23 juni 2022
How to use sustainability data to influence other business decisions?
By now we all know - sustainability is important. More importantly, sustainability shouldn't just be for your corporate image, brand or conscience - it should be for your bottom line, and of course, for the planet. In order for any sustainability efforts to make a real impact, it cannot be merely cosmetic. It has to be systemic, and included in core business decisions and business models.
How to make sure sustainability is embedded in your core business? Well, you should make sure your sustainability data is being used to influence other business decisions.
In this blog post we dive into some productive ways you can use sustainability data to influence your business decisions. But before that, we answer two questions:
What is sustainability data?
Why is sustainability data important?
What is sustainability data?
Sustainability data is data about a company's environmental, social and governance (ESG) performance, and also about the impact of its products, services, or business.
The data can be either quantitative or qualitative. Quantitative sustainability data can include numbers, figures, or computations (e.g. units of energy used, emissions, costs of fines for not complying with standards or legislation). Qualitative data on the other hand is a bit more complex, and can include employee feedback, customer opinions, complaints, and interests, collected through surveys, focus group discussions, or similar activities centered around feedback.
The data can be either quantitative or qualitative. Quantitative sustainability data can include numbers, figures, or computations (e.g. units of energy used, emissions, costs of fines for not complying with standards or legislation). Qualitative data on the other hand is a bit more complex, and can include employee feedback, customer opinions, complaints, and interests, collected through surveys, focus group discussions, or similar activities centered around feedback.
Some of these social and governance metrics include:
Workforce diversity
Gender pay
Gender composition of the board
Labor practices
Workplace related injuries
Working with sustainability data typically involves very large data sets. Having to collect data from a broad range of data owners (i.e. customers, factory owners, other stakeholders along the supply and value chain) can be difficult if manually handled. This is why the subscription and adoption of an automated sustainability management system is quickly becoming a best practice in most forward-thinking businesses.
Why is sustainability data important?
Sustainability data can be used to measure, manage, and improve a business' sustainability practices and efforts, and also can be used to measure its performance against its own goals or against industry benchmarks.
When sustainability data is measured, collected and analyzed properly and accurately, it can be helpful in several situations:
It can be used to manage and improve your organization's sustainability practices and efforts
It can be used to measure your organization's performance against its own goals or against industry benchmarks
It can be used to understand your customers, suppliers, and your competitors
All in all, it can help you make better decisions about your products, services, and business practices.
But let's be real - if sustainability data doesn't leave the sustainability department, and if it is not being treated as important as any other business-critical data and taken into more board meetings, then it is not being used to its full potential, and frankly, we think it's a waste of time, and a wrong intention of collecting the data in the first place.
How can I use sustainability data to influence other business decisions?
To maximize the full potential of your data to create real impact, here are seven productive ways you can use sustainability data to influence other business decisions within your organization:
Ensure sustainability data is represented in all business cases
Ensure sustainability data can be quickly analyzed and understood
Ensure sustainability leadership is represented in all business meetings
Use sustainability data to influence incentive programs
Use sustainability data to guide risk mitigation
Use sustainability data to guide supply chain improvements
Use sustainability data to guide company culture, processes and hiring practices
1. Ensure sustainability data is represented in all business cases
How do you currently make business decisions? If your sales team is discussing which products or services they should sell more of, what questions do you ask? Do you ask questions like: Do we have the resource capacity? How much will it cost? How much more revenue will that bring in?
But has someone ever asked: how much will this influence our sustainability targets? Will this decision result in any negative impact?
Another example: if you're trying to penetrate a new customer segment, a good question to ask is, are they more likely to buy our more sustainable products? Perhaps a particular segment might be larger, more prone to buy, and more profitable, but - are they more sustainable?
2. Ensure sustainability data can be quickly analyzed and understood
A simple way to support the previous point is to ensure that once the data has been collated, it should be quickly and effectively analyzed and processed in a way that can be easily understood by all departments in a business. The best way to achieve this is through automated sustainability management dashboards which can provide a clear, visual indication of performance in real time.
Representing sustainability data using easy-to-understand visualizations and dashboards make it easy to monitor sustainability KPIs, to track the upward and downward trends, and to highlight potential missed targets. This also means you've leveraging your sustainability data in a way that helps you drive more awareness and change, and present stronger arguments to support any necessary business decisions that might be beneficial for the company's sustainability agenda.
3. Ensure sustainability leadership is represented in all business meetings
Another way to ensure sustainability is represented in all business decisions is, well, to make sure sustainability leadership is present and represented in all business meetings.
It's about time organizations invested in sustainability leadership, like a chief sustainability officer, to be represented in all board meetings and business decisions. We have to stress that it is an important position that should go beyond something superficial (e.g. “Look, we have a sustainability manager now, they will help us produce sustainability reports so we look good”)
Sustainability is a complex issue and there are many sustainability talents out there who should be used to their fullest potential.
4. Use sustainability data to influence incentive programs
Companies should ensure that existing business processes and operations align and work together with sustainability goals. One way to do this? By using sustainability data to influence incentive programs at work!
Mastercard recently announced that in order to achieve its sustainability goals, such as cutting carbon usage, and improving gender pay parity, it has launched a scheme to link all employee bonuses to the company's ESG initiatives.
On the flipside: conflicting incentive programs should be reassessed and recalibrated. Imagine this: The bonus of a sustainability manager at a food production company is based on how much they improve animal welfare in the supply chain, but the bonus of the procurement manager is based on how much cost they are able to save - That would not give the procurement manager any incentive to pick a higher cost supplier even if it meant better animal welfare. Such conflicts are counter-productive!
5. Use sustainability data to guide risk mitigation
Sustainability data can guide risk management, again through proper data collection, tracking, and looking at the right metrics.
Don't say we didn't warn ya, sustainability apathy and inaction is going to be costly: businesses are expected to shoulder the burden of US$120 billion in direct costs from environmental risks in their supply chain within the next five years.
But it goes beyond environmental, supply chain, and tangible risks - your sustainability data can give you better insight into other potential risks such as accidental sustainability legislation incompliance and GDPR incompatibilities.
6. Use sustainability data to guide supply chain improvements
We all know that the majority of many companies' footprints are not within their own organization, but beyond. Using sustainability data for your supplier assessments can help you gain better insight into your supply chain impacts, how sustainable your suppliers' practices are, and to make improvements. That will potentially either be cost-saving, or generate more positive impact than negative
7. Use sustainability data to guide company culture, processes and hiring practices
Like we mentioned before: sustainability is more than just the environmental impact of a company. A variety of other factors that can affect sustainability performance, such as social and governance factors, should also be considered and used to influence other aspects of the business, such as company culture, internal processes, and hiring practices.
Some relevant factors to keep track of include operational data such as employee headcount, hours of operation, production levels, facility productivity, labor practices, workforce diversity, pay and advancement opportunities according to different diversity segments, gender and ethnic composition of the board, etc.
The bottom line
As demonstrated, there are a myriad of ways you can make use of your sustainability data to influence other business decisions.
Sustainability data can also be helpful in pre-emptive activities such as anticipating future requirements, adapting to evolving market conditions, and future-proofing your company.
However, gathering accurate and timely sustainability data still remains an overarching challenge for some businesses: making sense of the large amounts of data from different sources can be difficult, but thankfully, today's technologies are now better equipped at analyzing big data, often in real time. And that's something we can do for you here at SustainLab
To learn more about how our platform can help you understand your sustainability impact a lot better and accelerate change within your organization, contact us or book a free demo with us!
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