Contributed By: Benroy Chan, Sustainability Associate, Schneider Electric Energy & Sustainability Services
Companies that are set on achieving a sustainable future for their business have many tools at their disposal to make an immediate impact. However, any company that has begun down this path knows that they cannot go at it alone for long. To stay on the right track, your company must prioritize engagement with those who have the biggest interest in their success: your stakeholders.
Effective stakeholder engagement helps solve issues at every step of the sustainability journey, whether you just started to think about sustainability or your company is leading the way. When you engage with investors, suppliers, and employees in ways beyond simple surveys, the insights provided on specific risks and opportunities can guide the path on what matters most.
Let’s explore four key milestones of your organization’s sustainability journey to see how stakeholder engagement can help:
1. Identify: Conduct a Materiality Assessment
Even when your company acknowledges sustainability as a key metric for business success, it takes real effort to identify the areas of the largest potential impact. To work through this, organizations should hold a collaborative dialogue with key sustainability players. This engagement strategy helps stakeholders identify material topics across the company’s value chain and show where to prioritize resources.
Common material topics include energy and water management, climate change adaptation, and transparency of information as elaborated by the Sustainability Accounting Standards Board (SASB). Forming a base-level understanding of what sustainability means to your company and its sector will streamline the appropriate next steps of your organization’s strategy.
2. Develop: Put Together a Data Inventory
Once you understand your company’s material issues, data collection must focus on the right metrics to track year-over-year progress. The sheer number of environmental and social metrics needed in a comprehensive inventory can prove challenging for any company, but taking the next step with your supply chain for deeper sustainability engagement is even more complicated. In addition, data owners often aren’t informed around specific requests for data and might not have the same goals as the teams asking for it – many don’t know about their organization’s efforts in sustainability.
Ensuring stakeholders are continuously educated on the purpose and benefits of data collection efforts help secure cooperation. Reporting bodies such as CDP have recently narrowed in on the supply chain as a key stakeholder for climate change reporting and are urging companies to collaborate with these players in their COVID-19 recovery plans. The breakdown in supply chains during this global crisis revealed the vulnerability of supply networks, and CDP's 2020 Global Supply Chain Report indicated that companies could face up to US$120 billion in costs from environmental risks in their supply chains over the next 5 years. The ask for this transparency requires companies to engage with individuals in their supply chain much more deeply than ever before, emphasizing the need for robust engagement strategies.
3. Report: Disclose to Sustainability Frameworks
With data in hand, your company should submit to groups such as CDP, DJSI, ISS, and other industry-specific bodies, such as GRESB for the real estate sector. Beyond the numbers and metrics of sustainability, these reporting bodies often ask for responses to explain and make sense of the data reported. This presents both an opportunity and trial for companies looking to lead industry discussion around material topics – with stakeholder engagement bringing twofold benefits.
First, getting stakeholder input allows you to tailor messages specific to your company’s needs and challenges. Second, transparency around a company’s sustainability performance primes investors to submit feedback for the future. In addition to the reporting bodies that companies are essentially required to disclose on, active participation in industry working groups, such as the Sustainable Apparel Coalition for retail and apparel companies, can provide an effective channel to further engage with stakeholders, access supplier data and share best practices with peers.
4. Lead: Set Long-term Goals to Improve Performance
Even after your organization has its sustainability programs in place, you should make commitments to demonstrate improvement over time. Science-based targets (SBTs) to limit climate change to 1.5°C have taken the center stage in corporate sustainability, and over 1,000 companies across virtually all sectors have already set targets in line with climate science. While SBTs have a place in every sustainability strategy, obtaining enough stakeholder buy-in for these ambitious goals lies paramount to success.
A challenge companies often struggle with when setting SBTs is both in the collection and management of Scope 3 data. Before the Science-Based Targets Initiative will verify your reduction goals, you must set Scope 3 targets if Scope 3 emissions constitute greater than 40% of your company’s total emissions. Given the difficulty in even setting an approved SBT, organizations should proactively engage with suppliers to form the relationships needed for successful emissions reductions.
In part II of this blog, our experts dive deeper into stakeholder engagement on Scope 3 with a real-life scenario. Click here to read.
Stakeholder engagement is core to your company's long-term success and will greatly accelerate your sustainability journey. Wherever there’s an opportunity to drive collaborative action across stakeholders and your supply chain – do it. By joining stakeholders across each step of the sustainability journey, you can build bridges to meet your goals and continue building upon success.
Schneider Electric has an excellent track record in helping companies develop stakeholder engagement programs and data-collection systems. Reach out to our team to learn more about strategies to engage your suppliers and other stakeholders to accelerate your sustainability progress.