Back 21.12.2022

Basic sustainability criteria is not enough, susformation hits the spot

Vihreä siirtymä susformaatio

With war, inflation and a looming economic downturn causing anxiety, one can easily concentrate on now and one’s immediate survival. It is normal to think about ways to save energy instead of worrying about the energy supplies of the future. Yet we should not only focus on tomorrow but on the years and even the decades ahead. Today’s crises do not diminish the need for green transition.

The time for one-off sustainability actions is over. Sustainability is no longer an isolated figure or just a report. Instead, every corporation must start thinking about sustainability as a central part of its business. Every company or organisation has to go through a susformation – that is, it must systematically redirect its business to further the green transition.

In other words, every individual and every company can be a part of the solution to global problems. That is why even amidst uncertainty we can be optimistic about the current crises birthing not only a lot of talk but also real action.

Susformation as key to value creation

In order to create value, we must see sustainability as a genuinely strategic part of the management and operations of a company. Sustainable transformation of a company requires that the company directs innovations to solve problems caused by diminishing natural resources and climate change and changes its operative model accordingly.

Everything creating value in a company should be on the agenda of its board. In order for the creation of social and market value to become possible, the board must also lead the company’s susformation.

Instead of merely concentrating on ESG targets, the board should follow things that truly verify the progress of the susformation and things affecting value creation. To further this, pioneering organisations have linked the upper management’s long-term incentives to sustainability. For example, the retail giant Tesco has tied 25% of its incentive programme to the company’s sustainability targets. Meanwhile, the sustainable forestry company Tornator has linked 30% of its long-term incentives to its biodiversity programme. Metrics like these are a signal to the company’s employees and markets alike that the company is serious about sustainability.

Necessary is not enough

Added value is not created by optimizing current operations or thinking ahead a step or two. Added value is created by systemic sustainability thinking based on both short-term and especially long-term shifts.

Value is created by strategically innovating sustainable business in a way that takes the company’s ability to affect change in its environment into account and thereby benefits all stakeholders and the society at large.

Just barely meeting standards is not enough. Obeying laws and regulations and fulfilling investors’ minimum requirements does not create added value. True creation of added value requires future-forward thinking as well as ability to change and make long-term investments. When value chains are redefined, a company’s capacity for managing new business interfaces and creating new markets becomes essential.

We all share the responsibility for keeping the planet livable. Those in charge of making business decisions and laying out strategic plans have an extra responsibility.

It is time to stop just saying that sustainability is strategic. Can we finally make the phrase come true by including susformation on the agenda of every board and by following its progress the way we follow all business metrics?

Sustainable Growth Strategies, Strategy Realisation, Strategic Leadership, Management Systems

maria.sangder@gaia.fi
+358 50 310 5108