Boston Consulting Group (BCG) found that companies that focus on driving societal impact through sustainability have 12.4% higher margins and upwards of 19% higher valuation multiples; plus, they have all the soft benefits like recruiting and retaining talent, brand value, and higher levels of innovation.
And it’s not just short-term benefits. I’m talking about exponential market growth compared to competitors, and frankly, sustainability is going to be necessary for long-term business continuity.
But sustainability is a massive mountain to climb. It’s easy to get caught in analysis paralysis or not know where to begin. To capture a competitive advantage with sustainability you have to know where you are now and where you want to go.
That’s where the sustainability maturity curve, created by PWC comes in.
The stages of the sustainability maturity model
The maturity curve from PWC represents the relationship sustainability has with both risk and opportunity. At the beginning stages, short- and long-term risk are quite high. As you progress, you mitigate that risk (both from external and internal pressures) but, more importantly, unlock massive business value.
And this model is really about mindset shifts as you move along. Yes, there are processes to change throughout, but the maturity curve is to help frame up how you and your company think about and approach sustainability.
In a recent Sustainability Superheroes event, our host, Stephen Marland, and Justin Bean, Sustainability Strategy and Innovation Lead at Hitachi’s Environmental Business Division broke each stage down.
0 Disregard: Ignore
No one wants to be in this stage of the maturity model.
This doesn’t just mean that sustainability isn’t a high-priority item: Rather, it shows that a company has made a conscious effort to ignore sustainability.
This stance opens a company up to enormous long-term and short-term risk, with brand value, investors, and even long-term supply chain issues.
1 Compliance: Must do
This is how sustainability is talked about most often.
I call it “tick-box-sustainability.” In this stage, a company does what’s needed to meet regulations and nothing else.
There’s nothing particularly wrong with being in this stage either! Almost every company starts here. There just isn’t a whole lot of upside to it.
Until you get to the point where you have the right culture, headcount, and budget, you likely won’t be able to move past this stage. At this point, you’re mitigating short-term compliance risk, but not taking advantage of long-term opportunities.
2 Obligation: Expected to do
As you move into this stage you go from “What do I have to do from a compliance standpoint?” to “Now, what should I do?” and “What are customers and stakeholders expecting me to do?”
So, you still aren’t capitalizing on opportunities, but you are thinking about sustainability differently. It’s not just an exercise of fulfilling regulations but also of taking into account public perception and expectations.
3 Efficiency: Smart to do
This is where we go from mitigating short-term risk to capitalizing on short-term opportunity. As Justin points out “This is where we’re starting to get into the carrots. Below that is the stick, and carrots are a lot more fun.”
This is where most companies are today on the journey. They are starting to think about efficiency gains from reducing energy bills with renewables, or reducing materials costs, or higher margins from offering a sustainable product or service, as shown in the BCG study.
4 Leadership: Long-term viability
In the leadership stage the sustainability maturity curve takes one of the biggest mindset shifts. Sustainability moves from an add-on, or nice to have, to something that is crucial for business continuity.
In this stage you take a much more long-term view to think about what’s coming 5, 10, or 20 years from now.
The trends are clear. Sustainability is becoming a major driver of purchasing decisions, business investments, and of regulations. Companies that want to thrive in the future need to think about how to use sustainability as a catalyst for growth.
It’s almost like an investment mindset: “What can I put in now that will pay dividends later?” You’re thinking about how to create a sustainable alternative to what the market offers today, knowing that it will grow faster in the future.
5 Purpose: Create value
Stage 5 is much more ambiguous than the others, and that’s because not many companies — if any at all — fall into this category.
It’s about creating value for the future, the community, and the world. Justin put it as not just creating a sustainable alternative to an existing market, but creating a new market geared towards advancing sustainability.
And this doesn’t have to mean that you’re suddenly creating these new, innovative products. What it does mean is that your scope for sustainability now moves beyond your company and your customers, to impact the world around you.
Take a holistic approach to sustainability
To move through this journey is going to take a lot of time and stakeholder management. You literally have to win the hearts and minds of those in your company and shift the culture. But if you do, there are many long-term benefits to be had.
It’s important to think about sustainability holistically, not in a silo. Otherwise, you’ll never reach that competitive advantage.
What I mean is this:
Businesses operate within an economy. That economy happens within a society. That society is operating within an ecology of the entire earth, which makes the entire thing possible.
It’s easy to think of sustainability as this abstract thing, but by looking at it in these holistic terms you can see how to make a real difference. Each one of these layers impacts the next.
If we get thrown out of balance at the ecology scale, it’s hard to notice until it’s too late. But by taking these smaller chunks, it’s very easy to see if a company isn’t operating sustainably. And by addressing sustainability at the business layer, the entire system stays in balance.
Want to see how satellites and Ai can help you manage sustainability at scale? Check out AiDash Intelligent Sustainability Management System (ISMS), or better yet, get a demo and see it in action.