Holistic Sustainability Framework

Every industry undoubtedly faces specific challenges in terms of CO2 reduction and sustainability. Nevertheless, the diverse fields of action and sub-topics can be consolidated in a systematic framework with individual areas that will be relevant to varying degrees for each company. In any case, this system helps bring order to current and planned initiatives – and, above all, provides a structured approach for defining future strategy. We would be happy to explain the building blocks outlined below in more detail in a face-to-face meeting.

Existing strategies and business models will need to be reinvented or refined in light of current and prospective sustainability requirements. Three central elements require strategic evaluation and integration: 

• Decarbonization: Transformation of processes and activities to avoid – or at least significantly reduce – greenhouse gas emissions or to implement offsetting strategies 

• Hydrogen & electrification: Use of hydrogen as a key technology for energy transition, switch to low-emission electric-based drives 

• Circular economy: Reuse and recycling with the aim of reducing waste as much as possible 

These are the core strategic fields of action arising from the European Green Deal. For companies, the resulting mandatory changes can only be managed with high investment costs, taking into account potentially long reinvestment cycles. Top managers must face this reality and act accordingly. 

A concrete roadmap is needed for the sustainability transformation. That is why the aforementioned core action areas for environmental sustainability have to be integrated into the corporate strategy. It is also important to create an overall sustainability vision. For this purpose, fields of action must be defined based on a preceding materiality analysis. The individual targets can then be backed up with KPIs and concrete measures and reviewed within a proactive performance management framework. Corporate management will increase significantly in complexity due to the additional environmental and societal strategic aims – this too must be made clear. The integration of sustainability indicators into corporate incentive systems has proven to be indispensable. 

The second dimension has an additional regulatory component, which we discuss in more detail in this article. In Europe, this is essentially about ESG reporting in line with mandatory CSRD and EU Taxonomy regulations, but it also involves sustainable supply chain requirements (LkSG and CSDDD). Depending on the priorities of the respective company, voluntary standards can also be useful. 

The "Sustainability Management & Steering" dimension is also about the fundamental organizational anchoring of the tasks involved in sustainability transformation. Clarity is required as to how the topics are to be embedded within the organizational structure and incorporated in business processes and governance. A clear best-practice model has not yet been established here. Companies will need to explore which organizational approach suits them best. 

In all industries, the shift towards sustainability in terms of corporate value creation must extend to processes on the shop floor – i.e., wherever products and services are created. Products and services must be designed sustainably, and product development must be realigned accordingly. Evidence for customers is also essential, for example the Product Carbon Footprint (PCF). The biggest and most important challenge is to ensure sustainability in the supply chain and procurement. For many companies, the largest contributor to their carbon footprint is the upstream value chain, and ultimately this will determine whether decarbonization targets can be met. The company's own production and service provision must also be decarbonized and made sustainable. 

In addition to the dimensions and fields of action described, sustainability transformation must be thought of in terms of two layers that form essential basic prerequisites – digital and personnel. 

• The "Technology & Data" layer, for example, is not just about using data and systems to meet current ESG disclosure requirements, but also about making better business decisions that take the environment and society into account, not to mention the company's own efficiency benefits, for example for future disclosure requirements. 

• At the "People & Culture" level it is important to ensure that employees are involved, informed, empowered and motivated with regard to the transformation. Change management is an important keyword here, but so too is formulating and communicating the ultimate vision and the speed of transformation. 

The dynamics of transformation towards enhanced sustainability still appear to be wildly contrasting at present. Companies that have been strategically engaged with this topic for a longer period and have created structures accordingly have a clear advantage. The energy crisis – and the resulting acceleration of the energy transition – is putting many companies under pressure to act. Instead of continuing to tackle challenge after challenge, and requirement after requirement with individual solutions, we recommend a systematic and structured approach for all facets of this issue within the company. Future corporate success will depend on whether companies can use sustainability as a driver for innovation and growth. Companies that take too long to act run the risk of no longer being able to compete. Their business models will disappear from the market. There is no way back.