1.1 Ten Recommendations for Best Practice

For a company’s sustainability agenda to be effective, it must be embedded at the highest level of leadership. Together with the board, executive management should not only define the material topics and performance indicators, but also ensure that progress and target achievement are consistently reviewed over time. Only with this anchoring at the top can cultural change be fostered, and the defined goals and agreed requirements be embraced and implemented by employees.

A regular sustainability analysis is crucial for identifying gaps and drawing up an action plan for achieving short-, medium- and long-term goals. This involves a critical review of structures, processes and systems. A review of the company’s documents, organizational structure and management system is a good starting point. This sustainability analysis can be performed by consultancy firms or internal committees.

A company’s sustainability reporting must meet the different requirements and expectations of stakeholders. Engaging regularly in dialog with the most important stakeholders and identifying key topics are therefore crucial for aligning the company’s strategy with sustainability factors. Furthermore, sustainability information should be actively disclosed and communicated via established communication channels if it is to provide added value, especially for investors.

Priorities should be set according to the principle of materiality. This helps filter out irrelevant information from the reporting. Companies should identify their material topics and review them regularly. Reports should be kept brief and concise and concentrate on the most important issues. Secondary information can be provided on the company’s website. Finally, the interdependence between financial and non-financial information should be shown, for example in an integrated report.

To achieve a good balance between economic, social, and environmental results, sustainability governance should be integrated into the governance structure at all levels of the organization. A sustainability committee, consisting of members of the board of directors, should develop and monitor the implementation of the sustainability strategy and guidelines. The coordinated implementation of the sustainability measures defined by the committee and the exchange of information between departments and business units is delegated to management and division heads. The board of directors should have ultimate responsibility. As the highest governing body, the board of directors oversees the achievement of corporate objectives and strengthens stakeholder confidence in the credibility of the company’s sustainability efforts. The involvement of external experts can further strengthen this credibility.

In this phase, the integration of sustainability into strategy and management will undoubtedly have an impact on the company’s goals and its relationships with stakeholders. A review should therefore be conducted to assess whether the company’s identity – i.e., its mission, vision, and values – is still in line with commitments. If this is not the case, now is the right time to make changes.

A series of general and/or sector-specific commitments can help companies formulate and continuously develop a sustainability strategy, while also integrating them into a network of learning and stakeholder interaction. Examples include joining internationally recognized initiatives such as the United Nations Global Compact or sector-specific sustainability programs.

The development of sustainability guidelines is a key step in the process of implementing strategies through binding targets and management systems. The guidelines should define the organization’s sustainability management targets and processes in order to ensure that all divisions and departments plan and carry out the relevant measures. A good set of guidelines is brief and objective and is forwarded to all internal and external stakeholders. Economic incentives can also be created by including social and environmental targets in performance appraisal systems. 

The sustainability strategy must be integrated into all areas of the company and include targets with quantifiable indicators. These key performance indicators (KPIs) are based on strategic sustainability goals and must be realistic, achievable, and time-limited. To integrate sustainability, it is also necessary to adapt company commitments, management systems, and guidelines. This process serves to institutionalize the implementation of sustainability goals in the company’s day-to-day activities, strengthen the corporate culture, and reduce compliance risk. KPIs are regularly tracked, monitored and presented to the board of directors.

To gain and maintain stakeholders’ trust, companies should report transparently and responsibly on both successes and challenges, while integrating sustainability information into their annual financial reporting. Reporting should also be balanced, comparable, reliable, and accurate.