Once viewed by many organizations as an unnecessary cost center, sustainability is now largely accepted as a corporate imperative. This change in mindset is partly thanks to increased sustainability reporting requirements, but it’s also increasingly seen by business leaders as an opportunity to create long-term competitive and financial advantage. At CCi we’ve been helping drive operational excellence and sustainable outcomes for over 35 years, but today our customers are looking for innovative solutions to help them meet their sustainability goals.
Robust corporate sustainability strategy is just good business. It helps ensure you are taking care of your business, your people and at the same time the environment. Many organizations are adopting sustainability as a core corporate strategy because of the financial potential it offers. But for sustainability to really stick, it needs to move from corporate-level strategy to be integrated into day-to-day business operations at the site-level.
Increased reporting requirements globally
One driver for adopting sustainability is increased regulation driven by demand from consumers, stakeholders and investors. The Corporate Sustainability Reporting Directive (CSRD) came into force in January 2023 in the EU. It modernised and strengthened the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, are now required to report on sustainability. Non-EU companies will also have to report if they generate over EUR 150 million on the EU market.
In addition, the International Sustainability Standards Board was formed following COP26 in 2021. The ISSB is developing standards that will result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets. When these standards are released, reporting on sustainability will impact the majority of listed businesses around the world, so if they’re not already doing it, they soon will be.
Corporate emissions still rising
Even with this increased focus and commitment to corporate sustainability, research shows that every year, Fortune 500 companies devote $20 billion to their CSR & sustainability efforts, yet total GHG emissions from corporates continue to rise. Why? In our view, while most organizations are integrating sustainability into their strategic goals, there remains a real disconnect between the goals that are being set at the corporate-level and day-to-day business operations.
The cycle of operational excellence and sustainability
To make sustainability stick and affect real change, we need to take sustainability strategy from the boardroom into the real world – what we’re terming site-led action. Site managers and employees have deep knowledge of site-specific capabilities and challenges – they know their teams, their equipment, and their product better than anyone else in the business. They will be the real drivers of sustainable outcomes and lasting change. Corporate strategy must be translated into actions that can be integrated into the day-to-day site processes, to make sustainability goals achievable. Operational excellence and sustainability are deeply interconnected concepts that, when effectively integrated, can create a virtuous cycle benefiting both the environment and the business. Here are some of the things organizations should be considering.
Operational excellence fuels sustainability
Resource efficiency: Manufacturing excellence focuses on optimizing production processes. By reducing waste, improving energy efficiency, and maximizing the use of raw materials, companies minimize their environmental footprint.
Example: Implementing lean manufacturing techniques reduces material waste, leading to less waste to landfill and lower resource extraction.
Innovation and technology adoption: Excellence drives the adoption of advanced technologies like automation and data analytics.
Example: Using IoT devices for predictive maintenance reduces machine downtime and energy consumption, leading to lower greenhouse gas emissions.
Quality improvement: High-quality production reduces the need for rework, discarded product and scrap, conserving resources and energy.
Example: Six Sigma methodologies decrease defects, resulting in fewer discarded products and less resource use and waste.
Sustainability fuels operational excellence
Risk management and operational resilience
Supply chain stability: Sustainable practices promote the development of resilient supply chains that are less susceptible to disruptions.
Example: Sourcing raw materials from multiple, sustainably managed suppliers reduces dependency on a single source and mitigates the impact of geopolitical tensions or natural disasters.
Operational continuity: Sustainable energy sources and resource management enhance operational resilience against environmental events.
Example: Utilizing a mix of renewable energy sources protects manufacturing facilities from power outages due to grid failures or fossil fuel shortages.
Circular economy
Product design innovation: Designing products for longevity, reparability and recyclability optimizes resource utilization.
Example: Creating appliances with easily replaceable parts extends their lifespan and reduces the frequency of new production runs.
Waste-to-value conversion: Transforming waste streams into valuable inputs for other processes or industries enhances profitability and sustainability.
Example: Converting organic waste from food processing into biogas provides renewable energy for the facility.
Empowered workforce
Enhanced skill sets: Training employees on sustainable practices and technologies enhances their skills, leading to higher-quality manufacturing outcomes.
Example: Educating staff on energy management systems enables them to optimize machinery settings, improving performance and reducing costs.
Higher employee satisfaction: A focus on sustainability can improve job satisfaction and morale, reducing turnover and retaining experienced workers.
Example: Workers take pride in being part of a company that values environmental stewardship, leading to increased loyalty and productivity.
Delivering sustainable change that lasts
There are multiple strategies that businesses can adopt to deliver sustainable outcomes while at the same time enhancing operational and financial performance. By focusing on both operational excellence and sustainability together, organizations will begin to drive the changes and improvements needed to meet their sustainability targets. The key to delivering meaningful and sustainable change that lasts is implementing strategies that can be applied and integrated into how companies operate, from the shop floor to the C-suite.
Read our press release to learn more about how CCi and Impact Pathways partner to help our clients achieve operational and sustainable outcomes.
Chris Hagler, CEO, Impact Pathways and Ed Koch, Chief Solutions Office, CCi
About the authors
Ed Koch is the Chief Solutions Officer of CCi. Ed leads the solutions division at CCi working with clients to deliver tech-enabled solutions to transform business performance. Ed has over 30 years’ experience in the consumer goods and food and beverages sector, with global expertise in supply chain performance improvement through Lean.
Chris Hagler is the Co-founder and CEO of Impact Pathways. Working at the board level and throughout the organization and down to the bottom line, Chris has more than 20 years of expertise working with businesses to advance Environmental Social Governance (ESG). Having previously led the Climate change and Sustainability practice at EY and worked with public and private companies across several industries including consumer products as well as founding the Sustainability Matters podcast, Chris focuses on integrating ESG into company strategy through oversight, strategy building and effective implementation.