Jamie Hall of Zenergi discusses the value of clearly articulated sustainability commitments and engaging your whole team in your social value operating model
There is no denying that it’s a uniquely challenging period for organisations. Fresh off the back of a global pandemic, we’re now faced with a brand-new set of circumstances. Operating costs are increasing at an alarming rate, thanks to inflation being at its highest level in 40 years and soaring energy prices. Across the continent we’re witnessing atrocities in Ukraine and the first war on European shores since the end of World War II, in addition to learning to adjust to a post-Brexit relationship and the pressures we’re now facing in the job market and supply chains.
Beyond the macroeconomic challenges, organisations large and small are also dealing with a set of “business as usual” challenges that are unique to them. Admittedly, this all sounds very bleak, but with so much change and uncertainty in the world around us, the question for sustainability professionals is, how do we support organisations to strike a balance between survival mode in the short term and long term sustainable planning?
What do we mean by social value?
The case for sustainable practices within business is well understood, and most people will be able to provide examples of how organisations can be more sustainable. Many will naturally consider resource usage, energy, waste, water, travel and so on. However, fewer will be familiar with the notion of social value and how a well articulated strategy can further strengthen business performance. So, what do we mean by social value? Well, firstly, it’s easy to understand why people would be confused by the industry jargon and varying definitions we hear regularly. We have all become accustomed to hearing about green, CSR, ESG or sustainability practices, but here are some dictionary definitions of the well-recognised terms:
- Corporate Social Responsibility – awareness, acceptance, and management of the implications and effects of all corporate decision‐making, taking particular account of community investment, human rights, employee relations, environmental practices and ethical conduct.
- ESG (environmental, social, and governance) – a way of judging a company by things other than its financial performance, for example, its policies relating to the environment and the happiness of its employees.
- Sustainability – the property of being environmentally sustainable; the degree to which a process or enterprise is able to be maintained or continued while avoiding the long-term depletion of natural resources.
It can therefore be difficult to draw clear lines of separation between these terms, which probably explains why they’re frequently used interchangeably to describe an organisation’s practices, so why is social value any different? Firstly, its scope is broader, since social value has four commonly used pillars which are ‘community, sustainability, wellbeing and diversity’, so it is therefore more encompassing than green and net zero, which are environmentally focussed. Secondly, and perhaps more fundamentally, a social value strategy should be aligned to organisational purpose and its core mission (outside of generating profits as financial metrics don’t feature in social value reporting). So, for it to be successful it needs to be embedded within an organisation, unlike ESG, for example, which is a reporting methodology for external stakeholders, such as investors.
How can social value benefit businesses?
A well-articulated and successfully implemented social value strategy can support businesses to overcome many of the challenges described earlier. It’s difficult for any business to be successful if they aren’t aligned with their stakeholders’ expectations and values. With the ever-increasing focus on global issues, such as climate change and inequality, customers, employees, investors, suppliers and society in general all expect more from the organisations they have relationships with. So much so, that they are increasingly making decisions based upon their perception of the impact and value an organisation has on society. Businesses therefore need to demonstrate responsibility with credible and realistic commitments if they are to retain relationships and, moreover, relevance with their stakeholders. There are numerous tangible benefits but some of the key opportunities have been highlighted below:
Employees – with record levels of unemployment, the battle for talent is intensifying so it’s vital for companies to have a strong employee value proposition. Social value can help to engage teams as they support the development and implementation of the strategy, but it can also be a great opportunity to reflect upon your employee value proposition and your people policies. Some examples would be switching your fleet to electric cars, or enhancing your commitments to diversity, inclusion, and equality across the business.
Resilience – long-term planning is fundamental to any social value strategy, as is assessing materiality and good risk management. This forces organisations to think beyond short term issues and to reflect upon the issues which could impact performance, in addition to identifying opportunities to increase their reach and impact. Assessing key issues such as vulnerability to climate change risk or supply chain disruption are examples of how social value can help to mitigate potential issues on the horizon.
Reputation – looking beyond standing still and remaining competitive, social value can help businesses to improve or change perceptions, whilst also acting as a key differentiator. ESG reporting and tighter regulation are fast becoming the norm, so companies need to act if they are to remain attractive to investors and stand out from the crowd. Examples of this in practice would be identifying how your business can give back to local communities or supporting charities whose mission aligns with your values.
How to design and implement a social value strategy
For many this may feel like a daunting prospect, or simply not urgent given the many competing priorities facing them in the current climate. Others will be further along the journey, perhaps they have the resources, or their sector demands a more sophisticated approach. Either way, social value is no longer a ‘nice to have’ and it also doesn’t need to ‘cost the earth’, in fact, it’s well documented that sustainable businesses are more profitable and have much higher valuations than their peers.
To borrow a Chinese proverb, a journey of a thousand miles begins with a single step. Scrambling to launch something half-baked in a big bang approach will cause you issues in the long run, as you’re in danger of having gaps or overcommitting. Starting small is better than not starting at all. Also, talk to your stakeholders and get their input, alongside employees, customers, and investors; build working groups, and engage the teams that will eventually own the implementation and whose KPIs will be linked to the strategy’s performance.
Finally, it’s important to balance the needs of the business in the short term with your long-term ambitions. Trust the sustainability professionals in your team, or work with experienced partners to navigate this challenge to ensure you take a structured and well-trodden approach.
Here at Zenergi we believe we will be defined by our social value commitments, so please feel free to contact us if you’d like to hear about our experiences, or head to the website below to learn more about our approach.
About the Author
Jamie Hall is Chief Sustainability Officer at Zenergi.