How To Evaluate Strategic Partners For Shared Sustainability Goals

0
How To Evaluate Strategic Partners For Shared Sustainability Goals
marcinjozwiak / Pixabay

An increasing number of enterprises are making sustainability core to their business model and operations. One report found that 21% of the world’s largest public companies have now set net-zero targets and sustainability goals.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2021 hedge fund letters, conferences and more

Nike, for one, launched initiatives to reduce greenhouse gas emissions across its operations and supply chain to reach net-zero by 2050. Adidas made similar pledges, committing to reduce its own — and its suppliers’ — greenhouse gas emissions with a 2050 climate neutrality goal. Unilever, on the other hand, is moving to organic palm oil and working toward a deforestation-free supply chain for the near future.

SALT New York: Canyon, Mudrick, Fortress And Sculptor On Finding Distressed Value

At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More

Commendable, worthwhile internal efforts by all accounts, and they all share a common thread: Partnerships are a critical component to a company’s sustainability efforts. If your organization takes up the increased use of renewables, it should logically mean the same for your suppliers, partners, and other affiliates. Their practices and investments are reflections of your operation’s practices and investments, no matter the aggressiveness of your efforts to reach net-zero targets.

Why Net-Zero Targets Matter

Expectations continue to increase around corporate responsibility initiatives, and sustainability is chief among them — a fact not lost on leadership teams. According to one survey, 62% of executives feel sustainability strategies are necessary to remain competitive today and another 22% believe such efforts will be key in the future.

But not getting suppliers and partners to take up the cause could do more than counteract the steps you’re taking to reach net-zero. It can impact customer (and investor) perceptions of your organization, which could lead to financial woes down the line.

You need to ensure that your strategy and your partners’ strategies align with sustainability across your operations, supply chain, and products and services. On top of that, you need to swing the doors open to what you’re doing to meet net-zero targets by informing the public of your initiatives and broadcasting the results.

Forging A Sustainable Path Together

You are the company you keep, as the saying goes. Because of this, great consideration must be made when forging strategic partnerships with other organizations for both business and net-zero purposes. Consider the following during your selection process:

  1. Commitment

Vision is often seen as a strategic business element that can help any enterprise work toward an organizational goal. The same idea applies to strategic partnerships, as both parties should enter into the arrangement with a shared vision for the future.

Don’t shy away from asking questions that can uncover a potential partner’s fundamental commitment level to sustainability independent of your enterprise. Has the other party set any net-zero goals for itself? Is there currently a plan to achieve the objectives? In other words, use “level of commitment” as a key parameter for evaluating partnerships.

  1. Business Practices

It’s one thing to have developed a plan for sustainability; it’s another thing entirely to set that plan in motion. Assess what real actions potential partners are taking at the ground level to reach net-zero goals, such as Unilever’s enthusiastic embrace of new, innovative suppliers and Salesforce embedding energy efficiency and environmental criteria into its purchasing contracts. Inquire about changes they’re making to business practices regarding people, sourcing, and energy processes.

Approaching the evaluation process from this perspective obviously provides insights into whether a potential partner is all talk and no action, but it also shines a light on whether the organization is implementing any unique best practices to reduce long-term consumption. Is the other party doing something drastically different? Take note.

  1. Technology

Technology used for business purposes isn’t often seen as a means to achieving climate neutrality, but a recent study found that well-established companies could reduce their carbon emissions by 50% — and save billions of dollars in the process — when migrating to cloud-based data storage solutions.

Consider asking about their technology partners and whether they’re prioritizing a move to cloud-based technologies. What percentage of their applications are currently running on the cloud? If limited, is the partner as committed as your enterprise to making such a move for its own internal systems? You’ll want answers to these questions.

  1. Offsets

Companies in certain industries won’t necessarily be able to reduce their carbon footprint to zero. And though you’ll still want to partner with organizations implementing emission reduction initiatives, you should also consider the context of what is possible. It’s much easier for a technology company to reach its net-zero goals than it would be for a steel or cement manufacturer, for instance.

One thing to consider in the plan for decarbonization is a potential partner’s initiatives to moving from fossil fuels to renewable energies versus those using largely carbon offsets — where a company funds outside projects that reduce greenhouse gas emissions. Understand, however, that partners who rely too heavily on offsets may be seen as not doing enough internally. This, in turn, could tarnish your efforts toward sustainability, at least in the eyes of the public. The path to net-zero fundamentally should happen through a decarbonization approach; ultimately, leveraging offsets should only be used as a bridge to meet net-zero goals.

Sustainability isn’t going anywhere, and net-zero initiatives can certainly become a market differentiator in many sectors. The key is to partner with other organizations with a similar commitment and shared vision for sustainability in your particular space.


About the Author

Ajay Bhaskar leads Strategy and Transformation at Wipro, combining his passion for innovation with more than 25 years of experience in corporate strategy, mergers and acquisitions, sales and business development, and supply chains.

Updated on

No posts to display