It does not even seem so long ago that companies formulated sky-high ambitions for the magical year of 2020. A year that resonates so well asked for inspiring views and great plans. But guess what, 2019 just came about which means that 2020 is at your doorstep. Hopefully 2019 will be a year of realising these big company ambitions, as 2020 is no longer that far-away year on the horizon, but comes close all too quickly.
Time to formulate firm ambitions that go beyond 2020
All too quickly because many societal challenges have not been resolved. In Belgium we are no longer on track in terms of our reduction of greenhouse gas emissions. Although between 2013 and 2015 we reached our annual target designed to reach -15% greenhouse gas emissions* by 2020, since 2016 this is no longer the case. Due to distributed power between the federal authority and the three Regions, decision-making on climate change-related matters is challenging, to say the least, whereas a quick (re)action is required. In the coming decade, we will need to make extra efforts and set ambitions that will be even more bold.
On a global level there is also reason for concern: the Sustainable Development Goals progress report from the United Nations shows that the number of people suffering from malnutrition has increased by 38 million, that nine out of ten inhabitants of cities are breathing polluted air and that the livelihood of more than one billion people is threatened by soil degradation. Luckily we also see positive developments. More and more people get access to electricity and the number of people working without getting a living wage in return is decreasing. Above all, when seeing the initiatives of public and private sectors, one thing is certain: sustainability is here to stay.
At Sustainalize we see that companies have an important role to play in reducing their negative impact on the environment and accelerating positive impact via innovative products and services. The question is how to stay relevant as an organisation in an ever changing world. After all, without clear positioning and bright goals for the future, an organisation is unable to steer on positive change.
Sustainability as a key strategic concept is becoming widely embraced by companies. Yet the tangible results are still to come. Because, as far as we are concerned, sustainable change does not go far enough. And with 2020 around the corner, it is the time for firm ambitions ‘beyond 2020’.
How to develop a sustainable strategy as a company…
Among our customers, mainly companies with a global impact, we see great motivation and efforts to contribute to the global 2030 agenda for sustainable development, the SDGs. But what are the right long-term goals, these ‘Big and Hairy Goals’ that guide an organisation and enable you to steer on positive impact?
We are lucky enough to support a growing group of companies with these questions and are happy to share our experiences. As we believe there is no ‘one-size-fits-all’ approach, we look at the strategic direction of the company with an integrated lens. To do so, we often use the ‘strategy backbone’ as a guideline. Strategy development is a complex process, and this guideline helps to ensure that we all speak the same language. We explain how concepts like a purpose, vision and ambitions are linked to one another.
…and for what point in time?
In our ‘strategy dictionary’, the purpose of a company describes the positive impact it wants to make on the world and/or lives of its stakeholders. It is the fundamental ‘why’ of an organisation. A good example is the chemical company DSM that wants to ‘create better lives for everyone, now and in the future’. Because a purpose touches the core of a company, it is often timeless.
A vision does, however, have a clear element of time. With a vision, you tell what you want to achieve as a company on a certain moment in time. This could be formulated as a ‘Big Hairy Audacious Goal (BHAG)’, a concept that was introduced in the nineties by Jim Collins and Jerry Porras. For example, Randstad wants to touch the work lives of 500 million people by 2030. Via this statement, the human resources company shows that it wants to go beyond the current core activities, and tackle societal challenges around youth employment, diversity and inclusion.
With 2020 at your doorstep, the time has come to come up with an inspiring vision. Because the SDGs are formulated for 2030 as a dot on the horizon, it would make perfect sense to take this year as starting point. Yet there may be good reasons to choose for another year, like 2025 for example, because the business you operate in is transforming so rapidly that 2030 is simply too far away to formulate a meaningful vision. Another option is to look further on the horizon towards 2050, aligning with the World Business Council for Sustainable Development (WBCSD).
From an inspiring vision towards tangible ambitions
A purpose and vision will not bring you anywhere yet. That is why a (medium) long-term vision usually consists of different ambitions. Starting from a thorough insight into the current situation of the business, ambitions are developed with a shorter timeline than a vision. They usually answer the question: ‘where do we want to go in the next 3 to 5 years?’. DSM translated its purpose into a vision and strategy with different goals. In 2020, the group wants to realise 65% of its turnover through sustainable products (‘Brighter Living Solutions’). A ‘good’ ambition is measurable, and is therefore accompanied by an output Key Performance Indicator (KPI). The output KPI with a ‘target’ helps to assess whether the ambition is actually being achieved.
And, then what?
This is just the start. A long-term vision with corresponding ambitions does not yet answer the question: ‘how do we realise our vision and ambitions?’. For this purpose, you need to define which activities you have to undertake as a company and/or what you need to be good at in order to achieve your goals. You could call these your drivers, or critical success factors. In other words: activities that you are able to steer on. This process comes with dilemmas.
Take the example of a company that wants to be 80% circular in 2025. That means that within the procurement process the desire for circular raw materials must resonate in the purchasing process. Then, you need to base your procurement decision on this, even though that involves a fundamentally different way of working with your suppliers. Drivers are the key for the company to successfully realise its sustainable strategy. Together with our clients, we develop a ‘strategy map’ that will guide the successful execution of the sustainable strategy.
Is it easy to define and implement a meaningful vision with ambitions beyond 2020? No, unfortunately not. But, is it necessary? Yes, much needed! The world asks for companies with courage and ambition, and we’re more than happy to support them. Want to know more about our approach? Please contact us.
Let’s set off to a year in which hopefully lots of the 2020 ambitions will be realised, and meaningful visions and ambitions will be developed that go beyond 2020. With the best wishes!
*From non-ETS sectors