25 Jan Making Sustainability the Default Setting for Business
Phil Keoghan, CEO, Ricoh UK talks to the Sustainable Markets Initiative about how businesses can make sustainability their default setting
The past few years have pushed Environmental, Social & Governance (ESG) to the top of the agenda for governments and businesses alike. From natural disasters to increasing social inequality, the need for change is becoming more and more apparent. And that was before the pandemic exacerbated the issues.
Investors, customers and employees expect organisations to act fairly and responsibly towards the environment and local communities. At a government level, increased regulation, such as the European Commission’s Corporate Sustainability Reporting Directive, is driving corporate accountability.
This is all putting pressure on companies, leading the way to a future where performance will be evaluated not just on financial metrics, but on how they respond and act in response to the greater societal and environmental challenges we all face.
The Challenge for Leaders
Business decision makers are often left with difficult choices to make. They find it hard to know where to begin when it comes to improving ESG performance and are often held back by the need to support other areas of the business. In fact, Ricoh Europe research recently found that the majority of European organisations struggle to invest in environmental sustainability because other business needs are perceived to be more urgent.
This is despite a vast array of studies showing that companies that focus on environmental sustainability concerns do not, as McKinsey puts it, “experience a drag on value creation – in fact, quite the opposite.”
Plus, it is not all penalty from a regulatory perspective; governments are offering incentives to those companies that want to change, with the European Union in particular committed to increasing the availability of funding and assets through projects such as InvestEU, Digital Europe and the EU Green Deal.
Deploying ESG in Practice
With only one in four organisations investing more in sustainability compared to more than a third investing more in digital transformation, the research suggests that businesses have to choose between focusing on ESG and prioritising technology. But are the two really so separate?
It is important that businesses continue their digital transformation journey, as we all shift to an increasingly contactless, virtual world. A lot of the work done to grow a business’ technology footprint contributes to its ESG concerns as well.
The issue is not about choosing environmental sustainability over digital or any other business focus. To be sustainable, organisations need to embed environmental sustainability thinking across the organisation, with the right technology to support all aspects of the business.
That can only be achieved with a clearly articulated ESG framework that provides a structure and guidance, with defined goals and steps to follow. It is through this that organisations can then start to see how decisions can help or hinder their ESG efforts.
For instance, Ricoh has identified priority issues that matter most to its business and used its ESG framework to influence research and development decisions, and to develop products and solutions for its customers that support environmental and social sustainability as well as business productivity. These include:
- Designing our multi-function printers (MFPs) using biomass plastic components, primarily made of PLA (polylactic acid) produced from plant-derived starch and sugar.
- Developing plant-based inks for packaging.
- The ongoing refinement of dye-sensitized solar cells, which maximise high-power generation performance even under weak lighting conditions, and in doing so will help allow the capture and use of solar power in a much wider array of environments.
This approach is working – Ricoh has just been recognised in the Dow Jones Sustainability World Index, a leading ESG index, where it achieved the highest score out of 34 companies in the Computers & Peripherals and Office Electronics industry.
This is all part of a process for ESG to be embedded across the entire organisation. The required actions are specific to each business, but there are a number of steps all companies, irrespective of sector or approach, can consider:
1. Start by identifying material issues, prioritising those that matter most to your business and stakeholders.
2. Assess your business strategy, operational resilience and identify risks and opportunities related to the climate.
3. Define your targets, and the means to measure them, then keep revisiting them. Goals that are looked at once and forgotten are no better than not knowing what you are aiming for. It is only through the process of constantly reviewing and revising that organisations can hope to achieve their objectives.
4. Use these targets to inform and establish an ESG structure, measure performance against recognised industry frameworks and implementing transparent ESG reporting.
5. Deploy this structure and transparency on targets and results to build ESG across all business operations, feeding into decision-making processes to ensure that every choice is considered for its impact on ESG.
Becoming more sustainable is hard; no one is denying that. Too many organisations see it as an either/or setting; they can choose to be sustainable, or they can digitally transform. What they need to realise is how closely interlinked technology, and the overall digitalisation of their operation, is to ESG performance.
Once they acknowledge that, then they will see how their efforts can be recalibrated to make their businesses more sustainable.
The bottom line is that we all need to do our part. As businesses, we are complex organisations, but with significant opportunity to influence and effect change. For that to be successful, we need to make sustainability the default setting for our organisations.
If you would like to learn more about Ricoh’s commitment to a sustainable future, please visit our Environmental, Social & Governance resource hub.
This piece was originally published on the Terra Carta website, prepared by Brands2Life in partnership with Ricoh UK.