By: Anil Sachdev and Neetika Batra
The concept of sustainability is critical to be adopted by companies in today’s world scenario, which is increasingly facing challenges of varied kinds. The framework of ‘Vision to Action’ is adopted by truly inspired leaders who wish to take responsibility for the state of our world. The objective of the present study is to evaluate the effectiveness of this vision to action framework with regard to sustainability in companies. For this, a questionnaire was prepared with the following broad objectives:
- to seek their opinion on inclusion and effectiveness of sustainability in their vision & values, mission, strategy and structure,
- to assess the extent to which sustainability is implemented through their vision deployment process which includes resource deployment, roles & goals, metrics & review, learning, development & training system and reward & recognition, and
- to assess the extent to which sustainability is emphasized in their communication system: internal and external.
The responses were received from twenty three leading companies. Based on these responses, analysis was made to assess the commitment levels of companies towards striving for sustainability, and to identify the level till which their vision of sustainability translates into action. It was found that the sustainability concept is not strongly evidenced in the various stages of vision to action framework of most companies. Nearly half of the companies do not give it a high rating in their vision and value system. Out of those which rate it high in the vision, nearly three fourth of them do not implement it through their structure and vision deployment process. Within this process, a higher proportion of companies seem to face problems while translating it from mission to strategy level. Further, the weightage given to sustainability does not percolate as much to lower levels of management and remains more or less confined to senior levels. Within the vision deployment process, the weakest areas appear to be in categories of rewards & recognition, learning, development & training, and roles & goals (in that order), which highest number of companies have rated as low. Finally, sustainability is yet to find its due place in communication systems of companies, and more so to internal stakeholders.
By: Neetika Batra
The study is an attempt by the Business Leadership Program (BLP) students of SOIL (2012-13 batch) under the guidance of Prof. Neetika Batra, to create a basic framework for generating scores to indicate the level of sustainability in companies. The study helps to understand the key drivers of sustainability in companies, and to identify the Key Performance Indicators, which can objectively reflect the underlying parameters of the sustainability aspect in companies. Three broad dimensions of sustainability have been taken: economic, social and environmental. Within each dimension, certain indicators were chosen, based on secondary research of major corporate indices (DJSI, FTSE, B Corp), GRI guidelines, and on publicly available sustainability data of companies. The indicators used in the study, represent both theme based approach as well as stakeholder based approach towards sustainability. Seven major industry sectors were considered: automotive, consumer products, oil and gas, pharmaceutical, electronics, banking, and technology. Top four to six player companies were taken within each industry. Data for each indicator of a company within the specific industry, was taken from their annual reports, and from other publicly available sources. This data was normalized through CAGR technique. Thereafter, scores on a scale of 1 to 5, were assigned to them, based on a normalisation grid. While calculating these scores, a relative approach was followed, wherein a company’s performance on individual indicators is benchmarked against their competitors. Based on this, scores in a range from 1 to 5, were allotted to each indicator of a company. The final sustainability score was then calculated by multiplying the score of each indicator with its respective weight, and then aggregating the same.
The current study proposes a methodology which can be easily used for many purposes. Based on this methodology, companies and industries can be ranked to assess the level of sustainability being followed in them. The study can also be used as a basis and carried forward, to understand the crucial aspect of the driving forces behind these numbers, and how to integrate them into business strategy and operations through effective leadership. A more advanced empirical study can also be conducted to understand the contribution of sustainability (based on the present study methodology and scores) to financial value creation of companies, thereby reinforcing the belief that it is not just sensible but also smart to adopt sustainability as a key concept in companies and in leadership.