Unlocking business value through Corporate Sustainability
Unlocking business value through Corporate Sustainability
The changing societal context is prompting companies to rethink how they understand and approach ‘value’ creation. Businesses narrow focus on the bottom line coupled with the annual charitable initiative covered by the media is increasingly being re-shaped by environmental, social and governance factors. While reaching out to the needy is not at all bad, it is time to expand the narrative.
Business no longer exist to just make money; the well-being of employees, communities and the planet is inevitably tied to the health of the business. Business has an opportunity to create societal value, have motivated employees, have a more competitive advantage and have a chance to share emerging and best practices.
Some companies in Kenya have notably started publishing annual corporate sustainability reports showing their value add on social and environmental aspects. Safaricom through KPMG’s True value methodology created a total value of 414 Billion in their 2016 sustainability report. While this kind of reporting has not gained much popularity, it definitely influences the consumer’s decision making process.
Global Compact, being the world’s largest corporate sustainability Initiative, exists to help businesses to meet these and more goals.
First, we need to have principled businesses, that align their strategies and operations with the Ten Universal Principles on Human Rights, Labour Standards, the Environment and Anti-corruption. The principles provide a universal language for corporate responsibility and a framework to guide all businesses regardless of size, complexity or location.
A growing number of companies are finding real value in actively addressing social, environmental and governance issues. Kapa Oil refineries, a signatory to Global Compact, through the integration of the Ten principles set up an anonymous ethics hotline for their employees and recorded 24 cases in the 2015-2016 with disciplinary action taken on the cases. In addition, Kapa Oil Refineries also managed to save 20-30% on steam energy reducing the overall cost of business As a result of energy efficiency management in the company.
The other crucial aspect of corporate sustainability is taking action and collaborating with others to advance global challenges. Sustainable companies look past their own walls and actively support the societies around them. Poverty, conflict, uneducated youth and resource scarcity are examples of strategic issues that business can look into. Business cannot thrive while the world around it is deteriorating.
Partnerships are a major necessity in handling these strategic issues. Companies and stakeholders are now coming together to provide a collective voice and share risks in tackling major challenges that no single player can overcome.
Top among the requirements to be fully engaged is leadership commitment. Effecting change begins with the company’s top leadership. This means calling for action in all areas, from adjustment of policies and practices, training and motivating employees, pushing sustainability into the supply chain and disclosing efforts of embedding sustainability issues into business and outcomes. Leaders recognize that they cannot achieve sustainability alone; they make it an all-inclusive process to increase the chances of success. Sustainability requires a long-term vision and commitment to ongoing efforts, to ensure progress and keep pace with a rapidly changing world. It is for this reason that Global Compact requires a public commitment by CEOs to participate in all its initiatives and report on progress or engagement.
The second requirement is reporting on progress. Stakeholders – investors, consumers, citizens and civil society groups – want to continually know what a company has been doing beyond pursuing profits. Are they improving the lives of their employees, the communities around them and the planet? Global Compact provides an avenue for companies to report on their progress, through submission of a Communication On progress (COP) report which serves as an accountability measure.
A COP is typically included in a company’s main medium of communication, be it an annual report or a sustainability report and uploaded in the UN Global Compact website where it is publicly available. Businesses are also encouraged to share the COPs with stakeholders through their normal channels of communication.
Lastly, local action is a major component of corporate sustainability. While the global compact principles are universal, companies have a chance to act on the principles at a local level, and engage in policies and strategies unique to their operations and countries. To assist companies in this journey, there are local networks in approximately 85 countries. The networks exist to support business participants regardless of size or industry sector. They foster learning, reporting, networking, partnerships and advocacy, with the goal of advancing sustainability understanding and performance. Global compact members get the opportunity to share best and emerging practices, mentorship from more established companies, capacity building in the ten principles issue areas namely Human rights, Labor, Environment and Anti-corruption.
Businesses actively taking up Corporate sustainability have continually attracted more stakeholders as they add more value in socio-economic and environmental aspects and ultimately thrive. We look forward to engaging more companies in Kenya, being more intentional and proactive about corporate sustainability.
Lilian Gikandi is the UN Global Compact Network Kenya Network Support Officer and can be reached on [email protected]