Activate the organization to support sustainability goals

In early May 2024, WBCSD and BCG conducted a masterclass on the topic of Empowering Leadership and Activating the Organization as part of a Climate Transition Roadmap masterclass series. This document summarizes the key learnings that were presented and surfaced via rich discussion among company participants under Chatham House rules. This document has been supplemented with previously published content that addressed additional topics that were related to, but not part of, the masterclass.

Catalyzing, sustaining, and accelerating climate action requires organizations to embed sustainability throughout their operating models, and to foster a deep culture of sustainability. Effective climate-related efforts – from transition planning and roadmap building to the deployment of decarbonization levers, and the strategic planning and financial decision making that underpins all of this – requires activation across every level of the organization.

As such, organizations must encourage and empower their leaders and employees to take action and establish systematic mechanisms to enable ongoing progress.

Realizing sustainability goals will draw upon every aspect of an organization’s operating model. Sustainability should become a natural component of a company’s operations and culture, and needs to be viewed as a value-add, not an add-on. As sustainability continues to be embedded throughout their operating models, companies should consider the following key aspects [see Figure 1]:

Figure 1: Embedding sustainability throughout the organization

Companies typically fall into four categories across the ESG maturity journey: Starting, Developing, Advancing, and Leading [see Table 1 for details]. Leading companies integrate ESG to drive competitive advantage and reimagine future growth.

Table 1: Maturity Journey

[See “Implementation” for more details]

Below are some examples of companies embedding ESG into their organizations and the characteristics setting them apart:

Ikea: Ikea’s central sustainability team is made up of 60+ FTEs. It is centrally located, and their CSO is a member of the executive board. In fact, each of Ikea’s regional Chief Executive Officers also act as Chief Sustainability Officers for their respective regions. Additionally, ESG representatives are involved in decision-making bodies at every level of the organization. The company has worked to decentralize sustainability efforts and embed ownership across all levels of the organization.

At Ikea, all employees are eligible for sustainability-linked bonuses tailored to business units and on a short-term payout basis (annual bonuses). KPIs are aligned with company-wide goals and tracked areas include energy efficiency, emissions, and water and waste management. Specific unit targets are aggregated to the country level for ease of progress-tracking, sharing, and oversight. Performance is rated on a binary scale and bonuses are awarded if the target is hit. Collectively, weighted sustainability-related KPIs are of equal importance to financial and other KPIs and account for a third of overall short-term incentive plan bonuses. Non-monetary incentives include career progress opportunities (e.g., failure to meet ESG goals can hinder leaders' career progression).

Learn more about Ikea’s sustainability efforts here.

HSBC: HSBC provides tailored climate learning pathways to employees. This includes programs that develop foundational understanding, deepen knowledge, and build practice-based capabilities. In 2022, the company launched its Sustainability Academy, which offers over 200 modules. In 2023, it launched its “Net Zero in Practice” series, which involves live briefings from its Centre of Excellence experts. Furthermore, it is also introducing bespoke interactive workshops related to specific roles (e.g., upskilling content on climate risk for traders and risk managers in Markets and Securities Services, sector-focused sessions for coverage bankers working with high transition-risk customers, etc.). Newly inducted board members also undergo climate-related training.

The company is taking steps to embed a “net zero mind-set” throughout the organization, harness its employees’ passion for sustainability, and empower them to embrace new climate-related opportunities. Several touchpoints exist to encourage employees to adopt the behaviors and practices required to foster a culture of corporate responsibility. For example, the employee-led global Climate Action Network holds Climate Action Festivals to raise awareness for and understanding of HSBC’s net zero strategy, and how they can contribute to achieving the ambitions that it lays out.

Learn more about HSBC’s sustainability efforts here.

Climate impact

• Setting up sustainability enablers is critical to accelerating the realization of sustainability projects and initiatives, facilitating a sustainability transformation to meet ambitious emission reduction goals, and ultimately creating value. As such, it contributes to emissions reduction across all scopes

• Companies with robust organization design, well-established processes, empowered leaders, and motivated employees can tackle climate action more effectively, therefore driving accelerated emissions reductions

• Properly designed incentives can drive real change, as illustrated by the fact that 100% of CDP's top-rated companies have management incentives related to climate performance, versus only 52% of the overall pool of organizations disclosing to CDP (1)

Business impact

Benefits

• Companies that have activated the organization and embedded a culture of sustainability across the business are more equipped to facilitate cross-functional collaboration that climate action requires

• Organizations that prioritize building capabilities through developing their existing employee base (upskilling and reskilling), anticipating emerging needs (identifying gaps and (re)defining roles accordingly), and attracting, engaging, and retaining talent (integrating sustainability into their employee value proposition) are better equipped to take climate action

• When fully embedded within the organization, climate action can become a source of competitive advantage, differentiating the organization and allowing it to capture climate-based value including:

  • Enhanced brand perception

  • Improved long-term resilience

  • Higher employee attractiveness, including improved ability to attract and retain top talent

  • Cost savings resulting from improved operational efficiency

  • Increased revenues driven by growing consumer demand for sustainable products

  • Better financing access and lower cost of capital

  • Higher market valuation

[See “Design Climate Transition Plans – An Overview” for more details]

Costs

• One-time costs of new data systems and integrations, as well as temporary resources needed to realign organizational priorities.

Impact beyond climate and business

Co-benefits

• Beyond climate, ESG realignment has the potential to impact other topics like nature/biodiversity, diversity and inclusion, and human rights if companies choose to make these part of their ESG priorities and strategy.

Typical business profile

Virtually all companies can and should set up organizational enablers to help realize sustainability goals. However, the timing and sequencing of these enablers varies widely depending on the company profile. Companies in the Starting category may need to create high-level structures and positions to implement sustainability in company operations, such as creating a central ESG team and designating an owner at the executive level to help steer the climate journey. On the other hand, Leading companies may already have organizational enablers in place for sustainability, but may still need to fully embed decision-making processes, appropriate KPIs and incentives, and adequate upskilling across the company’s business units, while maintaining a center of excellence to provide support. Through the journey from Starting to Leading, companies will need to improve their strategy and vision, organizational design and accountability, decision-making and processes, etc.

Stakeholders involved

Internal stakeholders:

• Board: elevate sustainability agenda and provide guidance on priorities

• Executive leadership: set the tone by leading from the top, engaging employees, mobilizing teams, and maintaining sustainability’s level of priority within the organization

• Central sustainability team: act as a center of excellence by articulating ambitions, providing strategic steering and oversight, facilitating cross-functional coordination, and driving best practices

• Business units / corporate functions: take ownership of the implementation of sustainability initiatives by balancing priorities to align with ambitions, managing programs, and owning functional expertise (e.g., finance to support reporting, HR to support training, procurement to support supplier decarbonization, communications / marketing / investor relations / public relations to communicate efforts and progress, etc.)

• Employees: put sustainability into practice by embracing the shift towards a more sustainable corporate culture, contributing to climate-related efforts, and participating in upskilling and capability-building initiatives

Implementation and operations tips

Strategy and vision

As will become evident in the following sections, a robust and clearly articulated sustainability vision and mission – linked to the organization’s overarching corporate strategy – is foundational to activating and empowering the organization. Rather than being reactionary, an organization’s sustainability-linked strategic ambition should be backed by thorough planning, and positioned as a value driver, in order to inspire sustained action. [See “Design Climate Transition Plans – An Overview”]

Example: L’Oréal’s sustainability vision is captured by its 2013 program, “Sharing Beauty With All”, and its more recent “L’Oréal for the Future” program, which launched in 2020. These programs embody the group’s sustainability ambition, underpinned by the strategic moves it is making to transform its business and make its vision a reality. [Learn more about L’Oréal’s sustainability efforts here]

Organization design and accountability

Effective climate action requires clearly defined roles and responsibilities for the sustainability team versus corporate functions and business units. As companies mature in their sustainability journey – from “Starting” to “Developing”, “Advancing”, and finally “Leading” – accountability becomes increasingly decentralized and integrated into the organization.

Organizations typically begin the process by building a sustainability team. This team is often small, centrally located, and fully responsible for owning the sustainability agenda with minimal outside input. Its focus is often on the most pressing issues, which may be compliance (i.e., meeting stakeholder expectations and regulatory requirements), or the implementation of near-term initiatives (e.g., onsite energy efficiency, electric vehicles). While some attractive climate-based initiatives may be pursued, climate action tends to be an “add-on” to the core operating model.

As the organization’s climate maturity increases, the central sustainability team becomes larger, increasingly influential, and more able to drive sustainability efforts outside of its immediate sphere of influence. As such, the organization can begin to drive climate action from within corporate functions and business units via establishment of climate-empowered leaders therein. As such, BUs / functions start to take on more ownership and accountability for climate efforts. At this stage, the focus is usually on ensuring that sustainability is a strategic priority for the business, with bolder ambitions, associated goals and plans coming into play. As such, an increasing number of flagship initiatives in key areas that have proven climate impact and robust business cases are implemented.

With increasing climate maturity, ownership for sustainability capabilities becomes more decentralized and are built out across the organization. Structured accountability measures are established for the execution of sustainability projects by BUs / functions, while the central sustainability team may still retain responsibility for driving strategy.

In organizations that are pushing the envelope on climate action, sustainability is deeply embedded within business units and functions, allowing for accelerated action intertwined with business priorities. The central sustainability team acts as a Center of Excellence continuing to provide strategic guidance / oversight and best practices while BUs / maintain responsibility for the ongoing execution of sustainability initiatives. At this stage, climate action is integrated throughout the business and can potentially act as a source of competitive advantage.

Defining differentiated roles and responsibilities is essential for well-coordinated execution. In climate-mature organizations, the central sustainability team and BUs / functions have distinct but intertwined roles:

• Central sustainability team should have executive visibility (e.g., CSO at CEO -1 level), and act as a Center of Excellence that provides guidance on best practices, strategic steering, and oversight on targets. Key responsibilities include:

  • Setting strategy and policy: developing long-term strategy and scope, setting overarching targets, and defining clear guidelines

  • Providing topic leadership: sharing expertise and best practices in major topics (end-to-end expertise across a breadth of topics and deliberate depth on material topics) that supports other teams in fulfilling their roles and responsibilities

  • Managing communications and engagement: overseeing external relationships as well as internal and external communications to build awareness and drive action

  • Overseeing reporting: tracking and communicating ambition and progress

  • Coordinating programs: supporting coordination of cross-functional efforts

• Business units and corporate functions shouldtake ownership of climate-related initiative delivery including functional expertise and progress tracking

  • Owning functional expertise: building and maintaining function-specific climate and sustainability expertise to identify new initiatives and drive implementation

  • Defining specific strategies: defining BU-specific climate-related goals, roadmaps and activities as well as building targets into BU performance management, and communicating progress

  • Managing programs: implementing initiatives, overseeing climate related projects, and tracking delivery

  • Leading engagement: managing relationships with internal stakeholders (e.g., strategy, finance, communications, marketing, risk management, etc.) as well as external stakeholders (e.g., suppliers, other businesses, etc.) as they relate to climate action

Organizations should be wary of falling into the trap of developing a large central team that is solely responsible for sustainability outcomes at the expense of embedding distributed ownership of sustainability efforts into business units and corporate functions. Failure to embed ownership of the sustainability initiatives within business units will lead to strategic detachment. Defining which teams will be responsible for executing each element of the organization’s overall ambition is critical for goal realization, as is involving said teams in the process of building implementation roadmaps with specific actions linked to corresponding targets. This process of the central sustainability team collaborating with business units / corporate functions to co-create shared plans drives ownership, ensures that relevant parties have a robust understanding of the path forward, and leads to more successful solutions and outcomes.

In addition to defining the roles of specific business units and corporate functions, driving cross-functional collaboration is also essential. While some action can be successful in silos (whether that be in the sustainability team or specific business units or corporate functions), as climate action progresses, it will increasingly require coordinated efforts across multiple departments. At this point, progress will stall unless all relevant parties come together to drive further action. As such, explicitly defining shared goals is an important element of sustaining action. Building a unified vision can be challenging as it requires overcoming competing priorities. Each segment of the organization will have its own long list of priorities, only a few of which can be pursued at a given time. Bringing focus to initiatives that are most urgent / important, and ensuring their (broader) attractiveness will therefore be essential.

Lastly, it is important to clearly define the roles that individual contributors play. Employees need to know exactly what they need to do differently in order to align with broader sustainability goals. In most organizations today, moving towards sustainability requires doing things differently, even if just a little bit. Doing things exactly the same way is unlikely to bring about the organizational change required.

Example: Unilever has a lean central sustainability team of 10+ FTEs, responsible for setting company-wide goals and policies with input from functional leaders to ensure alignment. Ownership of specific strategy development is decentralized to allow for tailoring to brand and region-specific contexts and priorities. Individual teams initiate and own new initiatives and are required to share best practices with the central sustainability team. In addition, Unilever has also set up several external advisory boards that provide additional input. [Learn more about Unilever’s sustainability efforts here]

Governance

In addition to a robust organization design, effective governance on sustainability at board, executive, and management levels are essential for ensuring that sustainability efforts receive sufficient attention and remain a top priority throughout the organization. Boards should provide regular steering on sustainability priorities, and a wide network of sustainability-aligned leaders should be cultivated. This includes executive-level leaders to provide oversight, manage strategy development, monitor performance, and allocate resources, as well as management-level business leaders across the organization that incorporate sustainability into their team’s regular operations.

Example: John Deere’s Deere & Company Board of Directors is responsible for overseeing sustainability, aligning strategic priorities accordingly, and ensuring that ESG principles are integrated across the enterprise. Their board’s Corporate Governance Committee reviews ESG topics quarterly. [Learn more about John Deere’s sustainability efforts here]

KPIs/incentives

Incentives are a powerful driver for action. They provide motivation that supports the implementation of key initiatives, and – if designed wisely – can enable alignment on key corporate goals across all levels of the organization. Several factors should be considered when designing incentive mechanisms to maximize their effectiveness:

Materiality: Incentives should be tied to the issues that are most material to the business. Tracked areas must therefore be linked to goals that reflect the organization’s overarching sustainability strategy. Additionally, it would be more powerful to have associated metrics that are linked to business priorities, as this promotes integration of climate / sustainability into core priorities (e.g., using $/ton of CO2e to connect the financial and sustainability benefits of improved energy management) [see “Integrate Climate into Corporate Financials” for more examples]. Failure to connect sustainability metrics with material issues will likely result in these actions receiving less focus and becoming strategically disconnected, hampering integration of climate into business strategy.

Differentiation: Cascading incentives throughout the organization and differentiating them according to department, team and/or position (rather than keeping a narrow focus on executive level leadership) is of the utmost importance. Neglecting to cascade incentives throughout the organization fails to engage the employees who are in operational roles and therefore responsible for embedding sustainable practices. Along the same lines, a "one size fits all" model that is not tailored to employees’ spheres of interest and influence will not be specific and compelling enough to drive durable behavioral change. It is essential to draw a lasting connection between employees’ daily work and their sustainability impact.

Performance measurement: For incentives to be effective, performance measurement must be transparent, straightforward, objective, and actionable. KPIs, and how they are measured and assessed, must be clearly defined. Quantitative metrics are preferred to drive tangible impact, over qualitative ones that can be ambiguous and lead to “checking a box”. Additionally, the evaluation scale used to determine incentives (e.g., thresholds that need to be met or levels of a sliding scale) should be clearly defined to ensure fair assessment. Finally, performance measurement must enable action: they should both be measured and available in a timely fashion to provide awareness of (under)performance, and, as discussed earlier, within the employees’ sphere of influence.

Plan structure and design: Incentive structures should be both short-term (e.g., annual bonuses tied to tactical KPIs such as percentage of contracts awarded to suppliers with science-based targets), and long-term (e.g., shares that are vested over a longer timeframe tied to more strategic goals such as overall GHG reductions), in order to hold employees accountable for near-term and long-term sustainability priorities. Any monetary payouts should be based on a combination of these KPIs and integrated into the broader, more traditional incentive package. The weighting of KPIs should be aligned with the priority level of the goal that the metric is tied to. Best practice suggests that the overall sustainability-linked incentives should represent at least ~20% of the overall incentive package (2). This would ensure that they are consequential enough to motivate employees, while also generating disappointment when not received, together driving substantial behavioral change. Non-financial incentives should also be considered to recognize outstanding efforts, inspire employees, and generate a sense of purpose.

A few things to keep in mind when designing incentive mechanisms:

• Simplicity and transparency are essential to avoid confusion and facilitate action.

• While each company may have an extensive list of sustainability-related KPIs, prioritizing KPIs based on importance to the organization, and acknowledging / adapting to the reality that not all initiatives will hit all metrics equally, is essential.

• Selecting specific KPIs and designing tailored incentives can help drive clarity regarding who is responsible for achieving certain targets, and what action can be taken to do so.

• It is important to consider interdependencies and unintended consequences of implementing certain types / structures of sustainability incentives. For instance, introducing sustainability-linked incentives may result in competing priorities that will require the reexamination of established KPIs to integrate climate-related and traditional business metrics.

• Regular review and updates are necessary due to the quickly evolving climate landscape; stakeholder expectations, regulatory frameworks, and competitive environments are subject to rapid change that will impact priority KPIs and the effectiveness of incentives.

Example: AstraZeneca has begun the process of integrating sustainability-linked KPIs into their overarching incentive program. Senior leadership is eligible for sustainability-linked incentives, with weighted ESG KPIs accounting for 10% of the incentive plan. Incentives are based primarily on emissions reductions (linked to Scope 1 and Scope 2 GHG reductions). Non-monetary incentives include awards given at global ceremonies that recognize teams that drive sustainability initiatives. [Learn more about AstraZeneca’s sustainability efforts here]

Decision-making processes

In order to drive meaningful action, sustainability-aligned business processes must be established, with sustainability integrated with more traditional business considerations. This includes building sustainability into strategic planning, which can help organizations mitigate risk and capture opportunities for value creation [see “Integrate Climate into Strategic Planning”]. Additionally, integrating sustainability into existing financial planning processes (e.g., capital allocation frameworks, assessments of operating costs / savings, etc.) allows for more deeply embedded climate considerations [see “Integrate Climate into Corporate Financials”]. A mindset of creating value from sustainability would help sustain ongoing efforts.

Example: Volvo has introduced an internal carbon pricing scheme to ensure that all decisions (including those related to project selection, sourcing, and manufacturing) result in the most sustainable option being pursued. It now evaluates the profitability of future vehicles on a CO2-adjusted basis with the aim of identifying and reducing carbon emissions, in addition to securing future profitability. Volvo is the first car maker to implement carbon pricing across its complete operations. [Learn more about Volvo’s sustainability efforts here]

Talent and skills

Developing an organization’s climate capabilities requires a holistic approach, with a key focus on upskilling to build the required expertise and skills. It is essential that upskilling efforts balance overall literacy with specific skills and capabilities to drive both awareness and action. Upskilling programs therefore need to be bespoke and tailored to specific roles.

Accordingly, various types of upskilling and reskilling will be required at different levels of the organization. Foundational climate and sustainability knowledge will be needed across the workforce to drive awareness, a common language for forging partnerships, and alignment with corporate objectives. Leaders will need to be equipped with specific knowledge related to driving decision making as well as engaging teams across the organization and external stakeholders. Specific function-related skills will be required to drive corporate action (e.g., procurement teams will need to be educated on topics such as sustainable procurement standards to effectively engage with suppliers, while finance teams will need to be educated on topics such as ESG-reporting, financial outlooks for climate technologies, etc.). Finally, employees in core operations may need to be upskilled in sector-specific topics such as new technologies or business models (e.g., the latest low-carbon steel or plastics recycling technologies, or the emerging “as-a-service” models from vendors.)

Various modes exist for upskilling and reskilling (e.g., workshops, online modules, on-the-job training, group / individual coaching, masterclasses, etc.), which may be tailored to the specific context and need.

Beyond upskilling, other elements of capability building to consider include:

• Anticipating new needs: Planning for emerging capability needs, identifying gaps in talent demand and supply, and defining new positions. This can only be done effectively if closely linked to climate-based strategic planning as well as thorough workforce analysis.

• Attracting and retaining talent: Emphasizing sustainability’s contribution to employee value proposition in order to grow sustainability-minded talent base. It is important to avoid over-indexing on attracting new talent (rather than developing existing talent) as this can lead to teams that are removed from the realities of the organization’s specific context.

• Engaging the workforce: Harnessing employee interest and delivering talent value proposition to maintain enthusiasm for building sustainability capabilities. Note that failure to live up to corporate promises and expectations can lead to disillusionment and act as a barrier to climate action.

When developing upskilling programs, companies should be aware of the following:

• Understanding the boundaries of tactical knowledge can help inform more effective upskilling efforts.

• Currently, the upskilling initiatives of many companies focus on teaching employees about the organization’s sustainability policies or general climate science. Companies need to move beyond this and instead focus on equipping employees with concrete capabilities that can be leveraged in their day-to-day work.

• Careful consideration must be given to the mode of upskilling or training that is used in specific contexts. For example, executives might benefit from 1:1 coaching regarding macro-trends in the sustainability space, while workshops may be suitable for upskilling management teams on initiatives that impact their business units or departments.

• While structured training is essential, the importance of building new practical skills on the job should not be underestimated.

Example: Heineken has launched its “Brew a Better World Academy” to educate employees on climate change and its net zero strategy, in addition to upskilling teams with the best tools, training, and guidance possible. This includes function-specific training tailored to their specific roles and day-to-day activities. More than 1,400 employees from different functions have completed the training. Additionally, Heineken has developed several internal policies to guide teams on the latest best practices and external standards to follow (including a renewable electricity policy, a sustainable biomass policy, and GHG accounting standard). [Learn more about Heineken’s sustainability efforts here]

Technology and data

Technology and data tools can act as a key enabler by providing information that can be used to inform decision making, and allowing for better tracking, and reporting of progress / impact. Data should be integrated, automated, granular, and updated / audited frequently. Ideally, ESG data standards should be as sophisticated and accurate as financial data.

Example: Maersk leverages StarConnect, its AI-powered fleet energy efficiency platform, to forecast and optimize the fuel consumption of ~700 of its vessels based on environmental conditions. The system processes 2.5 billion data points annually, and is driven by machine learning technology. In 2023, the technology enabled Maersk to save over 101K metric tons of fuel and avoid 314 metric tons of CO2 emissions. [Learn more about Maersk’s sustainability efforts here]

Leadership, culture and change management

Fostering a sustainable corporate culture is essential for generating buy-in and driving sustained action.

Leadership enablement: This begins with enabling leaders, driven by a compelling, purpose-led, and fact-based case for change that links the importance of sustainability goals to overall business priorities. Leaders should be held accountable for results, and should be supported by a team of champions, both in the sustainability team and beyond. Leaders should act as spokespeople for sustainability efforts and model sustainable behaviors.

People engagement: Employees across the board should be engaged. This begins with communications that galvanize employee goodwill and energy, showing how their work (as well as the company as whole) contributes to the greater good, and extends to providing opportunities for employees to contribute directly to initiatives, ideation, and problem-solving. Flagship programs such as “green challenges” (e.g., competitions between employees / teams / departments to reduce waste / save energy / increase recycling) can engage employees and sow the seeds for a sustainable corporate culture.

Executional certainty: This is enabled by strategic, empowered, accountable teams that are able to spot risks and interdependencies, share learnings, translate and communicate sustainability vision into actionable roadmaps with in-built flexibility, and forge partnerships. As such, building executional certainty requires robust program management including clear delivery structures along with cross-functional transparency and accountability measures.

Desired culture: Explicitly articulated sustainability vision and values, hardwired into business processes and in day-to-day activities (e.g., communications, workplace norms) can drive the desired culture shift, along with leaders who act as role models and teams that practice target behaviors and experience them daily. This requires a robust understanding how power and influence flow within the organization and steps that can be taken to facilitate both top-down and bottom-up buy-in. Indeed, it is essential that sustainability is embedded throughout business structures, processes, and policies. Individuals and teams should be empowered and encouraged to act on sustainability-related matters. Symbolic “lighthouse moves” can be a powerful tool for bringing culture to life and building loyalty and affiliation among staff. Driving a culture shift towards sustainability will underpin lasting and meaningful action.

An organization may have a wide range of ambitions and commitments which can lead to confusion, defocus efforts, hinder proper integration, and stagnate action. As such, efforts must be made to declutter and simplify metrics and introduce a coherent structure for tracking them. Cascading the related ambitions throughout the organization and embedding them in the corporate culture requires that they be effectively communicated. Clearly defining shared goals and bringing visibility to these ambitions and commitments is absolutely essential for facilitating sustained engagement and action.

As organizations strive to cultivate a corporate culture of sustainability, accountability, transparency, and communication should be key areas of focus:

• Accountability mechanisms provide clarity on who is responsible for driving each initiative forward and ensures initiative owners are empowered to take action.

• Transparency empowers all parties to make informed decisions, enables accurate measurement and reporting, and supports internal as well as external awareness of progress against goals.

• Effective communication facilitates internal engagement and buy-in, and ensures that efforts receive appropriate external recognition.

Example: Many companies (including, but not limited to: Staples, Toyota, Bristol Myers Squibb, CalPortland, Merck, and others) have adopted EnergyStar “Treasure Hunts” as a way to supplement their traditional energy audits, drive employee engagement, and cultivate a culture of sustainability. During each treasure hunt, employees come together to walk through their facility (usually industrial plants or commercial buildings) and identify energy savings opportunities. The process of running a treasure hunt includes a preparation phase (starting 4 months out) followed by pre-training, a three-day team event, and follow-up activities (lasting up to 6 months post-hunt). Treasure hunts can be repeated as necessary, making this a sustained, rather than one-off, endeavor. Success is driven by the engagement and ownership of employees at every level. The process fosters cross-functional collaboration as it typically includes teams of employees from all areas of production, facilities, engineering, maintenance, and administration. This approach has been credited with improving the corporate culture around sustainability over time. [Learn more about EnergyStar Treasure Hunts here]

Finally, as you start to implement these changes and your organization starts to evolve, here are 5 key pitfalls to avoid:

• Weak commitment at the top: Senior leaders do not display a strong, visible, and consistent commitment to the sustainability agenda, limiting credibility with internal and external stakeholders

• Perpetual Chief Sustainability Officer: The company appoints a CSO with no plan to transition ownership to the business, limiting ownership of and accountability for sustainability outcomes among the organization’s leaders. CSOs can be a great catalyst for progress (e.g., in the Starting stage), but companies need to plan for the role to transition (e.g., get to the Advancing or Leading stages)

• Commitments with no accountability: Performance management, including executive compensation, is not tied to sustainability outcomes, so long-term sustainability goals lose out to near-term financial performance

• Coordination problems: The role of the central sustainability team versus the business units is not clearly defined, resulting in disorganized execution and slow progress toward goals

• Failure to embed sustainability in the business: Sustainability is not a mandatory or material consideration in business processes, limiting employees’ ability to make decisions aligned with sustainability goals

• Talent gaps: Companies fail to anticipate and act on the fundamental shifts in skills and capabilities required to deliver on their sustainability agenda

Note that the implementation tips highlighted in this section exemplify the practices organizations should aim for in order to achieve “Advanced” or “Leading” status. For actionable starting points tailored to your organization’s level of maturity, refer to the Table 1 in “Solution”.