Challenges

MLC Building, Sydney. Photos courtesy of GPT Group

With the questions identified throughout the Decision Support Tool, it is constructive for firms to also recognise that on the path to sustainability there are a number of challenges that often arise, many unique to professional services businesses.

Some have been identified as hurdles faced in the beginning of the sustainability journey, and others faced no matter your experience or sustainability ‘maturity’.

Knowing what you’re talking about

Definitions of sustainability differ between individuals and across firms. One barrier to effective implementation of sustainability may come down to the simple interpretation of the word. For those firms who do not take the time to come to an agreed definition, and ensure this is effectively communicated across the firm, the implications are many and varied and can be detrimental to efforts toward achieving sustainability.

Tip: Know what you mean when you use the term sustainability. It shouldn’t be limited to environmental stewardship or resource efficiency it should also include social and economic sustainability. They are one piece of the puzzle. If you mean resource efficiency say it. Sustainability should not be seen through silos, but as an integrated concept. This can be difficult to explain but if you don’t establish the parameters and communicate clearly then misunderstandings will abound and compromise delivery.

Real action or just a guise?

With the increasing pressure for firms to act sustainably, a dangerous trap is mistaking superficial change for real action. This can be applied to a number of situations: adding sustainability into the governance structure for perception and image, rather than to support delivery; mistaking communication for genuine change; and confusing firm-wide sustainability policies for genuine commitment and action. An example of this is when the availability of information is considered the same as change management, or behaviour change. Too often what we are trying to achieve is change management and we think all we have to do is communicate. 

Drive and vision

Defining the vision for sustainability should ignite an ongoing conversation at all levels within a firm.

The vision statement of many organisations most often either ignores the imperative of sustainable outcomes or pitches them as ‘the right thing to do’ (which it is) whilst missing other facets of the debate, for example the commercial imperative. A lack of a compelling vision will set the organisation down a lack lustre path, which will require constant reinforcement and defence.

A vision for a sustainable organisation should:

  • Understand the internal drivers for sustainable outcomes. Drivers such as client engagement, staff retention and maintaining social license to operate are useful expressions of existing drivers for beginning down the path towards sustainability—but alone they fail to engage the urgency or essence of sustainability;
  • Express values, objectives and vision and mission statements in way that is relevant to the organisation’s value proposition; and
  • Inspire the organisation to act.

Sustainability challenges and risks for Australia

From May 2008 to June 2011 the Australian Government through Treasury commissioned St James Ethics Centre to undertake a project looking at the responsible business practices of Australian companies.

The Responsible Business Practice in Australia report presents the key lessons learnt from the four year project.

Included in the report was a chapter on the challenges and risks identified for Australian businesses pursuing a more sustainable business, and included:

The relationship between sustainability performance and financial performance needs full recognition:

  • 38 per cent of Asia Pacific CEOs stated ‘failure to recognise a link to value drivers’ as a key barrier to realising business success from sustainability initiatives.
  • Only 24 per cent of senior executives agree that there is a strong link between financial performance and commitment to sustainability in the short term. However, 69 per cent say they consider the link stronger in the long term.
  • Small to medium enterprises cite several financial performance related barriers to increased responsible business engagement including lack of time and resources, lack of awareness of the business benefits, uncertainty about the business case, and lack of know-how.

Corporate responsibility and sustainability priorities need greater senior business leadership support:

  • 48 per cent of CEOs referred to competing strategic priorities as a major obstacle.
  • 34 per cent of senior executives say that their firms’ immediate financial goals are a more urgent priority than sustainability issues. This represents the leading challenge to embedding sustainability within the business. 27 per cent of senior executives also cited a lack of consensus on the ultimate goals of the sustainability program as a barrier.
  • Australian managers see a lack of senior leadership support for corporate responsibility as the major barrier preventing organisations from realising the full strategic possibilities of corporate responsibility. 24 per cent referred to a lack of organisational buy-in and commitment.

The integration of sustainability considerations into core business management practices and reporting needs to be simplified and mainstreamed:

  • 49 per cent of CEOs find the complexity of implementing strategy across business functions to be the major barrier to embedding sustainability issues. Asia Pacific CEOs believe that the most significant performance gap lies in integration of sustainability issues into the supply chain (88 per cent) and the operations of subsidiaries (91 per cent).
  • Australian managers noted difficulties in integrating corporate responsibility within organisational values and practices in the top two barriers to successful implementation.

Extract from June 2011, ‘Responsible Business Practice in Australia: A Report to the Australian Government’, St James Ethics Centre, pp.14-15

Getting necessary ‘buy-in’

Related to the identification of this vision was the need for high-level ‘buy-in’ commitment by senior decision makers) to achieve transformational change. Opportunities to ‘bring the board onboard’ are considered essential.

Whilst there is an increasingly large body of literature around the dollar value of sustainable buildings and offices, many claim that a barrier to achieving sustainability stems from a lack of mechanisms which directly align environmental and social issues with economic return. Such alignment is often signed as critical to ‘getting the board onboard’. Whilst sustainable buildings are proving cost efficient, effective, profitable and marketable, often it is difficult to provide leadership teams with a unanimous connection between market value and the impact of sustainability—especially where it concerns core business operations, rather than merely premises1.

Navigating existing tools, metrics and initiatives

The breadth of activities and tools available to firms to support sustainability are daunting and depending on firm size and resources it may be difficult to identify appropriate points of intervention and navigate through the various options.

Lack of consistency

Part of the problem for sustainability has been the plethora of (re)interpretations and misinterpretations of sustainability: its meaning, impacts, and potential outcomes. This lack of consistency impedes comparisons and is a barrier to effective communication about the benefits (or otherwise) of initiatives as well as a barrier to genuine reporting, effective benchmarking and knowledge sharing.

Whilst the path to sustainability differs between firms, it should be measured consistently, transparency and without bias. There is a need for companies to report sustainability performance using common reporting metrics and methods of measurement to enable comparison and foster healthy competition within and between organisations.

Using a common set of key performance indicators is a necessary first step to understanding performance, benchmarking it against peers, and setting targets to improve. Recent success of third party rating tools has combated some of this, but the underlying problem remains. Progressive organisations may consider reporting against a wider framework that also takes account of social and economic performance indicators.

Be inspired by best practice

It is clear that whilst many professional services firms’ exhibit best practice, there remain clear barriers and obstacles to achieving sustainability internally. The collection of information, opinions and advice from some of Australia’s top professional services firms provides a starting point to assist others to master the business of sustainability.

1 Lutzkendorf, T., Lorenz D. 2005 ‘Sustainable property investment: valuing sustainable buildings through property performance assessment’, Building Research and Information 33(3) pp.212-234