Sustainability operating model
A guide to setting a clear and shared vision for your organisation
We continue to speak to sustainability leaders who are currently focused on reporting and compliance and are frustrated at the gap in expectation between what they believe they have been hired to do and their perception of the ambition and appetite of the Board and Executives team to move in that direction. The root cause is often the absence of shared vision and ambition for sustainability in the organisation.
We discuss our observations on the drivers and provide a guide for organisations looking to reset their approach.
Insurance and reinsurance sectors are still far from truly embedding sustainability into operating models.
In our recent survey on the state of sustainability, we examined the maturity and progress of the insurance and reinsurance sectors in embedding sustainability.
Overall, progress varies by sector, some leaders are emerging; but the whole sector is still behind where it could be. It seems that organisations have either prioritised ‘low hanging fruit’, or those areas that enable them to win more business.
For example, some in the pensions sector have embedded sustainability into sales and investments decisions while the rest of their organisations lag. Conversely, the general insurance sector seems further ahead in doing the same from a procurement and supply chain point of view.
There are more broad statements of intent than visions.
When our clients ask us how to help them ensure compliance with sustainability regulations, they also ask us how to embed sustainability into their operating models.
starting point with many organisations is to take them one step back to bring them two steps forward. This is because we find that some are yet to properly determine what sustainability means to them beyond broad statement of intent crafted many years ago. Others have proceeded to goal setting but not yet established a vision which is underpinned by a clear philosophy.
As such, a critical first step is to work with them to establish a vision and ambition and agree a set of goals to inform the direction of their organisation.
The absence of a clear vision contributes to organisational tensions and inefficiencies.
Few organisations have truly embedded sustainability into their operating models and while we are now beginning to see a handful of emerging leaders in the sector; it appears that many organisations and their sustainability leaders are still struggling to truly to embed sustainability across the organisation.
The main challenge remains one of ‘buy-in’, often driven by a gap between visionary sustainability leaders who have been hired to drive forward sustainability goals and their seemingly risk and compliance focused senior management teams who may not have the ambition and appetite to move in that direction immediately.
The absence of a clear vision will typically result in a need to bridge the gap and when such tensions are visible, it is crucial that all leaders should take a step back to clarify the vision and ambition.
There are five things every organisation can do to minimise the expectations gap.
Below, we explore our five key insights to get right when setting your vision, which will inform their sustainability operating model.
The starting point is to have an agreed and strategic ‘world view’ about sustainability at the Board and Executive level. This should in turn inform the organisations vision, mission, and key design principles in relation to sustainability and should ideally be aligned to the organisations vision and mission.
This will serve to provide clarity and direction to the rest of the organisation and reduce middle management and staff frustration as they seek to drive change.
It also drives and informs the case for sustainability driven decision making, enables the compelling and effective communication of the organisation’s ambitions to employees, customers, and other stakeholders.
Organisations need to perform a materiality assessment and prioritise what aspects of being sustainable are most important to them. This should consider various factors such as the macro and micro economic environment, operational considerations, their resilience, and their stakeholders.
For some organisations; this might simply be to be compliant. Others may take a more encompassing approach.
This in turn provides the rest of the organisation with the confidence and focus to address the agreed priorities.
Maturity models are useful in setting a vision and ambition and driving a focused discussion on sustainability; the conversations that take place as part of the process, are as important and meaningful as the assessment.
Having the board-level debate about where you need to be in terms of sustainability maturity compared to peers and industry best practices is a key step in calibrating a sustainability programme, so it remains relevant to your organisation’s context.
The Crowe Sustainability Maturity Profile is a useful guide in ambition setting.
Maturity models are useful in understanding progress, setting a vision and ambition and kickstarting an internal discussion on sustainability; the discussions that take place as part of the process, are as important and meaningful as the assessment.
Sustainability is not merely a compliance and reporting exercise. Thinking of it in this way leads to missed opportunities.
For example, the link between sustainability and resilience is often ill-explored.
Embedding sustainability is also a change management challenge which requires an understanding of each stakeholder, what is in it for them and what they need to know, think, feel, and do to engage positively.
Crowe’s connected thinking ensures that our clients can take a cost-effective approach to meeting their ambitions, simply by helping them join the dots where they really matter.
Lastly, have a clear set of objectives and key results against which to track progress.
It is important to capture a broad set of environmental social and governance (ESG) related objectives and key results (OKRs) and start reporting them to management. With confidence in performance metrics, targets can be set, and responsibilities assigned.
While the approach taken will be unique to every organisation, the key learnings act as a useful guide for everyone either seeking to embark on this journey, who might have lost their way or might be struggling to get the support and traction within their organisation. It also provides reassurance for those who have got it right.
We operate an experience led model with a senior team to guide you on your transformation journey. Our transformation services include:
- operating model redesign
- post merger integration
- cost reduction
- finance and operations efficiency
- programme remediation and turnaround
- change management and adoption
- embedding regulatory and cultural change.
To find out more about our transformation services or how to embed sustainability into your operating model please contact Buki Obayiuwana, Alex Hindson, or your usual Crowe contact.
