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Putting sustainability at the heart of decision-making

  • René Vader, Leadership |

The flow of news out of this year's World Economic Forum (WEF) in Davos has made one thing perfectly clear: government and corporate leaders are taking sustainability and social responsibility seriously. Indeed, with one or two notable exceptions, the week at WEF saw business and public leaders virtually lining up to announce their ambitions for a more cohesive and sustainable world.

But you didn’t need to be in Davos to know that the public is demanding greater sustainability and social responsibility from their business and government leaders. Epitomized by unlikely activists such as Greta Thunberg (who was in Davos), the past 2 years have seen a massive outpouring of societal discontent about the pace of progress on the sustainability agenda. People are literally in the streets demanding action.

The key message for consumer and retail organizations should be obvious: your licence to operate now rests almost entirely on your ability to demonstrate your brands’ positive impact on sustainability and social responsibility.

The good news is that most consumer and retail executives already understand that this is not something that can be ‘greenwashed’ through slick ad campaigns or a barrage of well-intentioned Corporate Social Responsibility projects. What it requires is a fundamental rethink about how the business operates, grows, consumes and interacts with consumers.

I believe that the leading consumer and retail brands of the future will be those that view their strategic and tactical decision making through the lens of sustainability and social responsibility. They will be the ones that articulate and strive towards a wider societal purpose. And they will be the ones that are able to demonstrate the impact they have on the world around them.

The challenge facing most consumer and retail brands, therefore, is how to ensure the decisions they make are, in fact, helping them become more sustainable and socially responsible.

At the Davos summit, a slew of ideas and metrics for improving the way companies account for and disclose environmental impact were announced. One of these, supported by KPMG and the other ‘Big Four’ accounting firms (as well as dozens of other large companies), was embraced by more than two-thirds of the WEF’s International Business Council that week.

While greater consistency in disclosure of environmental and social impacts is critically important, I believe that companies also require a lens through which to assess their own decision-making on a consistent basis. It must go beyond a simple tick-box exercise for public disclosure compliance. Rather, it must help business decision-makers understand the true value of their day-to-day decisions and strategic direction.

There are multiple possible approaches to assessing the economic, social and environmental impacts of your decisions. At KPMG, we have a True Value methodology that quantifies an organization’s positive and negative impacts on society in financial terms. The approach allows business leaders to view their decisions broadly in terms of how they affect society as whole and not only in terms of bottom line financial growth.

Whatever methodology you use, the point is to take a consistent, data-driven and quantifiable approach that allows executives to understand the true social, environmental and economic impacts of their decisions.

As the news flowing out of Davos and the mood of the protesters on the streets clearly suggests, people are looking for evidence of positive, meaningful and – importantly – measurable change. Consumer and retail brands will need to do more to put sustainability at the heart of their decision-making.