Prioritise, Engage, Upskill and Break Cultural Barriers for a Sustainable Future

The sustainability transition has become an imperative for businesses worldwide. With the rise of environmental and social concerns, companies must adapt their strategies and operations to meet the changing expectations of consumers, investors and regulators, among others. However, the sustainability journey is not always straightforward, and businesses face a range of challenges and obstacles along the way.

According to a recent survey conducted by BDO Belgium and Mercuri Urval among 150 companies, the key challenges hampering their sustainability transition are: costs and lack of resources (for 26% of respondents), followed by complex supply chains, cultural and behavioural barriers, and lack of awareness and understanding.

Luckily, these challenges are not insurmountable. Here are some insights from our experience that can help businesses overcome them to become more sustainable:
 

Prioritise, Putting First Things First

In our experience, the challenge related to high costs and a lack of resources, can often be overcome by having a clear strategy in place. 

How can you approach this? What should you consider?
    • First, define your priorities. This could be done by a double materiality assessment based on two perspectives: the impact that the company has on the people and the environment (impact materiality), and the financial impact that ESG (environmental, social and governance) matters have on the company’s performance (financial materiality).
    • Then, take the broad business case into account when defining your ESG action plan. This is because, while initial investments may be required, sustainability measures can actually decrease costs in the long term. For example, investing in solar panels may require an initial investment, but in the long term, it can lead to significant cost savings.

Therefore, the most important element to decrease costs is having a long-term strategy based on the right priorities. A double materiality assessment can help you select the right things to do, identify where to invest and take a long-term perspective.

"The concept of double materiality has gained significant attention in recent years since the adoption of the Corporate Sustainability Reporting Directive (CSRD), and rightly so. By prioritising double materiality, companies can better understand the ESG risks and opportunities that are relevant to their business, and develop strategies that create long-term value for all stakeholders. This approach goes beyond the traditional focus on stakeholder requirements and can help companies to identify and manage sustainability risks and opportunities that are often overlooked."
CARMEN AUER & VIOLA MÖLLERPartner, Sustainability Services BDO Germany
"Many businesses mistakenly believe that costs and a lack of resources are the biggest barriers to sustainability. However, in the long(er) run, sustainability measures often actually decrease costs and increase companies’ top line. Sustainability helps companies in seizing new business opportunities. By prioritising integrated thinking and conducting a comprehensive double materiality assessment, companies can identify the right areas to invest in and view sustainability as a long-term strategy rather than a short-term burden."
NIELS DIJKMANSenior Manager, ESG Advisory BDO Netherlands

Engage your value chain 

In recent years, globalisation has led to increasing complexity of value chains. While this model has helped improve efficiency and reduce costs, it has also created significant obstacles for companies seeking to transition to more sustainable practices. The intricate nature of global value chains means that companies may be vulnerable to supply chain disruptions, such as those experienced during the Covid-19 crisis. Furthermore, companies often have limited visibility into their suppliers' practices, which can make it challenging to ensure that environmental and social standards are being met across the entire chain.

How can you approach this? What should you consider?
    • Map your value chain, from raw materials to end users. This can help you identify potential risks and vulnerabilities, such as areas where environmental or social standards are not being met.
    • Engaging with stakeholders throughout the chain (including suppliers, customers, affected local communities, etc.) can help you gain a better understanding of the impact of your company and identify areas where improvements are possible.
    • Implement responsible procurement practices. Set ESG (environmental, social and governance) standards to guide your procurement decisions, and support your suppliers in meeting these expectations. For example, companies can provide training and resources to help suppliers improve their sustainability practices, and/or offer incentives for meeting sustainability targets. Read more here.

Break Cultural Barriers

Integrating ESG considerations into business decision-making will require a significant cultural shift for many companies. While factors such as cost, quality and time have traditionally been the primary focus of business decision-making, adding ESG considerations to this list is becoming increasingly important. However, achieving this shift will require a concerted effort to change the attitudes and perspective of employees and management alike.

How can you approach this? What should you consider?
    • Lead by example: To create a culture that values ESG considerations, it is important that senior management and leadership teams lead by example. This means integrating ESG considerations into their own decision-making processes and visibly demonstrating their commitment to sustainability. When employees see their leaders taking ESG considerations seriously, they are more likely to follow suit. 
    • Engage employees: Creating a culture shift towards ESG requires the active participation and engagement of employees at all levels. As mentioned above, this can involve the organisation of training and education programmes. Additionally, companies can create channels for employees to provide feedback and ideas on how the company can improve its ESG performance. By actively engaging employees in the process, companies can create a sense of ownership and buy-in.

Read more about how to engage your leaders and employees here. Ultimately, the goal is to make ESG considerations a natural and integral part of the decision-making process, just like any other business factor.

Upskill Everyone

Another challenge that we see often is the lack of awareness. As sustainability is a relatively new and complex concept, many businesses have limited understanding of what ESG really is about, and this can be a significant barrier to progress. Therefore, upskilling the company is needed, which will allow your employees and Board members to go from an initial scepticism to understanding and buy-in, even to become a driving force. 

How can you approach this? What should you consider?
    • Organise training sessions for your employees and leadership group. When doing so, always link general ESG topics to the core aspects of your business and the potential for value creation.
    • The topic of Diversity, Equity and Inclusion (D&E&I) is an excellent example to show the importance of education. Many people think D&E&I is only about not discriminating women. However, it is much more than that. It includes unconscious biases, being able to keep talent, complementarity of profiles and ambitions, and much more besides. By educating employees on these topics, businesses can overcome these barriers and progress towards sustainability.

Overcome your challenges today

By prioritising the right things, engaging your value chain, upskilling everyone and breaking cultural barriers, businesses can overcome the challenges they face and make significant progress towards sustainability. The road may be bumpy, but with the right mindset and guidance, a sustainable future is within reach. Contact us today to discover how we can help you advance in your sustainability journey.

Note:

The research was conducted jointly by BDO Belgium and Mercuri Urval in the following countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and Switzerland. The study involved surveying companies to assess their attitudes towards sustainability, the obstacles they face and their main drivers. The research used a questionnaire methodology, and the online survey conducted in November-December 2023 reached around 150 companies. The full report will be published by the end of April 2024.