Only 2% of sustainability programmes achieve their objective – but defining strategies around value and materiality improves the odds of success
A word with traditionally soul-crushing connotations has been reinvented in recent times. Failure has been reframed as a learning experience. Failing forward and failing fast are perceived as the routes to ultimate success.
There’s merit to this way of thinking; but only if those who have not achieved their objective this time around really take the time to truly understand what didn’t hit the mark, and why.
A couple of years ago, the giant management consulting group, Bain & Company, produced a survey suggesting that 98% of sustainability programmes fail (only 2% succeeded compared with a 12% success rate for broader corporate transformation programmes).
That’s a pretty shocking statistic by any measure, only made worse by the acknowledgement that 81% of those sustainability projects were judged to be “mediocre” with a “diluted” value. Yikes!
The recommendations accompanying those stark numbers included the need to make a grand public commitment, for CEOs to be front and centre of that commitment, sustainability to be framed as an essential business requirement, and employee accountability.
But the brass tacks of the matter is that sustainability – like all important business operations – needs to be treated strategically. And being strategic is about making choices.
Richard Rumelt, widely recognised as the godfather of strategy, is clear that those choices aren’t easy. Choosing, he says, means setting aside some goals in favour of others and focusing energy and resources on one, or very few, “pivotal objectives”.
This approach can be skillfully applied in the realm of traditional corporate strategy, as Rumelt’s book ‘Good Strategy, Bad Strategy’ demonstrates. But one prominent school of thought around sustainability is that it must be an all-encompassing process that can’t include a narrow focus.
Often, company sustainability strategies include dozens of overarching objectives with multiple smaller goals within each bracket.
According to Felix Oberholzer-Gee of Harvard Business School, the thin and broad approach to any type of strategy is problematic. In his 2021 Harvard Business Review article, ‘Eliminating Strategic Overload’, Oberholzer-Gee suggested that more and more strategic initiatives were stretching employees too much and failing to achieve the results the company wanted.
His “value-based” approach to strategy puts forward the idea that strategic initiatives should achieve the following criteria, or be discarded:
– Create value for the customer by raising their willingness to pay
– Create value for employees by making their work more appealing
– Create value for suppliers by reducing their operating costs
It would be interesting to explore whether these criteria (or slightly altered criteria) can be adapted to sustainability strategy.
On the first point, the same publication (Harvard Business Review) had two contradictory articles published in 2019. ‘The Elusive Green Customer’, penned by Katherine White, David J. Hardisty and Rishad Habib, revealed that while 65% of consumers want to buy from purposeful, sustainable brands, only 26% actually do. Conversely, Tensie Whelen’s and Randi Kronthal-Sacco’s essay, ‘Research: Actually, Consumers do Buy Sustainable Brands’, paints a different picture, showcasing the faster and more sustained growth of sustainable products compared to rivals.
In terms of employee engagement, evidence is growing that individuals in the workforce are willing to earn less money to do more meaningful work, and while sustainability can be a complex road for supply chain partners, there’s an opportunity to help them reduce environmental impact and cost through energy efficiency, much like Walmart’s Project Gigaton initiative.
So there is scope to define sustainability strategy more clearly through the lens of value creation for both the environment and your organisation. Another (potentially complementary) way to narrow the scope is to focus on “materialities that matter” to your organisation and its stakeholders.
Carbon reduction, water, waste management, biodiversity protection, health and wellbeing of stakeholders, circular economy, energy management, responsible consumption, human rights – the list of sustainability topics that an organisation could tackle at any one time is a lengthy one, with objectives typically ongoing targets rather than one-off projects.
In their book, Winning Sustainability Strategies, Beniot Leleux and Jan van der Kaaij define “materialities” as sustainability issues that are most relevant for a company to tackle. The way to discover your materialities, say Leleux and van der Kaaij, is to conduct a sustainability assessment, and they offer a six-step process:
1. Ask important stakeholders what issues you should be focusing on
2. Define a long list of sustainability topics
3. Rank topics and create a shortlist
4. Analyse the risks and opportunities related to shortlisted topic
5. Plot shortlisted topics on a matrix to visualise their importance
6. Get sustainability priorities signed off
The sweet spot of sustainability strategy – and the removal of strategic overload – essentially comes down to two things: where the organisation can have the biggest positive impact and what strategies will, in turn, drive value for the organisation (see figure below).
Approaching sustainability without defining a few concrete objectives that drive impact and value can be like aiming at a moving dartboard blindfolded – particularly if you’re just starting out.
Doing the hard work of reducing strategic overload by stripping everything back and applying focus is critical. It’s the difference between being in the 2% of sustainability strategies that make a genuine difference, or the 98% that are diluted, mediocre, or fail miserably.
Johnson Controls, the built environment multinational and Official Smart Building Partner of the Milwaukee Bucks’ Fiserv Forum, has developed a “two-pronged approach” to sustainability strategy, according to its chief sustainability officer Katie McGinty: through the expertise and experience of its technicians and expectations of its customers.
This approach falls into the Oberholzer-Gee school of thought, i.e. making life better for both employees and clients, and positioning sustainability as a value driver.
In terms of the former, McGinty explains that Johnson Controls technicians and engineers were given the opportunity to bring issues of concern to them to the table during the organisation’s latest strategic review (its 2025 sustainability strategy was unveiled in 2018), giving them “ownership” of the companies sustainability direction and finding solutions to problems.
‘People’ is one of five areas of strategic priority carved out by Johnson Controls for that seven-year period, each of which has a strong focus on value: solutions, people, partnerships, performance, and governance.
Indeed, one of the major elements of the ‘people’ pillar is to establish employee engagement groups globally and to integrate sustainability into recruitment.
“Nothing brings out your competitiveness like having your teams and colleagues firing on all cylinders,” the former chair of the White House Council on Environmental Quality tells TSR. “(Sustainability) is 100% part of our recruitment strategy; our new recruits tell us that one of the deciding factors for joining Johnson Controls is its Triple A status for sustainability. It’s the kind of thing that has people coming in early and staying late.”
Offering value to customers – ‘solutions’ – is also a key part of this approach, which ties sustainability to corporate goals. Johnson Controls has started to offer companies “net zero as a service”, anticipating the regulatory need for organisations to reduce their carbon footprint in line with the Paris Climate Agreement, not to mention the business case related to future cost savings and consumer attitudes.
Using AI to track real-time sustainability metrics and, in this instance, a solar-powered battery storage unit, the company has helped Colorado State University “lock in its electricity costs” at a fixed price for the next 25 years, helping the institution work towards net zero electricity and budget for the mid- to long-term future.
“We strongly believe that sustainability should be an integral part of the core business strategy,” says Thomas Birnmeyer, senior director at SAP responsible for sustainability and human resources, “not a side strategy beside the business strategy. It’s a guiding principle when we have dialogue with customers and stakeholders.”
Back in 2010, the software provider – which has sports partners in FC Bayern, the NHL, TSG Hoffenheim, and the Women’s Tennis Association – developed its first sustainability strategy. But very quickly, the organisation decided that sustainability issues should be tied more closely to driving organisational performance.
Like Johnson Controls, several of SAP’s clients (if not all) are trying to reduce their negative environmental and social impact. To deliver value for them, Birnmeyer explains that SAP conducts a “double materiality assessment” to see how its software can decrease this negative impact and work together for positive results.
The sustainability issues that impact its customers – and where its expertise is strongest – is the sweet spot in which SAP applied the most focus.
SAP, Birnmeyer adds, positions itself as both an ‘exemplar’ and ‘enabler’ to drive value. The former is focused on what the organisation is doing internally, and how it can lower the carbon impact of the company and its supply chain partners. Its position as an enabler is related to how it can help industries or individual companies do the same.
It’s fair to say that both Johnson Controls and SAP can tie sustainability close to their core business strategies because they have products and services to do so. But Birnmeyer stresses that all organisations in all industries can approach sustainability from the value-creation and materiality points of view.
“There is not one single company without one sustainability challenge integrated into their core business,” he says. “We have to enlarge our perspective; when we talk about revenue growth, profitability growth, market share growth, we have to explore what the sustainability view is for each of these discussions and integrate it in.”
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