Right now, it is table stakes that every organization has a robust climate strategy and commitments in place to achieve significant emissions reductions. What we hear most frequently from clients is that they are struggling with follow-through on delivering the initiatives and step-changes that would actually reduce emissions.
This trend is borne out by research from the NewClimate Institute in Germany and an HBR survey of over 400 C-suite executives, which found that only 3% of companies had enterprise performance measures in place to track and meet their climate commitments.
Siloed working that prevents collaboration
Misaligned organizational incentives
Organizational inertia
A. Green-BAU
The easiest place to start is to look at any parts of your organization that are delivering products or services core to your business model but who need a rethink on how to deliver that value more sustainably. This is what we would call “Green Business-as-Usual” or Green-BAU. In these areas, we recommend keeping the organization or teams largely intact and augmenting with embedded sustainability expertise. For instance, a retailer looking to expand into new store locations may want to engage specific expertise in site assessments, green construction methods, sustainable materials and urban planning to ensure accessibility for green modes of transportation. By keeping ownership of the initiatives closest to the people and teams that know that aspect of your business most intimately, organizations can ensure continuity augmented by expertise to help make better decisions as a unified team.
B. Capacity or Capability Building Initiatives
Often organizations also need to innovate outside of their core competencies to drive real step-change in how they operate. For these companies, we recommend centralizing efforts for any capacity-building or capability-building initiatives under one hub or cluster of cross-functional teams. These types of initiatives could include building out a climate data capability or reimagining a sustainable approach to your supply chain – anything that is a bold leap forward from where you are today and that requires significant investment of people or resources to make happen. Centralizing these efforts is important as they likely wouldn’t be prioritized if left up to the decentralized legacy organization to deliver this magnitude of change.
1. Realign Organizational Incentives & Decision-Making
What gets measured matters, so consider adding your climate initiatives to the entire organization’s scorecard or objectives and key results (OKRs) in order to make carbon emissions a visible priority both internally and externally. At minimum, cascade climate OKRs for those leaders, departments or teams who have any degree of influence over the results. By tying their fates together, you are incentivizing real collaboration between different parts of the company to achieve an important shared outcome. In addition, consider adjusting incentives around how decisions are made – value-based procurement that accounts for end-to-end carbon emissions is a good alternative to traditional frameworks focused on controlling costs.
Time is not on your side here and the pressure to demonstrate progress is real. To this end, think about what resources can be immediately deployed for a first iteration of your operating model and then evolve towards ideal state over time. It may be quickest to formalize your sustainability experts and embed them into decentralized Green-BAU teams, with a fast-follow on any capability-building initiatives launched in a centralized cluster.
3. Plan and Monitor Progress Together
Use the guiding principle of ‘aligned autonomy’ to shape your planning process. Bring your Green-BAU and Capability-building teams together for a shared planning cycle where you set quarterly objectives and key results to drive a high degree of alignment. Then teams can disperse for empowered and autonomous delivery of the agreed-upon plan. Having your full cohort of business knowledge and climate expertise in one room will enable greater visibility to the work ahead and allow you to better identify and mitigate risks and blockers you’re likely to encounter.
4. Involve Your Ecosystem
Partnering with others in your ecosystem can be a way to accelerate progress on your climate ambitions. It may take a coalition of vendors, alliances, not-for-profits and government organizations to bring their unique skillsets to the problems you are aiming to tackle. In some use cases, a pre-existing solution may already exist in the market (e.g., climate data lake) that can be leveraged instead of needing to build your own.
5. Adopt an MVP Mindset to Learn Quickly and Build Momentum
Done is better than perfect – never truer than in this instance where a failure to act will continue compounding the complexity of the challenge. Agile ways of working at the team level can help deliver value more quickly with experiments and prototypes that unlock rapid feedback for teams. The test-and-learn mindset can help gather learnings at a safe risk-level before the organization starts to scale up its climate initiatives en masse. The momentum of these quick wins can help coalesce energy and excitement that your organization is making real progress against its ambitions and set you up for even greater success in future.
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