Sustainability: an integrated management approach

Anyone who is serious about implementing sustainability goals quickly realizes that the whole thing is not that trivial. It is not enough to simply install photovoltaic systems on the roof or switch to electric cars. Sustainability, or ESG as it is increasingly referred to in the financial sector, must be approached holistically and often requires external advice. One consulting firm that has been dealing with sustainable business and everything that goes with it for over 20 years is Sustainserv. This company was founded in 2001 as a spin-off of the ETH Domain PSI with the aim of building a bridge between research and practice in the field of sustainability. This quickly turned into a pragmatic and practical consulting approach "with a lot of grounding", as Managing Partner Stephan Lienin explains in an interview.

Mr. Lienin, where do you currently focus your consulting activities? I could imagine that clients are beating down your doors due to the increasing regulatory pressure?

Stephan Lienin: You can't retain customers with abstract ideas. We prefer to accompany customers on their sustainability journey, some of them for 20 years. But to your question: we take a holistic approach to sustainability. This means we can cover strategic issues as well as implementation and reporting in equal measure. There is great demand for this. Our challenge is that we are not a software provider. This means that we cannot simply double in size overnight. We therefore have to grow organically and with quality. And with the growing number of regulations, we also need to focus on our core business: If sustainability is viewed holistically, it can be worthwhile for the company and serve the environment and society at the same time. We want to shape a future in which sustainable value creation is the norm.

When you are in contact with customers: Do you first analyze the problem or does the customer have a specific question?

Customers usually come to us with a specific need, currently often to implement legal obligations. Or they need a materiality analysis, support with reporting or the creation of a carbon footprint. We are then happy to provide an overall view, which can result in a different perspective than the one the customer had at the beginning. At the moment, the market is pretty "excited" because there is a lot of uncertainty due to the new regulations. In addition, there are also many prejudices doing the rounds. It is therefore helpful to start by providing information and reassurance and explaining the whole context.

In collaboration with the University of Bern, you recently published a study on how companies are tackling the issue of sustainability. Fulfilling compliance regulations is seen as a top priority by those surveyed. To what extent can we conclude from this that Swiss companies are only responding to pressure, even though the issue of sustainability and the need for action have long been apparent?

Some companies have been exemplary in this area for 20 years. Others have not seized the opportunity of voluntary compliance and must now act quickly under pressure. This applies in particular to companies that not only have to implement the Swiss regulations, but above all the reporting obligations of the EU CSRD / ESRS. Swiss legislation is "softer" and less specific. Companies are put off by the EU regulations, which seem very bureaucratic. This is a big hurdle for many companies - especially if they have slept through the last 15 years. This is currently also leading to counter-pressure and a real "regulation bashing".

Now a number of SMEs suddenly find themselves in a situation where they have to account to their EU customers for the conformity of their supply chains. To what extent have they been caught on the wrong foot here?

For Swiss SMEs, there are two things to consider: if you export a lot to the EU as a company, it is probably necessary to implement the regulations for competitive reasons, even if you may not be obliged to do so. Secondly, it is simply the case that larger customers demand carbon footprint figures, proof of a report or participation in a label from their smaller suppliers such as SMEs. However, if an SME is more focused on Switzerland, then I hope that the company will be able to implement the legal obligations more easily. The federal government is currently clarifying the legal basis for this, so we'll have to wait and see ...

However, many SMEs are now saying that they have long been unable to do anything other than operate sustainably - simply due to their size and structure. This makes it all the more annoying for them that they now have to submit a report on this, combined with additional administrative work.

That is understandable, and in some respects I agree with these SMEs - we are one ourselves, with around 30 people. Swiss SMEs do a really good job, especially when it comes to energy efficiency and social responsibility towards their employees. It should be relatively easy for them to back this up with facts. But there are also issues where we honestly need to take a closer look, such as supply chains. It must not be the case that human rights violations are behind raw materials and materials that are sourced. We will have to pay closer attention to this in the future.

Scope 3 is likely to be a similar topic?

Yes, because taking responsibility outside of your own company is challenging. And what I also often hear in practice are preconceptions about sustainability: you simply put a photovoltaic system on the roof, drive an electric car or do a social project. That's a rather limited perception. I understand sustainability to mean business success geared towards the long term; nowadays you have to think more and more about the value chain as a whole.

But isn't that exactly what many SMEs claim?

That's right. In Switzerland, we have a high density of SMEs that are world leaders in one area or another. Many of them are also family businesses spanning several generations. That is clearly a sign of sustainability. The difficult thing is that you now have to somehow put this on paper - I completely understand this objection. But the fact is that there is often a gap between how we perceive ourselves and how others perceive us. And I have also noticed that many management teams have not learned to incorporate environmental and social impacts into their decisions. Scope 3 in particular is an example of this: Who knows off the top of their head how much greater the emissions are there? As an SME, you have to measure this, even if you think you are already doing a lot of things well.

In this context, Sustainserv presents "climate design", i.e. the combination of value creation and climate protection. That sounds obvious, but the reality is still different in many places. What approaches need to be abandoned in this context?

Let's assume that a company wants to set a climate target. In practice, I often find that this is discussed and planned away from the core business. It is only later that you start to think about it in product development and purchasing. If you want to implement a climate target, not just in your own company through the procurement of renewable energy or more efficient production, it quickly becomes about the entire value chain, i.e. Scope 3. In order to improve something here, you need good cooperation with suppliers and customers. The aim is then to make a product better or leaner so that it is more efficient - and possibly also more appealing in terms of design. This way of thinking has existed for some time in a narrower context in what is known as eco-design: not only improving the eco-balance of a product, but also optimizing its functionality and even making it cheaper.

That's all well and good for products. But what does it look like for services?

The first step is to recognize your own value creation and then identify levers where you can improve climate protection together with suppliers and business partners. This can certainly act as a driver of innovation.

In addition, there is now also reporting. How should SMEs structure their reporting? Purely based on figures or can it also be storytelling?

It doesn't work without numbers. The motto is: "If you can't measure it, you can't manage it!". However, it's not about producing a telephone directory, but about having the right levers and control variables. The approach is therefore to focus on the essentials. This is why materiality analyses are an important strategic basis. Of course, a story is also part of this; it creates the context and conveys messages. In reporting, however, they must be backed up by facts.

I think many figures - for example on energy consumption - are available in companies, they just need to be put into the right context.

Many companies have more to offer in terms of sustainability than they realize: they have worked on energy efficiency, do a lot for their employees and have good contacts with neighbors. At initial workshops, I often find that many corporate functions are discussing this for the first time. There is sometimes a surprising amount of substance and figures available, especially for their own operations (Scope 1 and 2). However, it must of course be evaluated, understood and placed in the right context.

So does it only become difficult with Scope 3? Where should companies start here?

In any case, you should proceed step by step. Screening can often be used to roughly estimate the CO2 footprint in the value chain by analyzing it: How much money do we spend in total in which categories, e.g. on procurement or business travel? Or for employees: Take the average CO2 consumption for commuting as a basis, for example, and roughly calculate the CO2 footprint per employee. The screening is then gradually replaced by activity indicators and the analysis and planning becomes more precise.

Yes, the employees. What is the best way to involve them? Because I've heard that companies do a lot for sustainability, but employees don't even notice.

Such gaps exist, and vice versa: employees who are strongly committed to sustainability in their teams, but management knows nothing about it. Employees want to participate in something meaningful. A company that creates value for customers, its employees and the environment is motivating. I therefore don't believe the prejudice that sustainability reports are not read. On the contrary: anyone applying to a company today wants to know how it is positioned in terms of sustainability. A sustainability report is certainly more informative than a financial report.

How can companies use reporting as a driver for concrete improvements? And how can effectiveness be measured?

People often underestimate what the reporting process can trigger. Management recognizes where there is a need for action and sets itself goals. And along with the objectives comes the ambition to achieve them.

Finally: "Quo vadis sustainable economy?" if many end customers are not prepared to pay more or even accept compromises in quality? Who pays the bill in the end?

The fact that certain things, such as renewable energies, become more expensive cannot be argued away. It can happen that more sustainability leads to poorer quality, but I think the opposite is more likely to be the case.

I was thinking of the "environmental protection paper" of the past, which was not bright white but gray and sometimes even had residues of the recyclate in it ...

Well, but there's been a lot of progress in that area too ... In general, I'd like to say that 50 years ago, hardly anyone talked about quality and quality management. Even then, some people asked themselves: What's the point of all this frippery? It just makes things more expensive. Today, production and product management without quality management is unthinkable. I am sure that the same will happen with sustainability in the near future. Even today, a newly developed product that has no environmental performance is hardly marketable. In this sense, I believe that sustainability as an integrated management approach helps to reduce risks and drive innovation.

About the person

Stephan Lienin is co-founder and Managing Partner of Sustainserv. Since 2001, he has been helping clients in numerous industries to integrate sustainability into their strategy, day-to-day business and reporting. Following his education and basic research at ETH Zurich, he developed analytical methods for energy, mobility and climate protection at the Paul Scherrer Institute (PSI). He also uses his further training in action-oriented communication as a coach and moderator. He is also involved in social projects at Kamboo Project and in initiatives such as ESG4Boards.

Notice: Sustainserv is the presenting partner of Forum Ö, the annual event of öbu, the Association for Sustainable Business. This year's event looks at the future of the sustainable economy and focuses on the potential and opportunities of corporate sustainability. Not yet registered? Click here for the Forum ö tickets!