Companies today are under increasing pressure to provide more than short-term financial performance. Instead, they are being asked to generate sustainable corporate value that meets the expectations of its customers, stakeholders and shareholders.
For many companies, this is not a fundamental shift. It’s really just a return to longer-term thinking. This recognizes that a business has to create value for others (think customers, employees, suppliers, communities and ecosystems) in order to gain access to the resources it needs. It’s not just about today but also about the future, in other words, how to generate value in a sustainable way.
This means that it’s important to see the work of your company from three perspectives (hopefully in an integrated way):
- Financial – how much does this work cost and what’s the financial return on it?
- Performance – is the result of our work achieving our target value outcomes for customers, stakeholders and shareholders?
- Sustainability – are we doing this in a way that ensures the health and viability of the resources we need in the future (financial, physical, knowledge, relationships and natural resources)?
It all sounds great in the abstract. But, on a practical level, this challenges management teams whose traditional information sources are financial and operational systems. What if you want to change your company’s carbon footprint? It can’t be a purely sustainability calculation—you also need to consider the operating performance and financial implications. You need to find the optimal balance among all three.
Many are now creating sustainability or ESG databases and reporting. They risk having these new data sources stuck in a silo. The challenge is how to integrate sustainability—especially into the decision-making processes. After all, if you don’t factor all three perspectives into resource allocation and investment decisions, your “sustainability” efforts will be little more than lip service and you’ll put your company at risk.
We created a simple interactive tool to illustrate this type of thinking. Check it out and plan the next steps in your company’s journey to sustainable corporate value.
