Sustainability strategies: five steps for planning and pursuing a vision for responsible business growth and transformation

The public debate on sustainability topics has been growing in recent years, but for various reasons sustainability strategies have remained in the background. In fact, if sustainability reporting has always been governed by international standards such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) or, more recently, by the CSRD provisions, the sustainability strategy has been seemingly left behind on this stance too, occasionally benchmarked against principles and standards such as AccountAbility (AA) or GRI aspects, but not being subject to local transposition and, therefore, bringing no responsibility or obligation to comply. On the other hand, even where sustainability strategies exists, there are multiple cases where it is decoupled from the business strategy, which creates an unproductive gap between growth and transformation objectives.

However, given recent years’ economic instability, as well as a spread concern expressed in a recent Deloitte report by seven out of ten global business leaders regarding climate change impacts on their companies’ operations by 2027, and especially considering the evolving regulatory landscape — CSRD, EU Taxonomy, Scope 1, 2 and 3 emissions, etc. —, the sustainability strategy is becoming one of the most relevant and practical actions to be taken by companies, increasing efficiency and resilience and transforming sustainability from an isolated topic into a pillar of organizational culture, providing direction, clarity and motivation.

Beyond ESRS requirements. How to start developing a relevant sustainability strategy?

European regulations provide an indispensable framework for sustainability reporting, but they can and should only be a starting point in the wider sustainable transformation of the business and in building a strategy. Because an effective strategy stands for more than just compliance. It is about setting priorities, integrating them into the business model and developing a multi-stage plan that will positively influence business’ impacts on the environment, on the market and society and, not least, will improve financial performance.

1.  The Value Chain Assessment is the first step. It involves identifying the critical points where the company can have the most significant impact, along the chain, from suppliers to the final product. Alternatively, there is the possibility of building a sustainability strategy based on ESRS (European Sustainability Reporting Standards) themes, but it provides a narrower perspective and fewer areas of intervention.

2.  The Double Materiality Analysis is an essential calibration tool at the initial stage, which highlights both the organization’s impact on the environment and society, as well as the risks and opportunities generated by external factors. Since the introduction of CSRD, the relevance of double materiality analysis has increased as it underpins much of the information required in reporting.

3.  Engaging with stakeholders in individual interviews or group discussions is the next step. Because understanding the expectations of critical categories, such as employees, customers, investors and the community, is essential from the initial strategy construction phase, and will ensure their commitment throughout the following stages.

4.  Prioritizing areas with the greatest potential for impact, rather than tackling everything at once, is also a principle to keep in mind. As with sustainability reporting, a cautious, gradual approach, building a plan around the topics where the company can make a real contribution, whether in environmental, social or business terms, is always preferable. In the opposite scenario, of simultaneous action conducted on multiple levels, the risks are related to resource waste on low-impact initaitives, confusion among teams working with objectives that are difficult to pursue and achieve, as well as a lack of credibility caused by the inability to deliver clear results.

5.  At the end of these first four steps, a scalable roadmap should organize the strategy into phases: short-term, immediately achievable objectives, medium-term, i.e. expansion projects, as well as long-term objectives — transformation initiatives. Sustainability strategies should be built to reflect the company's involvement over a defined period, as a result of context, value chain and materiality analyses.

What principles make a difference in successfully pursuing a sustainability strategy?

Integrating ESG principles into decision-making routines. Amid heightened economic instability and increasingly difficult access to resources, industries and economies are adapting, and the power of anticipation is becoming a key attribute. The ESG framework provides clear benchmarks for action towards targeted objectives, which is why sustainability must become part of the decision-making process in all its aspects, from supply chain to investments and innovation.

Following the market context and the global trends. An effective strategy involves aligning measures with consumer demand and technological evolution and should provide a comprehensive picture not only of the company’s situation, but also of the broader context in which the strategy was developed.

Communication. Any initiative, whether mandated by regulations or voluntary, will encounter some degree of resistance. Clear communication, with precise objectives and clear, organized steps to achieve them, fosters trust and commitment from the teams.

Flexibility. The sustainability strategy supposes concentrating all transformation and optimization actions in an integrated plan, developed based on the company's capabilities and industry specifics, allocating responsibilities and budgets and taking into account the realities of the market and competition. That is why it remains a “living” document and requires constant updates and adjustments.

In conclusion, why developing a sustainability strategy?

A sustainability strategy is not a response to regulations, nor an optional exercise, but an essential business tool, whose real value is reflected in all dimensions of the organization.

A well-constructed strategy directs investments, innovation and operational development towards areas that generate sustainable impact in financial, reputational and environmental terms. In addition, it ensures a higher level of predictability and resilience to systemic changes and external crises and helps strengthening investors’, partners’, employees’ and other stakeholders’ trust.