Sustainability as a strategic imperative
What is strategic sustainability?
Strategic sustainability is a ‘value lens’ approach that enables long-term, sustainable value for your business through the effective and responsible management of environmental and socioeconomic impacts. By defining a sustainability vision that complements your organisation’s overall purpose, vision and values, you bolster and build society’s trust in your business. This is accomplished by identifying, managing and monitoring material sustainability risks and opportunities that support responsible and purpose-led decision-making.
Why is it important?
Focusing on ESG is about value preservation (at a minimum) and value creation by optimising the use of key business drivers and capitals at your organisation. Inaction can lead to value destruction.
Value erosion from ESG headwinds is the ‘do nothing’ scenario.
Without positive action, progress on ESG issues by peers, changing consumer, employee and investor expectations, and new regulations, will inevitably lead to value erosion. Inaction on ESG can lead to value destruction.
Value preservation can be achieved through targeted ESG performance improvement.
To get started, businesses need to:
- Identify value-linked ESG factors and perform rapid remediation of critical issues;
- Review operations and value chain for exposure to climate change, social unrest, and poor corporate governance, and develop and implement risk mitigation plans;
- Define targets, KPIs and a roadmap to drive ESG performance; and
- Communicate relative ESG performance and resilience to key stakeholders.
Unlocking significant value creation is possible through ESG-led investment strategies and sustainable transformation of the business model and existing assets
For businesses to transform their operations and revenue streams, they need to:
- Align value proposition with ESG through a review of the company’s vision and mission;
- Re-evaluate business model and revenue streams and identify possible transformation strategies which incorporate ESG risks and opportunities;
- Develop a comprehensive public relations and communications strategy which can directly communicate the company’s sustainability vision and mission with its consumer base and the broader public
Challenges in adopting sustainability
While companies face intense pressure to act on sustainability and are making ambitious commitments, a significant gap between these pledges and actual achievement remains.
Investors recognise the benefits of sustainable practices but, are often unwilling to accept lower returns.
Customers are pushing for corporate change yet they are reluctant to sacrifice convenience or low prices.
Early-stage investments in climate technology disproportionately target sectors with a lower share of overall emissions.
For a successful sustainability transformation, embedding cultural change across an organisation is critical.
Here’s how we can help
PwC’s Corporate Sustainability Framework
As Bursa Malaysia points out in its ‘Bursa PLCT Guidebook 2: Sustainable, Socially Responsible and Ethical PLCs,’ addressing ESG is a continuous cycle that requires all components to be aligned to a PLC’s purpose. There is no start or end point and PLCs should assess their performance across all six components in a continuous improvement cycle.
- Stakeholder engagement
- Value creation strategy
- Sustainability initiatives
- Sustainability measures
- Structures, processes, people and infrastructure
- Non-financial reporting and assurance
Stakeholder engagement
- Prioritise stakeholders and define engagement plan
- Conduct phased stakeholder engagement
- Develop clear response plan for stakeholder queries
Value creation strategy
- Develop an overall ESG strategy and blueprint
- Define overarching ESG targets such as net zero commitment
- Conduct materiality assessment and prioritise material issues
- Activate brand around ESG strategy
Sustainability initiatives
- Address gaps in ESG initiatives
- Identify flagship initiatives and plans for future initiatives
- Exit non-relevant initiatives
Sustainability measures
- Implement metrics across priority ESG issues
- Align metrics to good practices such as the GRI, SASB, UN SDGs, WEF-IBC
- Establish ESG dashboard for board and management
Structures, processes, people and infrastructure
- Define clear ESG governance within board, management, working group
- Embed ESG criteria in key policies
- Implement ESG learning and development programmes
Non-financial reporting and assurance
- Define strategy on ESG (reporting) frameworks
- Develop clear disclosure roadmap
- Leverage on strategic communications for coherent messaging
Understand ❯
Understand the current state of your business’ sustainability practices across various key dimensions by conducting an internal baseline assessment against PwC’s Corporate Sustainability Framework.
Identify ❯
Identify best practices within your industry and pinpoint potential competitive advantages in the sustainability landscape for your business.
Carry out ❯
Carry out materiality assessment to identify, enhance and prioritise the sustainability issues that are material to your business, enabling a targeted response towards sustainability.
Establish ❯
Establish appropriate sustainability focus areas and targets, taking into account your business’ material issues and aligning them with your overall corporate strategy.
Develop ❯
Develop an implementation roadmap to operationalise your sustainability strategy, including prioritised initiatives, enablers, milestones and key performance indicators to track and monitor your progress.
Explore related case studies
- Statutory body
- Zakat institution
- Diversified retail holding company
Statutory body
Challenge: As a signatory of the United Nations-supported Principles for Responsible Investment (UNPRI), the client sought to build a Sustainable Investment (SI) Framework and Policy. They also aimed to achieve a fully ESG-compliant portfolio by 2030 and a climate-neutral portfolio by 2050.
Solution: We developed a three-year roadmap to guide the integration of ESG initiatives across the investment value chain, enabling the client to meet their sustainability targets. As part of developing the client’s Climate Change and Workers’ Wellbeing Policies, we outlined sub-issues, expectations for investee companies and acceptable ESG thresholds. The phased adoption of these expectations was tailored to the varying ESG maturity levels of investee companies.
Zakat institution
Challenge: The client wanted to embark on their sustainability journey by defining their overarching targets and identifying key material topics for their organisation and stakeholders. Their long-term goal was to adopt a sustainable approach, which included developing sustainability initiatives that would underpin their sustainability framework and support their aspiration to be a leading zakat institution.
Solution: To help the client achieve this, we conducted multiple internal stakeholder engagement sessions through departmental interviews to understand the current state of their sustainability initiatives and knowledge. We also performed a peer analysis of global zakat institutions to identify best practices. This was followed by a workshop with management to identify the top material issues and gain insights into current sustainability trends. Drawing on the findings from these activities, we proposed sustainability themes, targets and initiatives to support the client’s sustainability framework. Finally, we developed a three-year roadmap to facilitate the client’s aspirations towards their ESG agenda and sustainability targets.
Diversified retail holding company
Challenge: The client sought to enhance their sustainability strategy to align with industry best practices and evolving stakeholder expectations.
Solution: As part of the project, we conducted an assessment of the current state by performing a coherence review aligned with PwC’s Corporate Sustainability Framework and a gap analysis against established sustainability reporting standards. We examined the existing materiality assessment and prioritisation of ESG matters, integrating insights from stakeholder engagement through alignment workshops with senior management.
Following our analysis, we proposed refinements to the company’s existing sustainability charter to incorporate updated material matters. We also established organisational-level sustainability targets and indicators to measure ongoing progress. This informed the development of a three-year sustainability implementation roadmap, supplemented with supporting initiative charters. At the conclusion of the project, we delivered customised sustainability awareness and training sessions tailored to the needs of various stakeholder groups.
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