5 reasons why a sustainability strategy is important for companies

To get started: What does a sustainability strategy say?

A sustainability strategy is the roadmap for the sustainable transformation of your company.
It defines how you deal with relevant ESG issues – in other words, a plan for the key aspects in the areas of environmental, social and governance.
However, the strategy not only relates to your company itself, but also to environmental and social impacts within the supply chain or even across the entire value chain.
The roadmap contains

• key opportunities and fields of action,
• medium and long-term goals that your company has set itself, and
• above all, an implementation plan with effective measures.

You can identify the most important areas for action with the help of a materiality analysis.
The EU CSRD Directive with its European reporting standards ESRS requires an analysis based on double materiality.
In doing so, you identify relevant topics for your company – from two perspectives: how do sustainability aspects influence your company and how does your company affect the environment and society.
If you involve your stakeholders in the process, you will gain valuable input and create greater acceptance in advance for subsequent decisions.
The double materiality analysis helps you to focus on the key issues with the greatest leverage and not get bogged down in the minutiae.
You define suitable goals and effective measures for the relevant fields of action.
Measurable KPIs also ensure that your progress is monitored.
You should take a scientifically sound approach when developing your goals.
This means, for example, that you should base your climate targets on the GHG Protocol (Greenhouse Gas Protocol) and the 1.5 degree target.

Sustainability strategy: 5 advantages for companies

The importance of a sustainability strategy is shown by the results of the Bertelsmann Stiftung’s Sustainability Transformation Monitor 2024.
In the study, around 54% of companies stated that sustainability is part of their general corporate strategy.
Around 26 percent have a separate sustainability strategy.
But let’s now look at the specific benefits:  

1. effective risk management and greater resilience

We are in a time of change.
Climate protection, digitalization, new work, diversity and new technologies such as artificial intelligence are just a few of the current megatrends.
The future is coming in leaps and bounds and will bring numerous changes with it.
A sustainability strategy ensures that you are aware of potential environmental and social risks for your company.
This is where risk management comes into play, which is part of the double materiality analysis mentioned above.
Many companies already have a risk management system – but this usually only includes a small proportion of ESG issues, which are also only assessed from a financial perspective.
This is now being supplemented by a holistic ESG perspective and, in contrast to the established system, opportunities are also given greater weight.
You identify and assess potential risks, draw up a plan to avoid or reduce risks and monitor your measures as part of ESG management.
This allows you to react more agilely and flexibly to issues such as climate change, political developments, fair working conditions or resource scarcity.
You also have the opportunity to proactively minimize risks and their impact.
You should not only think about risks that directly affect your company, but also about the entire value chain.
Effective risk management therefore contributes to cost savings and protection against unexpected losses.
This goes hand in hand with greater resilience and future viability of your company.
It also pays to be able to demonstrate risk management with a view to ESG issues and a sustainability strategy when granting loans.
Banks regularly ask for both as part of their lending decisions – you can find more information on this in our blog post“ESG in financing: this data decides on loans”.

2. efficient use of resources and employees

Based on risk and opportunity management, you can improve the use of resources in your company.
Sustainability management promotes the optimization of processes and the development of new technologies and innovations.
This can result in the careful handling and more efficient use of resources.
Examples More efficient machines reduce energy consumption; recycling production waste reduces the need for raw materials.
Regardless of whether the end result is a reduction in waste or energy consumption or whether resources are used more efficiently – good ESG management can save you money.
Another point that speaks for a higher sustainability of your company.
However, you can not only optimize the use of resources, but also improve your time management and that of your colleagues.
By focusing on the key issues, you have more time to drive these tasks forward.  

3. holistic orientation and long-term planning

If you only introduce individual, unrelated measures, you often fail to see the big picture.
A sustainability strategy provides a remedy here and ensures a holistic view.
This means that no separate initiatives are launched, but each individual measure is an essential part of an overarching strategy.
You identify the most important topics with the double materiality analysis mentioned above.
They are then incorporated into your sustainability strategy, which enables long-term planning as well as systematic work and communication.
You can view your progress in CSRD-compliant software, such as our ESG Hub, where you can collect and monitor all data.
In the best case scenario, the sustainability strategy does not stand alone, but is integrated into the corporate strategy.
This allows you to emphasize the central importance of sustainability.
In addition, management is actively involved in the topic.

4. meet the requirements of standards such as ESRS

Many companies will also urgently need to develop an ESG strategy in the future as part of CSRD reporting – and in contrast to most existing frameworks, this will be much more intensive.
The European ESRS standards explicitly require a sustainability strategy for all material topics.
The German Sustainability Code (DNK) also addresses the sustainability strategy in its Criterion 1 – but nowhere near as in-depth as the ESRS.
The DNK requires companies to state whether they are strategically addressing the issue of sustainability or whether only individual measures have been implemented to date.
The GRI standards of the Global Reporting Initiative do not directly ask for a strategy.
However, some sections deal with the deeper anchoring of sustainability in the company.
The sustainability strategy also provides a lot of information that is needed when preparing a sustainability report.  

5. targeted communication of ESG issues

You have drawn up your sustainability strategy.
The first measures are underway and you can even see the first signs of progress.
Then you should also talk about it – for example in a sustainability report.
Read our blog posts to find out how to communicate sustainability on your own website and avoid the five biggest greenwashing traps.
As with the implementation of measures, the sustainability strategy ensures that you keep an eye on the big picture.
You focus on key topics with an impact that are also related to your core business.
The purchase of a single electric car in a vehicle fleet with hundreds of diesel cars will probably attract more criticism than praise.
As your communicated topics are placed in a larger context by the overarching strategy, they also carry more weight.
You present a consistent image to the outside world, increase your reputation and brand value, attract talent on the job market and retain or acquire customers.

Conclusion: A sustainability strategy is worthwhile for companies

ESG issues are often already part of a company’s strategy and risk management without being explicitly named.
A sustainability strategy now focuses on these areas of action.
It expands the existing strategy to include a holistic ESG perspective and also highlights opportunities.
The aim here is to position the company for the future and therefore to address relevant risks and opportunities or the greatest impact in a holistic manner.
A sustainability strategy is therefore definitely worthwhile.
Not only because it is required as part of CSRD reporting.
Your company can also use it to achieve and maintain competitive advantages.
With your ESG management, you can differentiate yourself from your competitors and increase your chances of winning tenders and loans, for example, where sustainability data is also requested.
You also improve your image, which leads to greater customer loyalty and attracts young applicants who also choose their future employer based on social and environmental aspects.
Do you and your company want to benefit from the advantages of a sustainability strategy?
VERSO Sustainability Consultants will provide you with pragmatic and effective support in designing a roadmap for the sustainable transformation of your company.
Together, we will put your company on the path to a more sustainable future – from strategy to implementation.  

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.