<<

. 115
( 131 .)



>>


Most organisations are at the fist or second stage, where compliance with
local laws is achieved (point 1) or initial benefits achieved from a strategic real-
isation that sustainability can also bring financial, social and environmental
benefits (point 2).
A “win, win, win” scenario can be achieved (point 3) where by economic
social and environmental capital can be preserved and enhanced. At points 4
and 5 there are reducing margins (at present levels of risk awareness) and over
investment can lead to negative returns on investment. The business case for
sustainability risk management needs to continually review the scale, magni-
tude and frequency of the risks posed to inform the level at which corporate
strategy invests in processes.


Monitoring and controlling
How do you know if you™re becoming sustainable?
Organisations seeking to benefit from sustainable systems often have a longer
time-line and a broader set of goals than more ˜traditional™ ones. Typically they
also value the well being of employees, customers, the wider society at large,
Chapter 24 “ Conclusions and future trends 629



culture factors and future generations. Whilst they cannot afford to ignore
short-term cash flow and profit (or surplus if a not for profit organisation), their
definition of success is more long-term.
This broader vision of success requires new business tools, systems and
relationships. Being proactive and innovative about dealing with potential risk
issues and being receptive to new ideas and suggestions opens the door to an
array of business opportunities. The organisation™s approach to managing inter-
nal corporate governance (see Chapter 9) and indirect economic, environmen-
tal, and social impacts resulting from its activities should include the following
Sustainability SERM comparison checklist:
The current failings of unsustainable vs. sustainable organisations are
viewed as follows:

Functions Unsustainable Sustainable
organisation organisation

Planning Short term planning bias Long term view on planning
Divided purpose: there is Long term risk awareness
a lack of collective consensus
of the long term view of the
organisation and their role
in making a sustainable
future
Unsuitable values: the
organisation™s systems and
values may be incompatible
with becoming sustainable.
People There is a lack of sustainability Education and Training “
awareness, education and Promote sustainability focused
training at all levels of many training
organisations
A reduced level of diversity Promotes diversity, equality,
can reduce innovation and innovation and meritocracy
flexibility to change and
markets
Lack of incentives and Incentives in place to promote
leadership from bosses beneficial activities that add to
causes staff to leave their economic, social/human and
environmental conscience at environmental/resource capital
home, leading to higher energy
bills and emissions
There is a shortage of Extensive engagement with
engagement with stakeholders stakeholders to scope the
both internally and externally marketplace
Processes Short term structure: the Long-term view and sustainable
organisation may have internal structure
processes and systems that are
biased towards short-term goals
at the expense of more durable,
long-term systems
(continued )
Part E “ Case Studies of Business Risks
630



Table (Continued )

Functions Unsustainable Sustainable
organisation organisation

Performance Limited measurements of Extensive measurement and
sustainability. The variety and reporting of performance of
depth of current indicators sustainability Key performance
rarely capture what is happening indicators (KPIs). The importance
with key sustainability indicators and relevance to profitability and
These indicators of extra other economic measurements of
financial performance should these sustainability factors are
be indicators of the quality of included in decision-making and
management and have elements investment processes
of organisational performance
measurements and benefits
systems attached to them




What organisations should be aiming for with their
sustainable enterprise risk management systems
An expansion of the principles and characteristics of a sustainable organisation
are expressed in the following format:


People
CEO and board support for the values of sustainable development helps, and
indeed is said to be essential for benefits to reach throughout the organisation;
Leadership: Organisations must demonstrate a commitment to the sustainabil-
ity, environmental and energy agenda before employees will feel committed to
take part. 80 percent of staff whose employers do not have an environmental
policy say they would like them to have one. (Logicalis commissioned research,
December 2006, reported in GreenBiz.com, 19 January 2007);
Education and Training “ Promote sustainability focused training. To edu-
cate, train and motivate employees and executives to conduct their activities
in a sustainable (environmentally, economically and socially responsible)
manner. These are not just specific training events on the big questions but
also missing practical knowledge for example, Research shows that while
three quarters of staff have access to double-sided printing and copying facil-
ities, less than a quarter had been offered training in using the equipment;
Openness to dialogue and the concerns of staff, the public, customers and
other stakeholders. Anticipating the concerns and potential hazards, risks
and impacts of your organisation™s operations, products and services will
reap long term benefits (see Chapters 9 and 14);
Incentives: Organisations must look to offer incentives to employees to bring
their good environmental practice into the workplace;
Promote diversity, equality, innovation and meritocracy; and
Chapter 24 “ Conclusions and future trends 631



Supply chain engagement and training require promotion to help reduce
indirect costs. Closer and more sustainable working relations with contrac-
tors and suppliers can be achieved through improvements to their processes
as a result of adopting sustainability principles and processes.


Planning
Corporate policy should make sustainability one of the priorities of the organ-
isation, encouraging policies, programmes, processes and practical action;
There should be the development of organisation wide policies, aims, objec-
tives and targets with regard to sustainability issues (economic, social and
environmental);
There should be the development of a long-term plan and an awareness of the
long-term risks and opportunities available. This should include a declara-
tion of the goals, principles and operating procedures of a company;
Ensure that the values of sustainable development reach throughout the organ-
isation. Executive commitment to accountability, good governance, trans-
parency, stakeholder engagement and social and environmental responsibility
are good starting points. There should be a Board or CEO statement to this
effect;
Ensure integration of the management of sustainability policies, processes
and performance fully into each business unit as an essential part of manage-
ment in all its function;
Follow the Precautionary approach (Chapter 18) which should act as a princi-
ple for the development, manufacturing, modification, operational activities,
marketing and use of products or services in line with the best of scientific and
technical understanding of current hazards and risks;
Develop a Sustainable Enterprise Risk Management (SERM) system with
which to assess future risk taking options and management systems (see
Chapter 2):
Use both adaptation (investing in measures to reduce risk incidence and
impact) and mitigation methods (avoidance, reduction or delaying of
impacts); and
Extend the sustainability risk assessment to reviews of new activities, proj-
ects and the development or decommissioning of facilities and sites.
Ensure emergency preparedness, with the development and maintenance
emergency plans where significant hazards exist in conjunction with the
emergency services, authorities, local communities and other relevant stake-
holders (see Chapter 8);
Internal Governance: develop structures that foster organisational durability
and sustainability as principles for progression. Keep management account-
able to these long term goals and engage with staff on all relevant issues:
Values: embed sustainability values into the organisation™s culture;
Changing a company™s culture to become more sustainable requires a con-
tribution from everyone, working as a team, and planning needs to embed
processes to encourage this;
Part E “ Case Studies of Business Risks
632



Include more externalities and full cost accounting into investment deci-
sions; and
There should be a code of ethics and any governance structure to support
this code of ethics should be disclosed. Any waivers to the code of ethics
or the rules governing ethical procedures should be disclosed.
External governance:
The board should disclose whether there is a mechanism protecting all
stakeholders interests and mitigating their, not just shareholders;
The board should disclose its policy and performance in connection with
environmental and social responsibility and the effect of this policy and
any related performance upon the organisation™s sustainability;
Engagement: Engage in dialogue with stakeholders and try to create a
shared vision for your sustainable organisation; and
Contributing to stakeholders and the common effort to promote sustainabil-
ity in the development of public policy, governmental and international
programmes and educational initiatives that will enhance the sustainability
cause, as well as technological transference where beneficial.


Processes
Develop processes and programmes to improve performance with regard to:
Improved risk management and other processes to assist with improving
sustainability. These should take into account technical developments,
research and technical findings, customer and stakeholder needs, and legal
requirements;
Products and services sustainability performance: to improve existing and
develop new products and services that have a reduced impact. Products
that have a reduced ecological and social impact footprint should be more
resource efficient and can be repaired, reused, recycled, or disposed of
safely;
Operations and facilities management. Where the design, development and
operation of facilities should take into consideration sustainability there
should be aims such as: the minimisation of the potential for HSE incidents
and accidents; the reduction of pollution to air, land and water; eco-
efficiency, (energy and resource efficiency); the increased use of renewables
and recycled and reclaimed materials; the reduction of waste, and the safe
and responsible treatment of waste and emissions from these facilities if
unavoidable (see Chapters 16, 18 and 19);
Research and the application of technology (see Chapter 11). Can support
the reduction of environmental and social impacts of products and serv-
ices as well as increase their economic potential. Research can benefit the
drive towards sustainability through a range of applications like reduced
use of materials, reduced waste, streamlined processes and other trends
reviewed in Chapter 3;
Customer and stakeholder advice. Relevant customers, suppliers, distributors,
vendors, and the public should be educated in the safe use, transportation,
Chapter 24 “ Conclusions and future trends 633



storage, recycling and disposal of products and related service provision
(see Chapter 17); and
External legal compliance and the anticipation of future requirements with
regard to each country of operation.
There should be internal communication and training and the disclosure of the
role of employees in the sustainability and corporate governance processes.
Training of employees should especially include the executives of organisations;
There could be an enhanced quantification of non-financial or extra financial
factors like risks within organisations, and the enhanced valuing of items like
brands as benchmarks of performance and market differentiators;
There could be the establishment of ˜Sustainability™ teams, comprising per-
sonnel from different departments to ensure that ˜sustainability™ becomes
embedded in the culture of the organisation as opposed to the preserve of one
department. It is important that they have top-level support, adequate
resources and ready access to all employees;
Internal communication and informative materials for employees about eco-
nomic, environmental and social trends will assist to keep them engaged. As a
result they will be better equipped to promote company goals and to respond
to major risks and trends. This could be in the form of books, articles, website
information, guest speakers, training courses, or, like Ted Turner, the US media
mogul, you could provide copies of the State of the World series by the
Worldwatch Institute to all new producers and reporters. Regular staff meet-
ings, e-mail bulletins, accessible managers and an in-house newsletter can also
help improved communication and the achievement of objectives;
External communications can improve the reputation and trust levels of the
organisation. Helping with this process are good reporting channels including:
Openness to dialogue with the public, customers, staff and other stakeholders:
Anticipating the concerns and potential hazards, risks and impacts of your
organisation™s operations, products and services will reap long term benefits;
Engagement: A commitment to engage with stakeholders: on a range of
issues is important for reputational reasons and to assist the company meas-
ure its potential risks on issues. Direct engagement like meeting investors
more regularly or employee involvement with local communities can also
have unforeseen benefits like tapping into the expertise of local groups and
non-profit organisation™s who may know straightforward solutions to prob-
lems that the organisation may be facing;
A sustainable section in the annual report highlighting progress made

<<

. 115
( 131 .)



>>