Unlock Sustainability And Business Value With Three Simple Questions

Corporate backtracking on sustainability makes headlines. But headlines can be misleading. As some firms dial down talk about corporate sustainability, CEOs of the world’s most resilient, forward-thinking companies are quietly dialing up action. The reason for this is straightforward: Done right, sustainability provides a lens through which businesses can gain insight into impact, risks, and opportunities for innovation — all through asking three basic questions.

This article introduces the of-on-for framework, a simple tool that enables your company to leverage sustainability to lead, now and in the future.

What Is The Of-On-For Sustainability Framework, And Why Does It Matter For CEOs?

What differentiates companies that proffer claims about sustainability and those that leverage sustainability to deliver on business goals? The answer is strategy and simplicity. Board members and executive teams who understand sustainability as strategic give their teams actionable ways to ask better questions about sustainability and business value.

The of-on-for framework equips you to quickly identify the impact of your company, anticipate impacts on your company, and identify innovation opportunities for your company.

1. What is the sustainability impact (of) your business?
2. What is the impact of sustainability risk (on) your business?
3. Which innovation opportunities does sustainability offer (for) your business?

These three questions frame sustainability as a driver of business value, providing real-time insight into business impact, potential risks, and how the company can lead.

What Is The Sustainability Impact (Of) Your Business?

Every company has an environmental and social “footprint.” This is the sustainability of business: how a company’s operations, supply chains, employment practices, and products impact the world. This impact might include waste, biodiversity loss, or poor working conditions. Ocean plastics have brought unwanted attention to consumer brands that depend on single-use items. Electric vehicles have become synonymous with serious human rights abuses due to their reliance on critical minerals mined in precarious conditions. At the same time, your business’s impact may include solutions for regenerative agriculture, opportunities for social mobility, or a large-scale solution to a problem like access to banking. The key is to have a clear understanding of your company’s top social and environmental impacts, positive and negative.

For leaders, this requires transparency and curiosity — an appetite to ask questions. What is your business’s true impact on the environment? On communities? Are you accounting for any negative impacts? Amplifying the positive? Redesigning your value proposition to reduce harm? Continuously exploring the sustainability impact of your business is a powerful source of insights about your business as a whole.

What is the Impact Of Sustainability Risk (On) Your Business?

Sustainability is not just about the impact of your business. It is about the impact of a volatile external environment on your business. A strategic understanding of sustainability includes a clear view of the impact of environmental and social realities on how you operate and compete.

The impact of sustainability on business is apparent, but often poorly articulated. Basic inputs, including water, clean air, and arable soil, are fundamental to business operations from mining to construction to manufacturing. Energy-hungry data centers require 24/7 cooling to power the AI and digital technologies on which modern business depends. Scientists at the Stockholm Resilience Center have identified nine “planetary boundaries” that provide a guide to the range of potential environmental impacts on your business. Impacts of social sustainability are no less significant: rising costs due to labor scarcity, supply chain and reputational risk due to human rights concerns, and global migration are a significant business consideration for industries from chocolate to wine — no business is immune.

Leaders must treat sustainability risks as material risks. Water shortages can halt production. Poor labor practices can provoke consumer and investor backlash. In short, a clear understanding of how sustainability impacts on your business can inform capital allocation, talent strategy, and your overall strategic direction. Companies that use these insights anticipate disruption and build resilience.

What Innovation Opportunities Does Sustainability Offer (For) Your Business?

When you understand the sustainability impact of and on your business, you can unlock the third and most transformative lens of the framework: innovation opportunities for your company. This is the true magic of a strategic approach to sustainability as a driver of value creation.

Many sustainability challenges are, at their core, problems in need of solutions. Low-carbon transport, circular packaging, regenerative agriculture, and access finance all represent such challenges. These needs can create new markets. Business is strongly equipped to respond with innovation. It is for this reason that sustainability represents the biggest innovation challenge of our time. Incumbent companies are being invited to re-imagine how to feed, clothe, house, and transport the global population for generations to come.

For business, this is an invitation to innovate on a scale not seen since the Industrial Revolution. From IKEA’s circular economy efforts in the furniture sector to Ørsted’s move to renewable energy to 3D printed homes, those who take a piecemeal, compliance-driven approach are unlikely to lead the industries of the future. Such an opportunity rewards those who rethink business models and whole industries.

Sustainability as an opportunity for business reframes environmental and social shifts as levers for new strategic possibilities. This is how the leaders of tomorrow will distinguish themselves today.

How CEOs Can Use Sustainability to Gain a Competitive Advantage

The of-on-for framework points to where your business needs to focus today, and how to grasp opportunities for the future. As you consider each of the three questions with your teams, track progress in each area, and continuously bring the results into strategic decision-making. The framework delivers a holistic view of your company, including your impact (of), risk (on), and potential for new strategic advantage (for). When you articulate how these insights connect to your strategy, you generate unique business intelligence and position yourself for compelling communication with investors, regulators, and consumers. Sustainability is not a tick-box exercise limited to a single department or team. It is a strategic opportunity for the whole business. The of-on-for framework equips leaders to grasp this opportunity. This means not only securing the future but reimagining how you create value today.

 

This article was written by Mary Johnstone-Louis from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.