Consumers, investors, governments, employees, and other stakeholders are demanding greater transparency, assurance, and resiliency from organizations who are on the critical path of the decarbonization economy. Organizations need to tell more credible stories about how they are managing operational and sustainability risks. The need to demonstrate effectiveness and improvement in these areas has quickly gone from the periphery to become a core element of an organization’s competitive advantage. This has become part of the expectations of both external and internal stakeholders.In the days of Gen Z, try hiring top talent without being able to show your work in this area is close to impossible.
Multiple global frameworks as well as national and sub-national legislation, now demand that companies disclose:
1) How their business and supply chain activities impact climate, resources and communities; and
2) How their operations are adapting to the increasing more extreme climate in which they operate.
These disclosures offer insights into the steps businesses are actively taking to contribute to society, reduce their impacts on the environment and provide an overview of how they are managing safe, repeatable and sustainable operations.
The ability to mitigate and adapt is part of a larger strategy organizations must adopt. Organizations must integrate performance data with these operational activities at all levels of the business. To build an effective strategy and differentiate themselves from their peers, organizations must see performance through a risk management lens.
To assist in building out that strategy, we see four key elements that every organization must include in the formation of their strategy that will help meet the increasing expectations of their stakeholders:
We feel the acronym ‘PIER’ is a suitable one for this purpose as it is a resilient structure where land meets water. Knitting these four elements into an effective strategy will help build the confidence and comfort that an organization can deliver on the commitments that it makes and is on the path of continuous learning and improvement.