Labour Law / Arbetsrätt
"Be sustainable and value driven" they say. But how do you – as a company – do it in practice? Here´s some help
Research shows the importance of Sustainable Branding and its significant effect on Brand Equity and Company Success. It is also clear that the branding must have an authentic base in the operations of the business - i.e. not only going for a "greenwashing" approach.
Sustainable marketing has significant positive effects - and it is key to understand that such effects go far further than the issue of consumer attitude-behaviour gap in relation to sustainability issues. In other words, significant market shares can be gained from going beyond only responding to the level of sustainability that data on customer behaviour show as in demand right now. A very good overview can be found in the 8 page article "Sustainable Branding" by Grubor and Jaksa (free download on SSRN).
Also, here are some helpful key steps on how sustainability goals can be made practical and measurable for a company. They are taken from the workshop on the topic “How to create value by caring for soft values” Thomas Kanestad and I held in fantastic New York on SACCNY's Sustainology Conference this autumn, discussing the present and the future of sustainable businesses, food-tech and the interaction between Swedish and New York based businesses.
First; what should be done and for whom?
The Customer is of course key in any business considerations - information on transparent and authentic sustainability work and communication must reach the customer if the aim is to attract and build loyalty with those who want the Sustainable life style.
But, on top of that, employee branding can be as important when setting the sustainability communication. That millennials are said to be hard to attract and retain for any company is old news by now. The question is how a company can ensure that sustainable values are intertwined with the core business and that this vision and work is more than green-washing.
Key Performance Indicators are a perfect – but tricky – way to transform talk into reality. It both makes the company values concrete and actionable, and it makes for good material to use in the (transparent) communication towards customers and employees. Showing that the Company means business.
So, what are KPI:s and how do you decide which to apply in your business?
KPI:s are metrics – quantifiable – and Sustainability is as an outset values – quality. Here is a check-list to help you make the transition between sustainability metrics and financial metrics, a way that will make the goals you set relate to overall challenges and financial situation.
When identifying the right KPI:s for your business;
What are the general areas that you should cover? E.g. environment, equality etc.
What are key areas for your business and business model? I.e. if you are in the car industry it can be enviroment, if you are a venture capital firm it can be governance and active ownership in Sustainability issues in your portfolio companies.
Whose perspective should the KPI:s address? This is important! Are you looking to different stakeholders, and if so could there be conflicting interests? Ask the hard questions. For instance, could the customer want one thing, the owner another based on how it affects the results, and the employees a third because they see to how the work environment will be affected? Don´t close your eyes - instead, seek to clearly list all stakeholders and what goals they, as a group, would want the company to work towards.
Consumer demands/media pressure? What will your activities and stated goals look from the outside? Is there a risk that they would be misunderstood - if so, you must be sure to have a communication strategy that is one step ahead.
Government/politicians? Are there regulatory requirements on the horizon? Then this could be a reason to prioritize actions that would otherwise not be high on your KPI list.
Current owners/future investors? Is there an exit strategy for the Company or does it plan to seek new funding? Then the anticipated preferences of a future owner (which could include the general public in an IPO process) should be included, so that the future deal does not have unnecessary friction based on lack of fundamental KPIs within the Sustainability area. Act now so you don´t have to panic later.
Board of directors/management/employees? Is there a management incentive program in place? If so, the KPIs concerning Sustainability areas that the individual manager/director/employee can affect should be included in that person's incentive program to ensure that they are incentivised to act for sustainability - and not only for financial numbers (although the two will often go more hand-in-hand than most will appreciate).
What are you looking to achieve and why? The million dollar question. Don´t be too general. A KPI is a specific metric.
What are the risks of excluding a specific area? Keep your eyes open for the risk of bad publicity, new regulation etc.
What is the competition doing? There can be both first mover advantages and second mover advantages, in particular if there are significant costs related to the sustainable KPI/goal such as when R&D teams need to be engaged to a larger extent.
How many KPI:s should your company have? There is a clear risk with having to many KPI:s - you lose the clarity of what should be done and follow-up on. Then the KPI:s will not help you but will instead only become a re-written policy code for Sustainability.
Do they work with or against each other? It is important that the KPI:s match with each other as well as with your overall business settings. Don´t decide on something that, when looking at the entire business, just won't work.
Internal order of priority – and why? Sustainability is a big and shifting area. Communicate to your employees what is to be your focus in both short and long term. Then they will be able to engage in the concrete goals - see that the company really wants to implement its Value driven Brand in the everyday work and feel that they themselves can make a change. It will be meaningful to go to work!
To give some more classic examples of how the KPI can be designed
Hard values - CO2 emissions - Employee turn-over or sick leave - Food waste
Soft values - Positive customer survey responses - Positive (social) media coverage - Quality ratings
The more concrete the better, but that should not mean that the soft values are overlooked – opinions and perceptions matter in business!
It can be helpful to, as a check, for each KPI/action point:
Think of both the short-term and long-term perspective
Ensure that all relevant costs and savings are considered, i.e. also the more hidden ones that may be affecting the results
Consider the potentially high implementation costs or research and development costs vs long term goodwill and consumer happiness
Ensure that the different KPI targets work together
Are your KPI:s conflicting? Too costly? Subject to unrealistic timelines?
Assess what the main revenue increases connected with the KPI actions are
More typical examples of some characteristic KPI:s within sustainability are:
Environmental - Reduce food waste - Reduce number of plastic bags sold - CO2 emission monitoring
Health - Reduce sugar and saturated fats within food products - Increase the physical activities of employees - Reduce self assessed stress for employees
Organisation & Structure - Reporting – e.g. sustainability reporting as a recurring topic addressed by the board/management team - GRC Framework – e.g. documented policies for the company’s processes and framework to manage GRC and sustainability
Corporate Responsability - Business ethics – e.g. quality of written guidelines for dealing with business partners and public officials
Governance - Code of Conduct – e.g. recurring training session, surveys and auditing of compliance with adopted code of conduct - Whistle blowing system – e.g. quality of whistle blowing system and monitoring of reported cases
Community initiatives- Active participation in local charities - Events for the local community - Awareness campaigns
Research & Development - Increase budget/resources devoted to sustainability - Invest in new technology focusing on sustainability.
Hope this gets you and your colleagues thinking - and let's work together to encourage others to define their sustainability values through KPI:s or other concrete and measurable methods, so we get as many and as well thought through actions as possible. And use the KPI:s as a clear way to communicate your values within the organization.
Also, here are some helpful key steps on how sustainability goals can be made practical and measurable for a company. They are taken from the workshop on the topic “How to create value by caring for soft values” Thomas Kanestad and I held in fantastic New York on SACCNY's Sustainology Conference this autumn, discussing the present and the future of sustainable businesses, food-tech and the interaction between Swedish and New York based businesses.
First; what should be done and for whom?
The Customer is of course key in any business considerations - information on transparent and authentic sustainability work and communication must reach the customer if the aim is to attract and build loyalty with those who want the Sustainable life style.
But, on top of that, employee branding can be as important when setting the sustainability communication. That millennials are said to be hard to attract and retain for any company is old news by now. The question is how a company can ensure that sustainable values are intertwined with the core business and that this vision and work is more than green-washing.
Key Performance Indicators are a perfect – but tricky – way to transform talk into reality. It both makes the company values concrete and actionable, and it makes for good material to use in the (transparent) communication towards customers and employees. Showing that the Company means business.
So, what are KPI:s and how do you decide which to apply in your business?
KPI:s are metrics – quantifiable – and Sustainability is as an outset values – quality. Here is a check-list to help you make the transition between sustainability metrics and financial metrics, a way that will make the goals you set relate to overall challenges and financial situation.
When identifying the right KPI:s for your business;
What are the general areas that you should cover? E.g. environment, equality etc.
What are key areas for your business and business model? I.e. if you are in the car industry it can be enviroment, if you are a venture capital firm it can be governance and active ownership in Sustainability issues in your portfolio companies.
Whose perspective should the KPI:s address? This is important! Are you looking to different stakeholders, and if so could there be conflicting interests? Ask the hard questions. For instance, could the customer want one thing, the owner another based on how it affects the results, and the employees a third because they see to how the work environment will be affected? Don´t close your eyes - instead, seek to clearly list all stakeholders and what goals they, as a group, would want the company to work towards.
Consumer demands/media pressure? What will your activities and stated goals look from the outside? Is there a risk that they would be misunderstood - if so, you must be sure to have a communication strategy that is one step ahead.
Government/politicians? Are there regulatory requirements on the horizon? Then this could be a reason to prioritize actions that would otherwise not be high on your KPI list.
Current owners/future investors? Is there an exit strategy for the Company or does it plan to seek new funding? Then the anticipated preferences of a future owner (which could include the general public in an IPO process) should be included, so that the future deal does not have unnecessary friction based on lack of fundamental KPIs within the Sustainability area. Act now so you don´t have to panic later.
Board of directors/management/employees? Is there a management incentive program in place? If so, the KPIs concerning Sustainability areas that the individual manager/director/employee can affect should be included in that person's incentive program to ensure that they are incentivised to act for sustainability - and not only for financial numbers (although the two will often go more hand-in-hand than most will appreciate).
What are you looking to achieve and why? The million dollar question. Don´t be too general. A KPI is a specific metric.
What are the risks of excluding a specific area? Keep your eyes open for the risk of bad publicity, new regulation etc.
What is the competition doing? There can be both first mover advantages and second mover advantages, in particular if there are significant costs related to the sustainable KPI/goal such as when R&D teams need to be engaged to a larger extent.
How many KPI:s should your company have? There is a clear risk with having to many KPI:s - you lose the clarity of what should be done and follow-up on. Then the KPI:s will not help you but will instead only become a re-written policy code for Sustainability.
Do they work with or against each other? It is important that the KPI:s match with each other as well as with your overall business settings. Don´t decide on something that, when looking at the entire business, just won't work.
Internal order of priority – and why? Sustainability is a big and shifting area. Communicate to your employees what is to be your focus in both short and long term. Then they will be able to engage in the concrete goals - see that the company really wants to implement its Value driven Brand in the everyday work and feel that they themselves can make a change. It will be meaningful to go to work!
To give some more classic examples of how the KPI can be designed
Hard values - CO2 emissions - Employee turn-over or sick leave - Food waste
Soft values - Positive customer survey responses - Positive (social) media coverage - Quality ratings
The more concrete the better, but that should not mean that the soft values are overlooked – opinions and perceptions matter in business!
It can be helpful to, as a check, for each KPI/action point:
Think of both the short-term and long-term perspective
Ensure that all relevant costs and savings are considered, i.e. also the more hidden ones that may be affecting the results
Consider the potentially high implementation costs or research and development costs vs long term goodwill and consumer happiness
Ensure that the different KPI targets work together
Are your KPI:s conflicting? Too costly? Subject to unrealistic timelines?
Assess what the main revenue increases connected with the KPI actions are
More typical examples of some characteristic KPI:s within sustainability are:
Environmental - Reduce food waste - Reduce number of plastic bags sold - CO2 emission monitoring
Health - Reduce sugar and saturated fats within food products - Increase the physical activities of employees - Reduce self assessed stress for employees
Organisation & Structure - Reporting – e.g. sustainability reporting as a recurring topic addressed by the board/management team - GRC Framework – e.g. documented policies for the company’s processes and framework to manage GRC and sustainability
Corporate Responsability - Business ethics – e.g. quality of written guidelines for dealing with business partners and public officials
Governance - Code of Conduct – e.g. recurring training session, surveys and auditing of compliance with adopted code of conduct - Whistle blowing system – e.g. quality of whistle blowing system and monitoring of reported cases
Community initiatives- Active participation in local charities - Events for the local community - Awareness campaigns
Research & Development - Increase budget/resources devoted to sustainability - Invest in new technology focusing on sustainability.
Hope this gets you and your colleagues thinking - and let's work together to encourage others to define their sustainability values through KPI:s or other concrete and measurable methods, so we get as many and as well thought through actions as possible. And use the KPI:s as a clear way to communicate your values within the organization.