How Leading Companies Plan to Face Tomorrow’s EHS and Sustainability Challenges

February 16, 2016

If you’re wondering what it’s going to look like inside the mind of a top sustainability or EHS manager this year, the latest NAEM report, ‘Planning for a Sustainable Future: Ideas that will Shape EHS Management in the Year to Come’, might just do the trick.

Based on the insights of recognized experts and corporate EHS & sustainability leaders, NEAM’s biennial report is a valuable source of inspiration for those looking to understand how EHS & sustainability innovators are defining their vision and setting their priorities for the next 18 months.

What’s new in this year’s report? What has changed since the 2014 edition? Here are five key takeaways as well as five quotes from respondents answers included in the report.

1. Delivering sustainability as a service and leveraging it as a core business driver

‘We are developing products and services that will help our customers and society solve their sustainability challenges’

‘The business case for sustainability is getting easier to make’. While this statement from the last edition of the report indicated a critical step forward, the sustainability vision of today’s companies goes much further. Leadership companies are changing how they think about their role in society, leveraging sustainability as a core business driver and embracing it as a cultural norm. Where specific operations were ‘greened’, through renewable power or energy efficiency, the focus today is on delivering sustainability as a holistic service by:

  • Defining and publicly communicating values and purpose
  • Addressing social justice issues (i.e. gender pay equity, healthcare and education)
  • Weighing in on policy issues and engaging with local government

2. Collaborating beyond company walls and addressing systems challenges

‘Who else is trying to source renewable power? How can we get together and potentially collaborate?’

Companies today realize that stakeholders expect them to set the pace for change. In order to address the challenges of an increasingly complex business environment, they must act beyond their own walls by not just acknowledging the limits of existing systems, but by fostering innovation to address systems challenges. As individual entities, companies are preparing to take responsibility for the impact of entire systems by:

  • Collaborating to advance renewable energy
  • Fostering the circular economy
  • Replacing obsolete business models
  • Promoting best practices and behaviors

In order to address the crossroads at which business finds itself today, companies must increase collaboration and be willing to partner with others in order to ‘change the rules of the game’.

3. Embracing value chain thinking, lifecycle design and the circular economy

‘We don’t have a supply chain, we are in a supply chain.’

Two years ago, NAEM took note of the increased inclusion of sustainability into all aspects of business operations, with risk management increasingly taking environmental considerations into account. While concerns around supply chain transparency and attention to supplier practices were already featured, today’s businesses are paying much closer attention to supply chain risks, by establishing mandatory supplier requirements associated with environmental, social, and governance (ESG) performance and taking steps to minimize non-compliance risks. Risks are also extending into new areas which may have previously fallen outside the scope of a company’s programs (i.e. forced labor).

In addition, companies are dedicating additional resources to supply chain management and increasingly looking at their products from a value chain perspective by:

  • Considering downstream impacts
  • Incorporating sustainability into more lifecycle phases (i.e. lifecycle design, end-of-life management)
  • Reducing the impact of products in their use phase
  • Incorporating lifecycle data into the evaluation process

By fostering the circular economy, today’s businesses are ready to influence the market in order to increase investment and demand towards more sustainable products, such as those manufactured using recycled content.

4. Leading the way by publicly advocating for policy solutions on issues impacting corporate sustainability goals

‘Looking back, people will look at 2015 as the year where there really was an inflection point’

In 2014 NAEM took notice of companies beginning to incorporate climate adaptation into their sustainability strategies and privately assessing their exposure to climate risks. While collaboration between business and government was acknowledged, (in the case of businesses working closely with regulatory agencies, for instance), today’s companies are increasingly taking a public stance by advocating for policy solutions on issues impacting their sustainability goals.

The climate conversation is changing business norms, with previous acknowledgment of the ‘climate change problem’ evolving into broader action. Today’s companies are increasingly working towards:

  • Making informed decisions by collecting and analyzing their own data
  • Using science based measurements in order to meet the demands of a low carbon economy
  • More openly disclosing and preparing for climate risks (i.e. by including questions about climate risk into annual supplier surveys)
  • Adopting a public role in addressing climate-related risks
  • Maintaining existing emissions even as the company grows

5. Affirming the focus on materiality and advancing towards increasingly sophisticated external reporting

‘My biggest worry is that we’re going to spend so much time doing things that are good that we’re not going to do the things that are great’

The 2014 NAEM report highlighted voluntary reporting and the already emerging trend of increased mandatory reporting. Two years later, external reporting strategies are maturing to better balance stakeholder expectations with business needs.

Providing a deeper level of transparency, web-based platforms are also expected to continue transforming how and when companies report. However, while the use of online tools opens the door to more continuous reporting, as companies start to take a longer-term view of their issues, reporting frequency is also likely to shift, with one company stating that it had recently moved to a 10-year cycle for goals. In other words, companies recognize the value of reporting, but they are also scrutinizing incoming information requests more closely.

Where materiality was becoming ‘the new rubric for external ESG reporting’ (2014), today, the focus on obtaining tangible outcomes on material issues is growing, with companies recognizing that ‘transparency schemes without a materiality screen or those that don’t drive behavioral change may not make strategic sense’.

If you’re interested in learning more, you can download your complimentary copy of the report here.

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