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Blog | Wednesday February 21, 2018

Collaboration for Impact: A Conversation

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This blog is the first in a series of interviews on how the private sector contributes to sustainable development through collaboration. It is adapted from a roundtable conversation conducted as research for Private-Sector Collaboration for Sustainable Development, a new report from BSR and The Rockefeller Foundation. 

Dominic Kotas: What is important for you when you consider joining a sustainability collaboration?

Chiel Seinen: For me, it is important that there is clarity. I can only sell it to the top of the house if there is a clear purpose, objective, and timeframe. I need to know when it would be a success, and I need a mandate; otherwise, failure is guaranteed, if you ask me. A clear vision, mission, timeframe, and objectives are 99 percent of the battle.

Moira Oliver: I think you also need to have some clear deliverables in the short, medium, and long term, otherwise people will just see it as a nice idea but with no real practical impact. Is it worth their time and investment if it is not going to deliver some actual impact for their business?

Seinen: I agree. You can of course have an open-ended working group, so to speak, but then at least you need to know what will be delivered, and whether there is a moment to evaluate and potentially exit or disband the collaboration.

Kotas: And what makes collaboration work over time?

Eric Anderson: When I look at potential collaborations, I like to think: Are we covering the ‘why,’ the ‘what,’ and the ‘how’ of this issue? It feels like the ‘why’ is covered if you have a clear purpose, as you mentioned. When it comes to the ‘how,’ as Moira said earlier, the governance is probably the most critical part in ensuring that we can work together.

In terms of the timeframe, I think that the ‘why’ gets you to the starting blocks, and the ‘what’ might get you into the first year. But actually delivering successful outcomes is all down to the ‘how.’

Yukako Kinoshita: The governance is important, I totally agree with what you have said, because I think there is also the issue of competition to resolve. At the end of the day, you will be working with your competitors, and good governance is what resolves that tension; it makes us feel safe working together.

Oliver: In addition, if you do not have a stakeholder in there who everyone regards as key, that can have a real dampening effect. So it depends a little on who you have within that group of early adopters.

Kotas: How does that evolve? Do you want to see a collaboration grow the number of members?

Kinoshita: I think there is a risk that as you gain more members, you lose the action and impact, and the collaboration becomes more of an information exchange platform. When you have a very small group, you have a specific purpose and you can make an impact.

Anderson: Yes, completely. As I mentioned earlier, if you have an emerging issue that you want to lead on and really drive, my belief is that you can have more impact by convening a smaller group that moves independently to a certain point. Then, when you are ready to scale, you will have a strong business case to share.

Oliver: For me there is also growth in terms of the agenda and maturity. Even if an initiative has been running for a long time, what I really want to see is that it adapts and moves on to another level; that it does not just stay static in terms of its agenda.

Kotas: And what are your views on the future of private-sector collaboration?

Kinoshita: I am quite positive because of the SDGs—everybody is talking about them, and you feel like you can collaborate.

Anderson: I think there will be more collaboration in the future, but I think it might be more bespoke, issue-focused collaboration.

Seinen: My vision is that collaboration will be fully integrated into the way we run projects and the way we run business. And I think that while we will collaborate across geographies, not everything needs to be solved at a global level.

Anderson: I agree. We’ll need global perspectives, but the action will be increasingly tailored to local contexts.

To learn more about this topic and the upcoming report, please register for our Sustainability Matters webinar on February 28.

Blog | Tuesday February 20, 2018

Assessing Suppliers: Inclusive Business or Business as Usual?

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Many companies are beginning to evaluate their suppliers based on their social and environmental impacts, both positive and negative. Particularly when assessing suppliers’ claims to have a social impact through employment, it can be difficult to determine whether a supplier is an inclusive business, or just doing business as usual.

In January, the Global Impact Sourcing Coalition (GISC) visited one of our members’ operations in Kingston, Jamaica to learn from its approach to inclusive employment. Sutherland is a process transformation company whose services include contact center management. Like other members of the GISC, Sutherland has grown its operations through intentionally hiring and providing career development opportunities to people who otherwise have limited prospects for formal employment, thus reducing social inequality and contributing to the Sustainable Development Goals to provide employment and decent work for all.
 

Graduates from Sutherland Global Services’ Community Technology Centre in Kingston, Jamaica. Photo credit: Sutherland Global Services.

Our tour of Sutherland’s investments in inclusive employment in Jamaica demonstrated how inclusive suppliers are distinguished by three traits.

1. Intentionality: Inclusive businesses do more than just hire people from disadvantaged backgrounds. They do it with intent, assessing what barriers vulnerable populations have in securing employment and deliberately removing those barriers through their application and onboarding processes. They assess how they might best source new workers from their communities and set goals to improve their diversity and inclusion.
   
   For example, Sutherland supports a network of Community Technology Centers (CTC) in Jamaica to train young adults in at-risk communities in the hard and soft skills they need to secure their first job in a modern workplace. When the company evaluated how to improve the impacts of the program, it decided to make a commitment to ensure that at least 10 percent of CTC graduates find employment. As a result of this pledge, participation in the program spiked, and the company now benefits from a new pipeline of qualified, enthusiastic employees who would not otherwise have had the academic credentials for employment there. Sutherland Jamaica has also set internal goals to increase the number of youth it trains and sources from the CTC program.
    
2. Social impact focus: An inclusive business seeks to understand, measure, and continuously grow the social impact that it is having in its workplace and communities. It goes further than traditional workforce engagement to understand and provide for the needs of its employees and ensure that they are equipped with the training, resources, and life skills that they need to succeed and grow. It aims for continuous improvement to ensure a positive impact on employees, communities, and the business.
   
   When Sutherland launched the 'Earn While You Learn’ program for university students to work part-time to pay their way through college, its focus was not only on producing a qualified workforce, but also on increasing graduation rates at local universities, which had seen graduation rates plummet as students struggled to afford recently introduced tuition fees. The company partnered with the university to set up contact centers on campus grounds, created flexible part-time work schedules that enabled students to attend classes on a full-time basis, and assessed academic achievement in employee performance reviews to determine if they need more time off to attend to their studies. More than 400 people have found employment with Sutherland on campus, many of them unlikely to have been able to afford higher education otherwise.
    
3. Partnerships and collaboration: Finally, an inclusive business does not attempt to do it all on its own. It works in close partnership with other experts to identify areas of need, provide expertise, develop targeted services and interventions, and ensure that impacts are shared with the wider community.         

For example, Sutherland’s CTC program runs on partnerships with clients, governments, universities, youth training programs, churches, community centers, and civil society organizations to reach and train at-risk youth. On our trip, we heard stories from youth of the many actors in their communities—the pastors, community leaders, teachers, friends, and family members—who reached out to them to encourage them to participate in the program, and who share an equal role in their success. 

Of all of the company’s investments in inclusive employment, Country Head and Associate Vice President for Sutherland Jamaica, Odetta Rockhead-Kerr emphasizes, “Our clients are some of the most important partners. If they didn’t give us the business, they wouldn’t be able to impact lives. It’s their opportunity to be socially responsible.”

By participating in the GISC, client companies are able to identify and partner with suppliers that have made real commitments to inclusive employment, contributing to the sustainability and social development of the communities they source from. Visit http://gisc.bsr.org to learn more about how your company can start an Impact Sourcing program.

Blog | Thursday February 15, 2018

Why We Need a Loud (and Consistent) Business Voice on Policy Issues

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In our recent report, Redefining Sustainable Business: Management for a Rapidly Changing World, we outlined new directions for companies as they manage sustainability through their business strategies, with ever greater impact.

Our “Act, Enable, Influence” framework represents a comprehensive approach from business, in which it is not merely an actor implementing rules and regulations, but instead an active participant in shaping its operating environment. 

As my colleague Alison Taylor put it when we released the report, “Companies should influence the policy and legal environment via vocal support for sustainable business. Silence on key policy issues is no longer an acceptable stance: The public—and your employees—wants to see more concrete evidence of business values and want business to take a more active role in shaping policy for the long term.”

The World Economic Forum in Davos last month provided one opportunity for business to engage with government leaders. Interestingly, conversations there about how to achieve the Sustainable Development Goals (SDGs) focused heavily on all-important Goal 17, which calls for partnerships across all sectors of society. 

In discussions on how to realize the vision of the Paris Agreement, companies called for policy frameworks that create the right kind of incentives. With more than 70 heads of state and heads of government present at Davos, it was sometimes hard to tell who was who: The CEOs just as often called for policy solutions to pressing global challenges as the political figures did.

Why is this crucial, and why now?

The world is changing ever more rapidly around us, and business—the source of many of the innovations that are generating many of these changes—has expertise on a number of key topics that tomorrow’s policy frameworks will need to address. Because global companies have an essential appreciation of the international business implications of things like free trade agreements, privacy and data protection laws, and materials disclosure requirements, it is crucial that their expertise and perspective inform smart regulatory frameworks. Businesses are well placed to speak, for example, to the listing rules that promote short-term decisions at the expense of investments in employees and climate-resilient infrastructure. They are also essential to involve in conversations about the human rights implications of new technologies.

In an era when leadership is badly needed and trust is in short supply, business leaders should work to ensure that the incentives created by governments align with high levels of ethical, environmental, economic, and social ambition. It is clear that the lowest-common-denominator approaches that have been the default position of traditional business associations in the past are no longer fit for purpose: Business must be part of the solution to our shared challenges.

Moreover, in a hyper-transparent world, discrepancies between the arguments companies make in hushed tones in the offices of their representatives and the aspirations they express in the colorful pages of their sustainability reports are not, to put it lightly, sustainable.

There is also an important incentive for business to promote effective and consistent frameworks. In recent years, we have seen a welter of frameworks develop on reporting and transparency, supply chain due diligence, and other topics. Companies operating globally do not benefit from an inconsistent set of rules and regulations; such a system incentivizes compliance, rather than creativity. It is therefore valuable for companies to support consistent policy frameworks across jurisdictions. Otherwise, the core objectives of advocacy—business certainty and predictability—are unlikely to be realized.

There is often a high degree of skepticism about where corporate interests lie, so this model only works if there is both transparency in how business engages and alignment in the public and private interests companies address. 

This is a point to be heeded. But it should be reason to participate in public policy the right way, not a reason to stay away from it altogether. Just as in past years it became untenable for companies to ignore labor conditions in their supply chains or the impacts of their products and services on the environment, we are at a time when any company aspiring to sustainability leadership will be judged not only on its performance, but also on how it shapes the rules of the game.

Ultimately, businesses press for policy changes on all sorts of issues: Why should sustainability be any different?  

Reports | Wednesday February 14, 2018

New Models for Sustainable Procurement

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While the first two decades of the sustainable procurement field focused on codes of conduct, supplier compliance, and auditing, procurement professionals in the vanguard today are looking to do much more with their sustainable procurement efforts, as major forces of change—such as climate change and automation—are poised to impact supply chains in uncertain and possibly unprecedented ways.

This paper captures three key developments that BSR's Procurement Leadership Group tracked, explored, and discussed in 2017: supply chain transparency, supplier engagement, and responses to shifts in trade and globalization.

Blog | Monday February 12, 2018

Event Summary: Ethics, Human Rights, and Artificial Intelligence

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Blog | Monday February 12, 2018

The 5 Stages of Materiality Grief

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Ask a sustainability practitioner what happens after mentioning the word materiality to a colleague for the first time, and she may likely tell you, “wide-eyed bewilderment.” And once that same colleague begins the materiality process, his or her bewilderment often transforms into grief. It is important to understand that materiality—much like grief—is a journey.

It is a journey worth taking, since materiality analysis is an extremely valuable business tool, helping companies like Sanofi bring a diverse set of internal and external stakeholders together in dialogue, Unilever help drive consensus around what topics to prioritize and where to invest resources, Starbucks determine where to focus goal-setting, or Telenor set expectations and boundaries on what information to report. Perhaps even more importantly, materiality can also indicate where not to focus limited resources and attention.

So how to get from grief to value? Here are BSR’s tips to navigate the five stages of materiality grief.

• Denial—We don’t need this. When you begin a materiality process, the first reaction from your colleagues may be closed-fist denial. Materiality can be as much an awareness-raising tool as a change management process, and those new to it may initially resist change. It’s important in this phase to be as transparent as possible about what materiality entails, how individuals will be involved, and how the outcomes will be used.
• Anger—Don't add to my workload! Once you have broken through the initial denial, colleagues may react with anger to the very suggestion of adding to their workloads, claiming that materiality is not their job or is even a waste of time. The best tactic here may be patience, but it’s also worth sharing testimonials and case studies from other internal or external stakeholders to help your colleagues see the value in their participation.
• Bargaining—Fine, but let's do the minimum. At this stage, colleagues accept to be involved in a materiality process but under certain conditions. It helps to understand what colleagues are willing to commit in terms of time and resources, as well as their expectations of what they will receive in return.
• Depression—But I don’t see my function listed as a priority. Once materiality is underway and initial results have been produced, depression may set in. While that may be too strong a word, there are traces of this emotion as colleagues begin to see where their areas or functions appear on a materiality map. They may fear that their function is being de-prioritized or stands to lose resources. Here, it’s important to remind them that all issues, functions, and individuals consulted during materiality are already considered high priority; otherwise, they would not have been included.
• Acceptance—Alright, this actually makes sense. Finally, you reach the end goal of acceptance. After being informed, consulted, and in some cases involved in workshopping the results of the materiality process, colleagues have accepted the outcomes and recognize that the analysis describes a reality they may not have understood before. The real work to drive the results forward begins here.

Thankfully, leading companies are finding ways to avoid the grief altogether—by more closely linking materiality to business drivers from the outset. We see three distinct ways this is happening:

1. Integration of sustainability-oriented materiality assessments into enterprise risk management processes. Companies that have a well-developed enterprise risk management (ERM) process are far better at managing sustainability issues. There is an opportunity for ERM processes to utilize the outputs of sustainability-oriented materiality assessments, and for those two processes to be much more closely aligned. Risk is a key factor in defining priorities for companies like Lockheed Martin, which seeks to reduce the risk of negative impacts to the business, the planet, and society while cultivating long-term, responsible economic and social growth.
2. Prioritization and support for global agendas, such as the Sustainable Development Goals (SDGs). Companies recognize that succeeding in the long run today requires a well thought-through sustainability strategy that aligns with the global risks and opportunities related to business continuity. To that end, the SDGs, while not designed as a business framework, are increasingly applied to company strategy. The SDGs and materiality assessments in many ways complement each other. Conducting a rigorous materiality assessment linked to the SDGs can help companies identify and make the greatest impact on those goals that are most closely aligned with their business models and strategic priorities. Companies like Vattenfall are demonstrating what this looks like in practice.
3. Identifying new value creation opportunities for the organization, such as the allocation of capital. In many ways, materiality is an attempt to express where companies stand to create the most value for their internal and external stakeholders. Companies like Hitachi Chemical approach materiality as a method to maximize value for stakeholders and use it as a key element of their value creation stories.

Are you looking to leverage your materiality process to create a more resilient business strategy? Read our new report, Redefining Sustainable Business: Management for a Rapidly Changing World.

Blog | Monday February 5, 2018

Three Hot Debates in Sustainability Reporting Today

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In 2017, we spoke with more than 50 sustainability leaders from our member companies and other leading organizations to shape our thinking about the future of sustainable business.

These interviews informed our new report, Redefining Sustainable Business: Management for a Rapidly Changing World, which provides a blueprint for company strategy, governance, and management fit for our sustainable development challenge. Included in this blueprint is our point of view about how companies can report sustainability information in ways that enable improved sustainability performance and catalyze action beyond a company’s own boundaries.

Also during 2017, we had the opportunity to learn from the work of our Future of Reporting collaborative initiative. These discussions informed our Practitioner’s View of Sustainability Reporting, which shares insights about the future of sustainability reporting from those who are closest to it.

However, we were struck by three questions throughout these conversations where opinions were often sharply divided.

Does sustainability reporting distract attention from sustainability strategy?

One interviewee complained to us that, “Sustainability teams need to be story-makers, not storytellers, yet too often reporting reduces bandwidth for half the year and prevents us from doing our jobs.” Indeed, it often becomes too easy for the sustainability team to prioritize responding to external requests and producing an annual report at the expense of shaping the strategic direction of the company.

However, others argued that the discipline of publishing information in the public domain creates a powerful incentive for performance improvement, helps socialize sustainability across the organization, and helps focus strategy on the issues of greatest importance to company success. As one interviewee put it, “Reporting has an effect to solidify program management. There is a difference between high quality and low quality, and this pushes higher quality outputs.”

We believe that strategy and reporting are both essential and should not be viewed in competition. Both outcomes shouldn’t necessarily be pursued by the same team, though—just as the company strategy function doesn’t write the annual report, so the company sustainability function shouldn’t necessarily write the sustainability report.

Should we move toward more real-time sustainability reporting and disclosure?

Advocates of real-time reporting argue that it would bring the twin benefits of engaging a wider range of people in the sustainability agenda and enabling more timely decision-making on important sustainability issues. Opponents judge that sustainability is the ultimate long-term challenge; it is inconsistent to argue that short-term decision-making by investors is damaging to sustainability, while at the same time advocating for more real-time performance information and updates on sustainability.

We believe that the discipline of the annual reporting cycle is essential to maintain, as it allows analysts to make year-on-year comparisons and identify forward-looking trends. However, we think that companies should also communicate about sustainability using the full suite of today’s social media tools to engage relevant audiences. It makes sense for companies to look at new formats where real-time sustainability data can inform decision-making by external stakeholders—for example, sustainability information about products could be made available in real time to consumers—but this is not the same as sustainability reporting.

Should companies stop using the term “materiality” outside the investor relations context?

Some argue that using the term “materiality” outside of the investor relations context creates confusion for report users, who may be unclear about what definition of material is being used, and whether certain issues are of material concern to investors or not. One interviewee commented, “People get tired of hearing that all sustainability issues are material to the business.” Outside the investor relations context, companies could use other terms, such as “relevance.”

On the other hand, the concept of materiality is the threshold at which issues become sufficiently important that they should be reported to a target audience. In financial reporting, materiality is the threshold for influencing financial decisions made by investors; in sustainability reporting, materiality is the threshold for influencing a wider set of decisions, made on a wider range issues, by a wider range of stakeholders.

The financial reporting discipline does not have a monopoly on the term “material,” and applying such a proven concept in the sustainability reporting discipline substantially increases its value for report readers. Provided the company is clear about the definition of materiality being used and the process applied to define material issues, then using the term “materiality” should not, in theory, create problems.

Yet the fact remains that, in practice, the dual use of the term is confusing. Ultimately, the substance of the materiality principle in sustainability reporting matters more than the term that is used, and we believe that companies can use other terms—such as relevance or prioritization—in the context of sustainability reporting targeted at non-investor audiences.

Our Future of Reporting collaborative initiative is a group of companies that share reporting best practices with each other and use these insights to inform the future of sustainability reporting. If you are interested in participating in the group during 2018, please contact us.

Reports | Monday February 5, 2018

A Practitioner’s View of Sustainability Reporting: Challenges and Solutions

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Sustainability reporting practitioners possess excellent insights into the challenges faced when writing sustainability reports and other sustainability disclosures. They navigate the complex mix of reporting standards, meet the needs of a diverse range of report users, tell the company’s sustainability story, and use the power of reporting to help improve company performance. Along the way, they learn many lessons in how to do this effectively. 

This briefing document supplements our 2016 Triangles, Numbers, and Narratives report with insights gained from meetings of BSR’s Future of Reporting collaborative initiative during 2017. 

Blog | Thursday February 1, 2018

Four Sustainability Management Trends and Opportunities in the Banking Sector

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According to a 2016 study by the Brunswick Group, only 27 percent of Americans trust banks. It has been almost a decade since the financial crisis of 2008, and while the financial services sector has made progress, it is still in many ways working to earn back stakeholder trust. Sustainability efforts offer a major opportunity for banks to demonstrate their commitment to operating responsibly and making a positive impact.

Banks in particular play a major role in our economy, as they provide vast amounts of capital and have the ability to influence other companies and customers across sectors through their products and services. Yet the industry continues to be in the headlines for various environmental, social, and governance (ESG) issues, such as ethics violations or potential human rights implications of project finance decisions.

How has sustainability, or corporate responsibility, in banks changed since the crisis, especially in the context of the Paris Agreement, the Sustainable Development Goals (SDGs), and investor-focused and sustainability disclosure initiatives? What more could be done?

To explore these questions, BSR completed a short research study, assessing leading banks across the U.S. and Europe across a few key areas. Here are four of our key findings.

1. Materiality assessments are being conducted to prioritize corporate responsibility issues but could be leveraged to play a greater role in internal engagement and sustainability strategy development. Banks can also more closely align their efforts with the SDGs.
   
   While it is commonplace for banks to spend the time and resources to go through a formal materiality process and publish the results online, in many cases the process seems to be more of a ‘check-the-box’ exercise for reporting than a determinant of strategy and business activities.
   
   The materiality process can be a powerful mechanism to engage and educate senior leaders and get valuable input from external stakeholders. There is a risk that the feedback it provides will be lost if it is not integrated into company strategy.
   
   The SDGs haven’t yet played a major role in informing corporate responsibility priorities, although banks understand that the sector will play a critical role in achieving them. While all of the SDGs can be inspirational for organizations, focusing on those that align best with the business strategy and existing corporate responsibility priorities will likely be most impactful for the industry. As a first step, banks are mapping business activities to key SDGs. BNP Paribas has created a formal SDG metric, which measures the share of the bank’s loans to companies that contribute exclusively to the SDGs.
    
2. Increasingly, banks are communicating major long-term sustainable financing commitments, which provide an opportunity to link products and services to corporate responsibility; however, they will increasingly need to be transparent about these initiatives.
   
   Bank of America and Citigroup both have 10-year sustainable financing commitments of US$100 billion or more. While these big commitments create internal momentum and demonstrate both business and ESG value, the definitions of what qualifies for this type of funding and how impacts are measured likely varies across banks. Transparency about the methodology and criteria for funding and calculating impacts will help banks add credibility to these initiatives.
   
   Additionally, creating a corporate strategy and mission linked to sustainability, such as ING’s purpose-driven Think Forward corporate strategy and Bank of America’s Responsible Growth strategy, is key in integrating efforts across the business. Our recent report, Redefining Sustainable Business: Management for a Rapidly Changing World, explores this and many other aspects of how to create a resilient business strategy.
    
3. Banks can better establish and communicate focused ESG metrics and targets aligned to their identified material issues.
   
   While banks are providing detailed ESG information in multiple reports and using the GRI standard, the key strategic metric and associated target that is often integrated with company performance results so far has been sustainable financing performance. Hopefully we will continue to see more, new ESG metrics integrated in standard company results, internally and externally.
   
   Some banks, such as Barclays, have moved toward publishing an integrated annual report that includes ESG data. While doing this would seem to imply more streamlined reporting, these banks have still been producing supplemental reports to provide the additional detailed ESG disclosures that some stakeholders require.
    
4. Governance structures continue to play a key role in engaging employees and driving corporate responsibility and business integration—executive ownership and engagement with the environmental and social risk management teams remain critical.  
   
   It is now common for banks to have board oversight over ESG issues, i.e. via a committee. Additionally, cross-functional senior executive committees and other internal councils (for example on sustainable products, human rights, etc.) are critical in integrating ESG across the business and engaging subject matter experts. While it requires more internal coordination, core sustainability teams at banks are seeing positive outcomes from these internal working groups and networks of ‘ESG champions’ dedicated to achieving ESG goals.
   
   One area that needs more consideration is compensation tied to ESG performance. It is encouraging to see BNP Paribas link nine of its 13 corporate responsibility indicators to its variable incentive plan for its 5,000 top managers. More banks should embrace this type of approach.

While banks have clearly made progress in better integrating corporate responsibility, studies show that the industry reputation continues to suffer. There is an opportunity for the sector to do more to engage its leadership, employees, customers, and investors on the powerful role it can play in creating a more sustainable world. Doing so could go a long way toward rebuilding trust. 

Blog | Wednesday January 31, 2018

(Re)Making the Case for Sustainability: Effective Sustainability Management through a CEO Transition

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With an average of one in 10 S&P 500 companies experiencing a CEO transition each year, sustainability departments need to be prepared to effectively manage a change in company leadership.  

As we articulated in our recent report, Redefining Sustainable Business: Management for a Rapidly Changing World, the era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin. An important test of a company’s resilience is how it weathers a CEO transition.

In most cases there is sufficient time to adjust—S&P analysis also shows that nearly 80 percent of CEO transitions are the result of long-standing succession plans. But in the case of forced or pressured resignations and mergers, changes can be abrupt and messy and require departments to balance preparing for a new CEO while simultaneously putting out the fires of reputational and cultural crises. The increasing influence of activist investors is contributing to more frequent CEO transitions, and comparatively “poor performing companies” have a 60 percent greater likelihood of seeing a new CEO in any given year.

Even if planned, a CEO transition is disruptive, and being prepared for transition can help make the work of a sustainability department sustainable. There is little doubt that a change at the top can be a nerve-wracking time for sustainability teams: In our 2017 State of Sustainable Business Survey, more than 90 percent of sustainability practitioners identified CEOs as the key influence on their companies’ sustainability agendas—more than employees, investors, or even customers. Losing a senior advocate is a tremendous risk, especially for organizations losing vocal and influential leaders who’ve shaped their corporate sustainability programs.

Part of proactively managing for CEO transition is deeply embedding and integrating sustainability. Making your programs essential to your company’s value creation and standard risk management processes will ensure that efforts are maintained despite the inevitable changes that come with new leadership. Setting long-term public goals is not just good practice—it can help keep the company accountable to those objectives, even through leadership changes.

When a CEO transition happens, however, sustainability teams need to mobilize. With a new audience likely comes the need for a refreshed business case. And while this change could threaten long-standing programs that may be closely associated with a previous CEO’s legacy, a leadership change may also offer sustainability teams a new opportunity to better integrate sustainability into the core business strategy. The task of the sustainability department in these initial months is to begin to build a relationship with your new company leader and provide a succinct narrative for sustainability as value creation.

Boiling down years of efforts and programs is no easy task, but answering a few guiding questions should help you hone and sharpen your pitch for maintained or increased investment.

1. Why was there a transition? Understanding the nature of a CEO transition is critical. In cases where a CEO had long-planned retirement or was enticed by a “new opportunity,” this may be less significant. For more seismic transitions, however, sustainability departments need to pay attention: Was the change precipitated by poor market performance, activist investors, reputational impacts from unethical business practices, or a highly publicized toxic culture? These factors represent failures that a new CEO will be mandated to remediate, and your sustainability department would be wise to explore how you could help mitigate those specific risks in the future.
2. What is the new CEO’s view of sustainability? When a new CEO is selected, it is useful to review his or her past experience: How mature were the sustainability programs in their previous companies? Are there key themes in their previous CEO letters that can help anticipate how they view sustainability? A new leader’s perspective on sustainability may not be clear until your first meeting, but awareness of his or her interests and past efforts can help inform your presentation.
3. What’s the current sustainability strategy—and is it actually current? A change in leadership offers an opportune moment to take stock of your current sustainability strategy. A rapid but robust strategy discussion can be extremely helpful to prepare your team for your first CEO conversation. What are your company’s material issues, and does the CEO change signal a shift in priorities? What has the company’s ambition level on these material issues been to date, and is there a corresponding need to advance your programs on these issues? The CEO transition should offer a moment to evaluate, refresh, and align your company strategy and your sustainability strategy.
4. What has sustainability achieved, where has it failed, and what’s on the horizon? All departments will, to some extent, be required to justify their programs and resources. While an exaggerated litany of achievements may be impressive, a clear-eyed account of achievements and shortcomings may be more effective at creating a strong advocate in the CEO’s office. Highlighting key milestones and demonstrating cross-functional support will show the sustainability department as an effective force for integration within the organization. An honest account of challenges and constraints creates trust that is integral to a strong working relationship. Positioning sustainability as a way to anticipate and respond to emerging trends shows how the team can be a critical partner in driving the company’s new strategic, resilient direction.

Ultimately, answering these questions will arm you and your team to answer the big question: How does sustainability add value to your company? To use a CEO transition to your advantage, you must be able to show that sustainability is not a remnant of an old regime, but a vital part of a company that is forging ahead. Showing how sustainability fits into the new order—whether in reaching new markets, driving innovation, or mitigating new risks—will be critical to gaining the buy-in of your new leadership.