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VyraNews #14:How to Accelerate Board-level Buy-in to Sustainability Strategy

Happy Thursday 🌍 🌱

Over two-thirds of corporate boards do not understand the sustainability risks affecting their companies.

If this were different, how much faster would organisations achieve their sustainability goals?

“If more investment cannot be made at pace to meet demand for green products and services, 20% of European businesses expect to lose customers to alternative solutions.”

- OliverWyman (source)

So, how can your company bring your board on the journey?

Find out in this interview with Áine Higgins, Head of Sustainability and ESG at NTR plc.

Listen or watch here:

Q1/ How do you incorporate sustainability into corporate strategy when board ambition (leveraging) and business (risk mitigation) differ?

- Saskia Blyham, Waverton Capital

Hi Saskia; here are three steps to bridge that gap, with a keen focus on risks (the language of the board)

1. Develop a Dual Framework: Outline risks and opportunities through a visual framework that shows how sustainability efforts can mitigate risks (like regulatory compliance) and unlock opportunities (such as market innovation).

2. Effective Communication: Communicate the value of sustainability initiatives by highlighting their role in risk mitigation for business leaders and their contribution to growth and innovation for the board.

3. Implement Metrics and Reporting: Create board-member goals based on the dual framework. Much better than aligning solely on an agreed net-zero target - as it’s very difficult to visualise, or even comprehend, because nobody in the room has ever delivered on it.

Q2/ What are the key sustainability-related skills that you think Board members (or at least one Board member) should have?

- Cathy Faria, RSM International

Hi Cathy, if at least one board member deeply understands sustainability issues, it is a great start. Otherwise, ensuring the entire board will have a foundational level of sustainability literacy will make the conversation inclusive. Use a checklist that looks at; Top 3 risks, Top 3 opportunities and Top 3 market trends. Keep it short and simple: people thrive off social currency (especially with market trends) - circulate this with all members.

Q3/ Where do you see the near-term Sustainability challenges/opportunities for the Board level to come from?

- Inger Ahaneku, MARK

Hi Inger, beyond the general challenges of people dynamics on the board and getting people to buy into new ideas, I have contextualised what I see as a main challenge and opportunity for the real estate investment business:

  • Challenge: Proposing continuous investment or partnerships with smart and carbon technologies for the portfolio, putting sustainability at the brand's forefront without compromising security or privacy. Be careful to separate the wheat from the chaff when selecting new technologies. But be deliberate in seeking out new solutions.

  • Opportunity: Leveraging the data from this technology to improve long-term building performance and telling a story with it to influence tenant behaviour. Get them bought in.

Q4/ How can realistic KPIs be set for reporting to the Board?

- Claire Curtin, Pension Protection Fund

Hi Claire, when I think of the word ‘realistic,’ I think achievable. It’s often hard to gauge what is achievable and what is a stretch goal when sustainability KPIs are often first-time KPIs. I see that the company is working toward net zero for operations by 2035 or earlier. So that should absolutely be at the core of annual KPIs, working backwards to this year and establishing what's achievable, then drawing on the strengths of various board members and setting goals as a part of the shorter-term net-zero KPIs so that they can influence the conversation and it’s not just a 1-way discussion. Instead of talking solely about the overall net-zero goal, you can speak directly to key members on goals that they’ve set in relation to any of the sustainability projects being completed this year.

Q5/ For small companies not mandated to disclose information, which framework would you recommend using?

- Moninich Pheng, Monex Europe

Hi Moninich, this is a great question, as many organisations are stuck, having not found a starting point. My best advice on this is to look at B Corp Certification and what they expect of companies. The next best thing is to look at what sustainability frameworks Monex’s ideal customers adhere to and then see how you can align with their sustainability advisory—this is a magnificent way to adopt sustainability and attract new and similar clients while authentically prioritising sustainability.

Q6/ How do you look at investment prioritisation challenges?

- Anonymous

Hi there, here is one basic and one detailed tip for this great question:

  • Use a Framework: Starting with the basics, a framework, like the Triple Bottom Line (considering social, environmental, and financial factors), to assess and prioritize investments. Going one step further, seek to measure the risks to assessing carbon intensity over time for new investment opportunities.

  • Work on your exclusion policy: Exclusion policies do change over time, reflecting a number of factors. It should reflect the need to facilitate a (quick) phaseout - rather than a sudden switch-off - of fossil fuels in general. For example with coal in particular, meaning that you tighten your criteria over time in terms of the % of revenue you "allow" to come from coal.

Q7/ How do you get busy execs' attention when so much is happening?

- Lorraine Becker, DIF Europe

Hi Lorraine, keep it simple: follow the language of risks and opportunities. Frame these risks, find robust data to back each one up, and then pose a pathway forward (opportunities). To break it down to basics before that point, it would be beneficial to have conversations 1-1 with some of these busy execs to understand what issues they mostly buy into. This comes back to knowing your audience.

Q8/ How can the board be involved in developing the sustainability strategy and decision-making regarding actions?

- Anouk Noordam, Nationale Nederlanden

Hi Anouk, the board will need clear direction, as some of my previous answers have alluded to. But I will summarize 3 things that are bound to increase board-level action and engagement:

  • Follow the checklist outlined in my answer to question 2. Risks, Opps and Market Trends.

  • Set goals for each member based on their skill set as a part of the company’s north-star sustainability KPI.

  • Co-create a commercial sustainability KPI. The language of new product innovation. This is what separates the solely ‘box-ticking’ companies from the market leaders. Whether sustainability-oriented or not, this is a conversation that will excite.

Q9/ How do you focus on the responsibility and management of ESG within the supply chain? Commitment from boards on addressing those risks?

- Cáit Kavanagh, Fidelity International

Hi Cáit, as we know, key suppliers' non-compliance with emissions reduction targets can disrupt operations, especially in the hard-to-reach places of the supply chain. That’s at a high level however, because even basic ESG engagement with the supply chain can be difficult. But this story should provide some insight; A large client of Vyra nearly lost a contract with one of the biggest sportswear brands in the world for not having certain sections in their ESG Policy. This is a very stark example of the link between supply-chain risk and retaining/gaining new business. It’s not always this clear for every business, and much of the time, it’s viewed solely from the compliance lens. While the journey may only be beginning, I ask whether the board wants to be the example client or the sportswear brand?

What’s next with Vyra?

Fancy joining a host of employees at exciting companies on the Vyra Earth Week Online Training Programme?

Lucky for you, the programme is completely free for all of our subscribers!

Kicking off last week of April.

Vyra Literacy Training: Earth Week 2024.