Strategic sustainability services
Our strategic sustainability services have three broad components to help clients address emerging sustainability issues:
- Sustainability measurement and valuation
In today’s business environment, CEOs and CFOs need a broader understanding of value. This extends to various stakeholder groups and includes non-traditional impacts, including social, economic and environmental. This is critical because traditional valuation methodologies are failing to sufficiently capture modern business issues including:
- Hidden business risks: impacts of supply chains that aren’t resilient
- Deliverability of strategy: business models unsustainable in the 21st century
- Stakeholder sensitivities: Governments or the media penalising companies for not understanding stakeholder needs
- Access to capital and markets: Investors’ loss of trust in management.
Critically our approach is based on developing a deep understanding of how stakeholders derive value from the positive and negative impacts of an organisation’s activity. This enables it to identify and measure value from the perspective of the stakeholders who have the most influence e.g. governments, employees, suppliers, communities.
We believe businesses need better tools to make more informed decisions. Business risks and issues are changing quickly, and organisations whose decision making processes do not change risk being left behind.
- Sustainable Development Goals alignment and measurement
Our Services include:
- Supporting business understand the linkages between sustainability performance, value creation and the successful delivery of business strategy
- Developing frameworks, input and outcome KPIs to support value measurement
- Developing models to demonstrate the financial impact of strategic environmental and social issues.
The Sustainable Development Goals
On September 25th 2015, 193 world leaders committed to 17 Global Goals which, if successful, would achieve 3 extraordinary things in the next 15 years: end extreme poverty; fight inequality and injustice, and fix climate change.
Business leaders need to have a clear understanding of which of the 169 targets they can influence, and develop new partnerships and strategies to achieve both business and Global Goals, and work out how to measure their impact, in a commercially rational way.
- The 17 goals and 169 targets are hugely ambitious, unwieldy and in places unclear. However they indicate a change of direction towards development financing which has measurable benefits for all and therefore to which more actors will be expected to participate. We believe there are a number of implications:
- Increased financial expectations on companies from host governments to address the agenda
- Increased social expectations on companies from governments and civil society.
- Changes in tax regimes to fund some of the costs
- Countries will be encouraged to develop national responses to the implementation of this agenda and to conduct regular reviews of progress.
- The UN body, the High-level Political Forum on sustainable development will monitor progress every four years, so countries will need to report on progress, the private sector will play a role in reporting on their impacts and outcomes.
- Specific metrics to track progress are being developed and will be published in March 2016.
Our services include:
- Understand - Understand the goals and implications for key stakeholders and markets
- Assess, Map the SDGs and targets to areas of strategic relevance for the business
- Prioritise, Develop framework to build business case to support prioritisation
- Collaborate, Identify collaboration partners to support delivery of goals
- Measure, Identify outcomes, develop KPIs, measure progress, using the SDG Compass - Inventory of Business Indicators, http://sdgcompass.org/business-indicators/
- Natural capital measurement and valuation
Natural capital is the bedrock of all economic activity and yet it is largely invisible in corporate boardrooms and public accounts. As we become increasingly aware of our reliance on natural resources, which the demands of a growing and more prosperous global population have left dangerously thin, natural capital depletion will become one of the 21st Century’s most prominent business concerns. Businesses will face an increasingly stark choice: adapt (and in some cases transform) their business model to a world in which there is intense competition for a dwindling reservoir of natural resources, or fail.
Natural capital is the elephant in the boardroom, looming large but mainly ignored as companies focus on short-term business objectives and priorities. Those in leadership positions, especially risk, supply chain and finance professionals, need to act now to integrate natural capital considerations into decision-making, resource allocation and reporting, thereby enabling their organisations to adapt successfully to growing competition for ever more scarce natural resources.
EY is a technical advisor to the Natural Capital Coalition, providing natural capital training and technical advice. We have played a central role in the development and pilot testing of the world’s first Natural Capital Protocol (NCP), working with the Natural Capital Coalition and its influential stakeholders amongst the world’s leading companies, international accounting institutes, NGOs, civil society and academics. The NCP provides a standardised process by which an organisation can identify its material impacts and dependencies on natural capital, quantify and value these, and integrate this information into business decision-making and reporting.
EY has first-hand experience supporting the NCP’s development, and our experience in sustainability strategy, measurement and valuation, can help organisations assess the risks and the opportunities associated with their natural capital impacts and dependencies and adapt their business model successfully to a resource-constrained world.
Our services include:
- We identify material natural capital impacts and dependencies in an organisation’s supply / value chain
- We measure and value these natural capital impacts and dependencies to enable sustainable business decision making and better resource allocation
- We identify the right mix of KPIs to report to the senior leadership team on natural capital impacts and dependencies
- Drawing on our expertise in Integrated Reporting, we help articulate an organisation’s relationship with natural capital through public reporting (e.g. annual report and accounts, sustainability report or corporate website)