Most Businesses Still Treat Sustainability As Compliance, Not Transformation
For many businesses environmental management (the first letter of ESG) is a tick-box compliance exercise (51%) or the inevitable cost of doing business (43%).
Now we have another EI - this time it's the Environmental Intelligence (after all, we're all experts in the Emotional Intelligence, right?). And it helps unlock business value as sustainability becomes a key business driver, i.e. it's shifted from compliance to business-critical.
As companies reach $1B in revenues, they're pressed to adopt a more active stance on EI to improve and maintain their corporate reputation/branding, proving to the society at large their licence to operate.
Large companies are trying to balance increased spending on implementing sustainable practices with the increased efficiency of resource use, asset life, leading to better business outcomes. Implementation cost pressures can't be avoided but can be offset by efficiencies.
Reduced operating costs are found in half the companies that are serious about EI; one third believed their brand reputation and positioning has improved as a result. Focus on sustainability helps with reducing the number of OH&S and environmental breaches, community complaints and regulatory interventions. (basically, a classic compliance and loss preventing measure).
COVID Fatigue is Real
The development of several vaccines has raised the business’s hopes about some sort of recovery in the foreseeable future. At the same time, many corporate risk managers are more fatalistic and believe that the risk maps and response plans are outdated, as uncertainty hasn’t got away.
The best risk response plans have been variations of the OODA loop (Observe, Orient, Decide, Act), while those companies that haven’t been able to break their infrequent Board meeting cycles or couldn’t collect intel from the field suffered the most.
On a side note, a good risk management system even in the times of uncertainty would produce a number of meaningful data metrics about the vulnerable nodes / pain points in the business (and specifically – the entire supply chain), so when the building is falling apart, it becomes clear, which wall to reinforce first.
It may be tempting to adjust the business model or completely pivot into something new [MK: even though I’ve only seen a handful of anecdotal examples about real pivots, not just reprioritizing features or distribution channels, if it wasn’t about producing some form of PPE].