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7 Sustainability Mistakes Executives make

From our experience working with organizations around the world we have identified three
key problems for CEOs and company executives:
• Their organisation is exposed to a number of critical sustainability risks which can
result in brand damage and reputation loss and wipe out 70% of the company’s value
 overnight.
• Institutional investors wont invest in or will actively divest from businesses with
sustainability risks; making finance more difficult and more expensive.
• Sustainability is a key priority for CEOs, however they cant quantify the value of their
sustainability initiatives and as such they have difficulty creating buy-in and in driving
these initiatives down through the organisation. This misses opportunities for cost
reduction and efficiency.

In solving these problems we have seen a number of common mistakes that organisations
make. Here are the top seven mistakes executives of organisations make in relation to
sustainability.

O Thinking that sustainability is not relevant for your business

Sustainability is such a broad concept and is not well understood. Many people
think that being sustainable is all about being ‘green’ and in doing so they fail to consider the
social and economic impacts the organisation may have. Not only do we need to consider
social, environmental and economic dimensions, but we also need to consider numerous
perspectives, such as suppliers in the supply chain, the customer, investors and external
stakeholders, providing a unique 360-degree perspective. Smart company’s cannot only save
money, but are also using sustainability as a differentiator to their competitors. We recently
worked with an organisation, for example who’s Mission was about improving social
outcomes, however, they had don’t nothing to identify and address social sustainability risks.
Had any one of these risks eventuated, the credibility of the organisation would have
evaporated creating an unrecoverable PR disaster that could bring the organisation to its
knees. Sustainability is also an important factor for employees. A recent survey showed that
75% of staff consider the sustainability of an organisation before they accept an offer.

BNot considering the sustainability risks to your organisation

Risks in the modern business environment are rapidly changing. One of the key
mistakes we see executives make is that they assume that all risks have been identified and
are being managed by their team who may not be across the changes in the external
business environment.

Sustainability risks are now front and centre in many organisations and have a direct impact
not only on the profitability of the firm, but also on their reputation and brand. With around
75% of the company value being derived from ‘intangibles’ such as brand, reputation, trust

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and ‘good will. Customers expectations are increasing and they
will no longer buy products or do business with organizations
that are not ethical. The landscape is also changing with
Institutional investors who will not invest, or will actively
divest any interest in organisations with perceived
sustainability risks.

The largest reputation and brand risks now exist in your supply chain. So whilst the
organisation may not directly get involved with unethical situations, human rights abuses or
with suppliers who build products that are not socially acceptable, most firms have little or
no visibility of who their suppliers are and whether they are ethical or engage in
unacceptable practices, particular when they be source raw materials or have work
performed in developing countries that don’t have regulations as we have in the developed
world.

So whilst you might think it is great to be able to offer a product much cheaper than your
competitors, and in doing so maximise your profit, this might be seen as unethical to your
customers, particularly if you using suppliers who are using slave labour or child labour to
manufacture components for your products.

B Can’t see why your business should be more transparent

Investors want transparency and disclosure of material risks to their investments.

Yet many organisations don’t produce a sustainability report or
provide only superficial motherhood statements, often assuming that no-one wants to read
it. Quite often we also see what is reported lacks any detail. This is often due to organisations
either not have a framework to report against, or not having any way to capturing data that
makes the subsequent reporting easier. We also see occasionally that organisations just don’t
know what to report or have not fully assessed their risks, so they don’t really know what
information should and should be included.

Try and fix problems yourself

Even today we occasionally see executives who don’t deliver there is a problem.

More problematic though is that they direct someone in their organisation to identify
sustainability risks and improve their practices. Even if there is a sustainability manager in the
business, the organisation isn’t across all the international standards and often can’t see the
wood for the trees. If they could, they wouldn’t be stuck in a position with these problems!

B Hiring the wrong person to help fix their problems

We see some organisations hiring the first sustainability consultant they find and
then discover that their focus is purely on a range of environmental aspects
such as water, electricity and waste. Many sustainability consultants also do not follow a

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rigorous framework or recognised international methodology
which result in gaps in the assessment, which can result in
unidentified risks which may come out of left field at any
time. Also, most sustainability consultants don’t know anything
about change initiatives and as a result they can identify
problems but not necessarily put in place a plan to resolve
them. With over 40% of organisational spend being in change
initiatives and capital investments, a focus only on
‘operations’ doesn’t cut it.

Not engaging staff and creating buy-in

A key element in reducing sustainability risks is educating staff and creating buy-
in to the need to improve. Unless staff are engaged, many of the improvement
initiatives proposed wont get traction and the old practices wont change. In speaking with
CEOs around the world, we often hear that even with an edict from the top, middle managers
and staff are not interested and often just ignore such edicts knowing that the ‘problem’ will
eventually just go away. Given that middle managers and staff often don’t consider that
sustainability is relevant to them, or even part of their job, often key risks to the organisation
are not surfaced, but instead remain like a ticking time-bomb hidden just below the surface.
Through education and engagement, your staff become champions and sustainability
initiatives get taken up willingly at all levels.

B Investing in the wrong CSR initiatives

Quite often we have found that organisations invest in Corporate Social

Responsibility (CSR) or environmental, social and governance (ESG) initiatives
without a clear plan and they often don’t understand what is a priority and what is important
to the organisation. This results in many projects being identified that either don’t align with
the company’s goals or strategy or don’t address underlying sustainability risks facing the
organisation. This not only costs money but it also delivers little or no benefit to the
organisation, the environment or society at large.

Investors and consumers see right through this, and then accuse your organisation of ‘green
washing’, even though there was no intention to do so. This tarnishes your brand and
reputation and through social media your organisation may end up in the news for all the
wrong reasons.

Need Help?
To address these mistakes, GPM has developed a sustainability assessment system based on
world’s best practice and the latest industry research - we call this PSM3.

PSM3 uses a unique methodology that we have developed over three years and aligns to
over 50 international and UN standards. It helps your organisation to identify and mitigate
sustainability risks and provides a simple and robust reporting structure to demonstrate to
investors and key stakeholders these risks have been managed. This makes your organisation

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stand out as a fantastic investment and demonstrates to customers and

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shareholders you are a good corporate Citizen without
compromising profits. PSM3 helps identify potential savings and
business opportunities that can be generated through
sustainability initiatives. It educates and creates buy-in
amongst senior managers which helps you drive your
organisation’s sustainability agenda.

Ultimately this gives you, the CEO, piece of mind and differentiates your business from your
competitors, providing a unique competitive advantage.

If your organisation is making these mistakes, contact Peter Milsom (peter@gpm.world) for a
free, no-obligation and confidential discussion on how a PSM3 assessment could help your
organisation.

About GPM is the world’s leading organisation in sustainable project management. We

GPM wrote the book on sustainable projects. We regularly present at United Nations
forums where we speak with leaders in business and government on sustainable
projects. We operate in 145 countries and through our global network of universities,
training providers and consultants and have worked with leading firms in South Africa, United
States, Panama, Malaysia, UK, Australia and the UAE.

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