindset, aligning ESG goals and processes can go hand in hand. When businesses measure their processes, they can start to identify inefficiencies, waste, and gaps that work against their sustainability goals. Consider starting by:
Identifying and systematically reducing waste in inventory and production;<!— htmlmin:ignore —>
Monitoring supplier sustainability and implementing procurement standards;<!— htmlmin:ignore —>
Tracking carbon emissions in logistics and prioritizing low-emission options; and<!— htmlmin:ignore —>
Analyzing and improving reuse and recycling in product lifecycle management.<!— htmlmin:ignore —>
The same approach is also used to improve the performance of processes in general. Any gain in efficiency can then improve the sustainability balance. Reducing waste and rework and improving the sustainability of suppliers and distribution systems reduces carbon emissions, shrinks waste of materials, and trims energy usage. Process management makes the interaction and interdependencies of KPIs visible and manageable.
Execution Management focuses on creating a systematic way to understand, refactor, and optimize processes. Early victories focus on cost savings and productivity but by adding more data to track new kinds of activity, Execution Management can also optimize processes to improve sustainability outcomes.
Think of it this way: Process optimization usually takes place within the context of the familiar tradeoffs making something good, as fast as possible, and with minimum resources. Often people say you must pick two of these measures and do worse on the third.
Execution Management helps overcome this zero sum game, enables progress on all three dimensions, and adds sustainability as a fourth dimension. By adding information about sustainability impact, it is possible to achieve victories that make products and services better, faster, cheaper, and more sustainable.
Here’s a play-by-play look at how Execution Management brings the power of Process Mining to sustainability programs.
In the typical Process Mining project the event log is analyzed so that the “as is” process can be understood.<!— htmlmin:ignore —>
Sources of variation or waste are then targeted for redesign and metrics are developed to show problems as early as possible.<!— htmlmin:ignore —>
External data about suppliers and distributors can be added into the process metrics. These ratings can encourage selection of high-performing partners, but also improve engagement with existing partners to encourage better performance.<!— htmlmin:ignore —>
The Process Query Language (PQL) can define new metrics that track activity associated with sustainability. This transparency can be used to identify opportunities for improvement.<!— htmlmin:ignore —>
The transparency shows where the biggest gains in sustainability can be achieved. Typically, processes like procurement have lots of low hanging fruit because of the wide variation on the sustainability performance across suppliers and other gaps that become visible.<!— htmlmin:ignore —>
Finally, automation can be applied to decisions related to sustainability such as considering changing suppliers to improve the sustainability of the entire value chain.<!— htmlmin:ignore —>
The data-based approach and the ability to permanently affect processes allows Execution Management to make sustainability a part of day-to-day operations.
When Execution Management is applied to processes that prioritize sustainability in a way never before considered, significant progress is possible. Here are some examples:
Millions of tons of greenhouse gas emissions saved from the world via intelligent shipment planning and route management to optimize carbon footprint by improving on-time delivery. This is a classic example of efficiency leading directly to sustainability improvement.<!— htmlmin:ignore —>
More than 5x sales growth achieved by proactively preventing misuse of resources like time, money, and human capital and ensuring supplier compliance for sustainably sourced products. This pattern of finding huge sustainability gains in procurement processes is repeated in many industries.<!— htmlmin:ignore —>
By addressing the issue aggressively and sincerely, it is possible to make incremental progress on sustainability and also to make giant leaps forward by building a new slate of skills for systematic improvement of processes.
Catch the full Sustainability Panel session from Celosphere 2021 on On Demand.