Into the Dragon’s Den: A guide to boardroom buy-in on sustainability
In this three-part 'guide to' series for sustainability professionals, edie asks the experts about how to overcome major challenges and seize hidden opportunities on the path to driving green business. First up: the daunting task of getting the board on-board.
Decades of media exposure and scandal-selling newspapers have done little to re-shape the connotations associated with the boardroom ‘fat cats’.
Approaching the Dragon’s Den, elevator pitches very-much memorised, sustainability professionals looking to fund what they believe is a fantastic – and highly profitable – new initiative could be forgiven for thinking that a short-term-focused board will be unwilling to shift their mindset and invest in sustainability or CSR projects with longer term paybacks.
But overcoming this critical first step of boardroom buy-in IS possible. It is, after all, what seperates sustainability champions from the rest. You just need to know exactly how to approach your board, and know exactly what it is they are looking for during the conversation.
While Sainsbury’s Paul Crewe has already preached the importance of good storytelling, a host of expert speakers at last month’s edie Live exhibition also offered up some invaluable advice on how to come out from the den with a project primed for take-off.
Show me the money!
As energy manager of Northern Rail, Gareth Williams has helped cut non-traction energy consumption (i.e. energy used in train stations and depots) by 12% in just one year, through a mixture of effective behaviour change programmes and efficiency upgrades identified through smart metering.
How did Gareth achieve the boardroom buy-in for such projects? Were these sustainability measures introduced under the cover of darkness, with Gareth quietly tip-toeing behind Northern Rail’s senior executives to deliver efficiency improvements? Of course not. Rather, Gareth took a holistic and open approach to his boardroom presentations – but always remembered the audience.
For Gareth, any boardroom conversation about how to improve the energy efficiency of a business will always revolve around the finances. He could have gone to the board to promote how train station retrofits might create good press, or help combat climate change, but this wouldn’t have won over his seniors. Ultimately, Gareth decided to put “pound coins against the metrics”.
“Energy reductions and CSR are fine, but you need to add the value in order to increase the business case,” Gareth says. “You need to add a figure to it and put pounds against a different metric, because business speak is all about finance and it will be for a long time.”
The majority of businesses are aware of sustainability issues and increasingly focused on tackling them, but for Gareth, the best way to the boardroom’s heart is to highlight the business case and what it will achieve in terms of financial savings.
But with aspects on finance covering everything from Return on Investments (ROI), loan funding and Key Performance Indicators (KPI), Williams notes the importance of knowing the initiative inside out, and exactly what it will produce.
“When building the business case, you need to demonstrate that you really know what you’re talking about,” he adds. “You’re building a case and highlighting the benefits for the company rather than just throwing figures around. You need to show that when you’re actually given money you’ll spend it wisely and you’ll do what you’ve set out to do in the business case. If you go out to save 50% in energy, you need to show it in the figures.
“You also need to have reliable data; finance people like data and have spreadsheets coming out of their ears. If you don’t have good data, the likelihood is that you won’t get what you’re asking for.”
And, even if you are unable to get the boardroom buy-in to get a particular sustainability initiative off of the ground, Gareth advises that you should always have a new scheme – or even an older unsuccessful one – up your sleeve, on the off-chance that there is money lying about waiting to spent.
“Always have something up your sleeve, because by the end of the year, if something hasn’t quite worked out and there’s money available, you want to be the first person to put your hand up and show them how you could save the company money,” Gareth adds.
But even if a company is fortunate enough to possess an easy-to-convince board that isn’t attempting to plunge its head into tar sands to avoid climate issues, sometimes the rug can end up being pulled from under that company’s feet, and the usual means to implement new projects no longer become viable due to external factors – the numerous government cuts to renewable tariffs and subsidies, for example.
So, what then?
For manufacturer Siemens, which regularly communicates with other businesses about sustainable technology deployments across nine separate industries, the lack of political drivers surrounding renewables and energy management shouldn’t shackle any initiatives, as long as you can highlight that these new measures will “pay for themselves from day one”.
“There is less money available from the (UK) Government, and this has clearly impacted the business case for making these investments,” Siemen’s strategic account manager for energy efficiency financing Mark McLoughlin says. “It’s now a case of turning from the carrot to the stick and looking at a host of reasons as to why businesses may be reluctant to, but also why they should, be looking at energy reduction measures.
“We see a lot of projects based on financial considerations, a lot of investments were made on the back of subsidies, tariffs and incentives. The business case was built around subsidies, but this has obviously changed. The incentives are now being taken away and if you’re looking at the financial impacts of legislation, this can have a huge impact.”
With the availability of capital for new projects seemingly shrinking, Mark argues that companies are not only growing increasingly reluctant to hand out funding, but also expect a quicker and bigger ROI on the projects that they do back.
Simply put, some businesses still don’t view sustainability and energy efficiency as a core asset for the business, and, as Mark points out, it is therefore up to you, the sustainability professional, to negate any aspects of initial costs by quickly highlighting that these measures will pay for themselves and generate significant profits eventually.
“If you can align the savings that you’ll make with the re-payments on a finance package or cost, it changes the dynamic of what you’re asking for,” McLoughlin says. “You’re no longer asking for money, because you’re going into this conversation with a solution built in that pays for itself.
“For efficiency measures, the original wasted energy that is being negated will pay for the project expenditure. You can use the money from those savings to pay for the initiative. It’s a compelling business case that takes payback from two to three years to something that pays for itself from day one.”
But, money isn’t everything
While green business speak looks set to remain financially-orientated for the foreseeable future, a new wave of strategic thinking has been slowly eroding the stubborn, short-term approach to many business models. The floodgates are yet to open, but more and more companies are beginning to turn away from quarterly reporting, to allow research and development (R&D) teams to embark on long-term projects that place sustainability over profit.
This much-needed new approach to thinking has already been heralded by the Institute of Environmental Management and Assessment (IEMA), which is actively encouraging businesses to adopt the outlines listed in its recent “Beyond The Perfect Storm: The Corporate Sustainability Challenge” report.
That report calls on businesses to implement transformative switches away from short-term operational plans, instead focusing on adopting plans that bring in values beyond finance and look towards the social benefits or aspects of natural capital in order to get away from a simple one-to-two year financial gain approaches.
One such company beginning to introduce this more holistic approach to sustainability change is engineering firm Jacobs. The company has to engage with stakeholders on a huge range of sustainability issues in order to reduce operational costs and drive revenue for clients. With more than 65,000 employees, Jacobs has launched a number of initiatives aimed “building a bridge between corporate understanding and new sustainability plans”.
But, while the aim of this movement originally set out to reduce costs, Jacobs’ director of sustainability Alan Hendry has adopted a new way of thinking from within the company that has “incentivised them by demonstrating sustainability challenges and ambitions in a way that appeals to them”.
“Companies are conscious of their image and presence in the market, so I think that more are looking to prove their credentials in ways other than balance sheets,” Hendry says. “Reasons for introducing initiatives seem to be changing, cost cutting seems to rise and fall and reputational benefits have hovered around the same type of marker.
“Ultimately, the environment that we’re operating in has seen thinking move to an age where sustainability isn’t an unusual thing and standards to drive sustainability are becoming the norm.”
Once upon a time…
For Alan, what began as a way to give sustainability a foothold in the boardroom has since blossomed into a vehicle that has sparked behaviour change within the company and led to the creation of Jacobs’ monthly “global sustainability call”, which aims to entice members of the engineering industry by advertising “sustainable heavyweights” to come and talk over new policies and initiatives and what impacts these could have on the sector.
Yet, in order to orchestrate these monthly meetings Alan first had to tackle the boardroom hurdle, and for him, it was all about storytelling.
“You need to be able to tell a good story,” he adds. “You need to understand who you’re talking to and what shapes their interest. People can be your greatest asset and ally so it’s about creating the right relationships to drive forward. Know your audience and know your enemy because you need them both on-board.”
While Hendry advises that you understand both your allies and your enemies in order to connect with the board on a personal level, he also warns that a failure to truly understand your own story, and what you’re actually looking to get from the board, could also scupper any potential buy-in opportunities.
“Some people need to take time to realise what they actually want from the boardroom. Is it money? Is it leadership and for people to come on and support the scheme? Is it wisdom and support? You’ll need to figure this out before you’ve engaged with them so that everyone understands what they’re trying to achieve. But usually, you want the lot.”
All of the quotes used within this article were obtained from sessions at the edie Live 2016 exhibition, which took place on 17-18 May.
The second part of this ‘guide to’ series will focus on sparking a behaviour change, and will be published on edie next week.
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