Strategic Planning for Sustainability

Sustainability and corporate social responsibility (CSR) have become mainstays of business activities: the percentage of large global companies professing to practice some form of sustainability and CSR has been steadily increasing, sustainability reporting has become the norm and businesses of all sizes are subject to sustainability and CSR drivers including the philanthropic motivations of their employees and the expectations of other stakeholders such as customers and investors.  As such, sustainability management now includes finding a way to forge a coherent strategy that is can accommodate the broad range of sustainability and CSR activities including corporate funding of community activities, grants for nonprofits/NGOs, environmental sustainability programs to reduce energy and resource use, “cause” marketing and comprehensive system-level efforts to remake a business’s entire value chain.[1]

Strategic planning for sustainability is far from easy or precise, if only because it requires that simultaneous consideration be given not only to economic performance and development, but also to environmental protection and the social wellbeing of employees and other persons and groups outside of the organization.  Companies and their managers are struggling to find and deploy the tools and practices that are necessary for balancing and reconciling the “triple bottom line” of profits, planet and people.  Clearly a company cannot contribute to sustainable development on a long-term basis unless it remains “in business” and this often means taking actions thought necessary for financial survival at the expense of other actions that would be environmentally or socially preferable.  Even when businesses clearly understand that respecting the environment and society are necessary it may take time for them to make the necessary changes in their operational activities and it is not always possible for companies to avoid actions that might cause short-term environmental or social harm.  In those situations, however, companies need to take responsibility for their actions and remediate the damage, such as by committing to build new skills and find meaningful employment for workers laid off as part of a downsizing of operations in a specific community.  Another challenge is that the empirical data that manages are used to having for their financial analysis is not as readily available for environmental and societal issues and the information that does exist is continuously changing, often technically ambiguous and subject to competing interpretations that not only make internal decision making more difficult but also muddle the regulatory environment in which businesses must operate.

The path for developing and pursuing a sustainability strategy will be different for each company and will depend on its unique characteristics and circumstances; however, it is generally recognized that an effective strategy must be based on accepting the need for organizational change, a commitment to continuous improvement and strong board-level vision and oversight.  Maon et al. suggested that sustainability strategy development and implementation could be considered as an organizational change process (i.e., moving from a present to a future state), or as a new way of organizing and working, with the ultimate aim being to align the organization with the dynamic demands of the business and social environment through the identification and management of stakeholder expectations.[2]  Companies can consult international instruments that provide guidance and ideas for designing and implementing an effective and comprehensive CSR initiative and which have been vetted and endorsed by governments and civil society alike.  Among the sources for companies to choose from are the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises; the International Labour Organization Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and Core Labour Standards; the UN Global Compact Principles; the Global Reporting Initiative Sustainability Reporting Guidelines; the International Organization for Standardization standards; the AccountAbility AA1000 Series; and the Social Accountability International SA8000 standard.[3]

In addition, there is a growing body of empirical research that has helped to build consensus on the elements of an effective framework for developing sustainability strategies including assessing current sustainability norms, standards and practices by benchmarking against competitors and universal standards; engaging key stakeholders to raise awareness of sustainability, solicit positive participation in the sustainability strategy process and mobilize commitment for significant organizational change; defining the specific sustainability and CSR commitments and goals and articulating a clear business case for each of them; developing an integrated strategic plan to achieve the selected sustainability goals and embed sustainability into organizational strategy; implementing the plan and the initiatives linked with sustainability and CSR; establishing internal and external communications regarding sustainability and CSR commitments and performance; evaluating, verifying and reporting on sustainability progress; and institutionalizing the sustainability strategies and policies by embedding sustainability into corporate culture and values and aligning organizational systems to support sustainability commitments.[4]

While the suggested frameworks for sustainability strategy are typically organized and described as an orderly continuum of steps, the reality is that developing and implementing a sustainability initiative requires that a number of activities be carried out at once.  One of the first things that should be done is to getting a good idea about what the company stands for and how it operates, a process which includes document review, interviews and observation.  Concerns of internal stakeholders, such as employees, need to be identified and analyzed.  At the same time, it is essential to determine who the company’s most important external stakeholders are and collect information on how those stakeholders have interacted with the company and what their expectations might be with respect to the company’s CSR programs.  Community concerns are particularly noteworthy even though the company’s relationships with other stakeholders, such as investors, customers, lenders and supply chain partners, have a more direct impact on economic performance.  Companies need to reach out to members of their communities through publications, open houses and workshops to develop and implement ideas about how the company can be a better community member.  Finally, the interests and concerns of society-in-general and regulators should be monitored on a continuous basis and companies should establish and maintain contacts with NGOs, advocates for civil society, legislators and representatives of regulatory agencies with influence over topics that are relevant to the company.

Becoming a sustainable business, or improving a company’s current performance with respect to acting in an environmentally and socially responsible manner, requires the same sort of strategic approach as any other major corporate initiative.  However, while strategic planning for sustainability has become a recognized discipline, companies and their directors and senior executives must acknowledge and seek to overcome various specific challenges the fluidity of the concepts of sustainability and CSR, ongoing debate about the allocation of responsibilities for sustainable development between governments and business, understanding and adopting new performance measures that go beyond financial results to include environmental and social dimensions, reconciling the difficult tradeoffs that often must be resolved when implementing sustainable business practices, effectively communicating with stakeholders to explain the long-term approach that is necessary for implementing sustainability and CSR and the need to adopt new processes for decision making in the boardroom and implement internal controls that track sustainability and facilitate sustainability reporting.

Companies can overcome these challenges if they understand and follow certain best practices when determining and implementing their sustainability strategies and making investments in sustainability-related projects.  First of all, companies need to align their sustainability investment activities with an overriding business mission and vision and focus those activities on projects that are both a natural fit for the company and which are perceived by the intended beneficiaries as valuable to them.  In addition, companies need to set aside adequate resources to support sustainability initiatives on a long-term basis.  This means integrating sustainability into the regular strategic planning and budgetary processes, rather than treating the topic as a discretionary matter that is addressed in an ad hoc fashion, and maintaining sufficient funding to ensure meaningful impact.  Provision should also be made for hiring and supporting a professional, dedicated management function for the sustainability initiatives, and resources planning should be flexible enough to involve employees beyond volunteerism including allowing them to participate in sustainability initiatives as part of their regular day-to-day roles.  Finally, strategies, goals and performance should also be continuously and clearly communicated throughout the company so that everyone knows the direction that has been selected and the steps that have been planned.[5]

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This article is an excerpt from the author’s forthcoming book on Sustainability Management, which will be published by Routledge in late 2020.  For further information, visit the following page on the author’s Sustainable Entrepreneurship Project website: https://alangutterman.com/topics/governance-management/

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About the Author

This article was written by Alan S. Gutterman, whose prolific output of practical guidance and tools for legal and financial professionals, managers, entrepreneurs and investors has made him one of the best-selling individual authors in the global legal publishing marketplace.  His cornerstone work, Business Transactions Solution, is an online-only product available and featured on Thomson Reuters’ Westlaw, the world’s largest legal content platform, which includes almost 200 book-length modules covering the entire lifecycle of a business.  Alan has also authored or edited over 90 books on sustainable entrepreneurship, leadership and management, business law and transactions, international law and business and technology management for a number of publishers including Thomson Reuters, Practical Law, Kluwer, Aspatore, Oxford, Quorum, ABA Press, Aspen, Sweet & Maxwell, Euromoney, Business Expert Press, Harvard Business Publishing, CCH and BNA.  Alan is currently a partner of GCA Law Partners LLP in Mountain View CA (www.gcalaw.com) and has extensive experience as a partner and senior counsel with internationally recognized law firms counseling small and large business enterprises in the areas of general corporate and securities matters, venture capital, mergers and acquisitions, international law and transactions, strategic business alliances, technology transfers and intellectual property, and has also held senior management positions with several technology-based businesses including service as the chief legal officer of a leading international distributor of IT products headquartered in Silicon Valley and as the chief operating officer of an emerging broadband media company.  He has been an adjunct faculty member at several colleges and universities, including Berkeley Law, Golden Gate University, Hastings College of Law, Santa Clara University and the University of San Francisco, teaching classes on corporate finance, venture capital, corporate governance, Japanese business law and law and economic development.  He has also launched and oversees projects relating to sustainable entrepreneurship and ageism.  He received his A.B., M.B.A., and J.D. from the University of California at Berkeley, a D.B.A. from Golden Gate University, and a Ph. D. from the University of Cambridge.  For more information about Alan and his activities, and the services he provides through GCA Law Partners LLP, please contact him directly at alangutterman@gmail.com, follow him on LinkedIn (https://www.linkedin.com/in/alangutterman/) and visit his website at alangutterman.com.

About the Project

The Sustainable Entrepreneurship Project (www.seproject.org) was launched by Alan Gutterman to teach and support individuals and companies, both startups and mature firms, seeking to create and build sustainable businesses based on purpose, innovation, shared value and respect for people and planet.  The Project is a California nonprofit public benefit corporation with tax exempt status under section 501(c)(3) of the Internal Revenue Code dedicated to furthering and promoting sustainable entrepreneurship through education and awareness and supporting entrepreneurs in their efforts to launch and scale innovative sustainable enterprises that will have a material positive environmental or social impact on society as a whole. 

Copyright Matters and Permitted Uses of Work

Copyright © 2020 by Alan S. Gutterman.  All the rights of a copyright owner in this Work are reserved and retained by Alan S. Gutterman; however, the copyright owner grants the public the non-exclusive right to copy, distribute, or display the Work under a Creative Commons Attribution-NonCommercial-ShareAlike (CC BY-NC-SA) 4.0 License, as more fully described at http://creativecommons.org/licenses/by-nc-sa/4.0/legalcode.

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[1] K. Rangan, L. Chase and S. Karim, Why Every Company Needs a CSR Strategy and How to Build It (Cambridge MA: Harvard Business School Working Paper 12-088, April 5, 2012), 3.

[2] F. Maon, V. Swaen and A. Lindgreen, Mainstreaming the Corporate Responsibility Agenda: A Change Model Grounded in Theory and Practice (IAG- Louvain School of Management Working Paper, 2008), 8 (citing P. Dawson, Understanding Organisational Change: Contemporary Experience of People at Work (London: Sage, 2003); and J. George and G. Jones, Understanding and Managing Organizational Behavior (Reading, MA: Addison-Wesley, 1996)).

[3] P. Hohnen (Author) and J. Potts (Editor), Corporate Social Responsibility: An Implementation Guide for Business (Winnipeg CAN: International Institute for Sustainable Development, 2007), vii.  Companies can also refer to guidelines prepared by local and regional governments which presumably were prepared with reference to specific local conditions and societal values and generally benefit from participation by representatives of business, government and labor.  Id.

[4] For a survey of the literature regarding frameworks about sustainability implementation, see F. Maon, V. Swaen and A. Lindgreen, Mainstreaming the Corporate Responsibility Agenda: A Change Model Grounded in Theory and Practice (IAG- Louvain School of Management Working Paper, 2008), 39, 56-58 (see also Figure 1: Proposed Integrative Framework at 62 of publication)..  Frameworks discussed included H. Khoo and K. Tan, “Using the Australian Business Excellence Framework to achieve sustainable business excellence”, Corporate Social Responsibility and Environmental Management, 9(4) (2002), 196 and 197; M. Werre, “Implementing Corporate Responsibility—The Chiquita Case”, Journal of Business Ethics, 44(2-3) (2003), 247; V. Panapanaan, L. Linnanen, M. Karvonen and V. Phan, “Roadmapping Corporate Social Responsibility in Finnish Companies”, Journal of Business Ethics, 44(2) (2003), 133; and J. Cramer, “Experiences with structuring corporate social responsibility in Dutch industry”, Journal of Cleaner Production, 13(6) (2005), 583.

[5] Adapted from “Best Practice in Corporate Social Investment” (https://nextgeneration.co.za/best-practice-in-corporate-social-investment-csi/) (accessed May 6, 2020).