FROM VISION TO IMPACT EP 6 : INTEGRATION WITH BUSINESS OPERATIONS

This episode explores the importance of integrating sustainability into a company's core operations and products, using digitalisation as an analogous example. Shargiil emphasises that sustainability is not just about words or a standalone concept; it needs to be fully integrated and embedded into every aspect of operation, similarly to how digitalisation has. 

They also talk about how businesses fell due to them not adapting to the market, with Blockbuster being a good example of this, offering a good reminder of what can happen if you fail to change. Bashir argues that this is also happening now, with companies like IKEA, which commit to using renewable resources and recycling, thriving. Companies that demonstrate higher sustainability tend to have higher returns. Sustainability is hugely attractive to not only investors but also consumers, especially in a more environmentally and socially aware world.

The important role of Chief Sustainability Officers (CSOs) is also discussed, as they help organisations strive towards sustainability. Their visionary leadership can help introduce and implement sustainable practices throughout an organisation, leading to long-term success and relevance. Sustainability, although it may incur initial costs, will ultimately yield long-term savings benefits. Shargiil states that sustainability should be so ingrained in a company and its people that, in the future, the job of a CSO should be completely different.

Transcript

SPEAKER_01: 0:00

You need to drive sustainability into your core product. You as a company have a core product. How do you drive sustainability within that, right? I think that's what it comes down to. And I keep using digitalization as an example, but it's exactly the same thing. Companies that were just creating digital as a standalone thing, oh, we're going to optimize our IT. Well, those weren't the most successful ones. But once you start integrating digitalization into your product, you can buy your product online, you can buy your product on an app, you can buy it through a phone. That's where digitalization really started creating value.

SPEAKER_03: 0:39

Welcome to this episode.

SPEAKER_02: 1:05

Today, we are chatting with Sharjeel about chapter six of his book, which is integration with business operations. So the previous episode, we went into strategy and we touched on how important it was to integrate that strategy with business operations, whereas we're going to go into a lot more detail in this one. So welcome, Sharjeel. Could you just, I guess, give us, as you always do, a bit of a summary of what we're going to be looking at?

SPEAKER_01: 1:33

Yeah, so I think in this chapter, Dave, it's very much about, I will almost say this is probably one of the most important chapters of the book if you're just starting your sustainability journey, right? Because this is basically about exactly why you should be having sustainability strategy because you need to integrate it within your business. You need to integrate it into your operations because there is this conception around sustainability. Oh, it's only costly or you only do it as a tick box exercise or you're doing it as a regulation. No, this chapter actually speaks about and is very much about why and how you integrate your sustainability strategy into your business itself and why that is critical to prioritize and focus on. And again, as an example, revenue is a good example, right? How can you generate more revenue by having a sustainability strategy? I mentioned this and made some reference to this as well. McKinsey Consulting published a report where they highlighted that the business opportunity, the revenue opportunity within different sectors in order to get to net zero is more than 12 trillion US dollars until 2050. This is additional revenue for different sectors. And you can see exactly from the sector on water, energy, banking, and et cetera, how much that is. So it just highlights that that's the business opportunity. You shouldn't do this just because somebody is asking you to do this. You should do this because this is going to create more business opportunity for yourself, for your company. And that's why you should do it. And this is basically what this chapter is focusing about, that how is it that you integrate your ESG strategy with your business, with your product, with your organization? And what are the ways to do this?

SPEAKER_02: 3:21

I mean, it's interesting. I guess leading on from that sort of whole discussion about strategy, but I guess what are some of the biggest challenges that you will kind of face? So why don't we start with the challenges before we go into the sort of

SPEAKER_01: 3:40

benefits? I think there are definitely many different kinds of challenges, right? The first big challenge is how do you start with this within your organization, right? Now you have a strategy. How do you link it to your operations, right? And unfortunately, some companies do that, that they create a strategy and then they try to figure out how you link it to your business operations. Ideally, this should be a cohesive process, right? You should be linking your strategy along the process with your business. But however... One of the risks are that you don't do this in the right way. The second risk, of course, is the time perspective of this, right? So your strategy, as we discussed previously, sustainability is very much about a marathon. You're not going to see the exact impact from day one. So are you willing to do that investment? And how quickly will you see the benefit of that investment? It's the same thing that, you know, Dave, you're based in the UK. You've seen solar panels coming on houses over the past 10, 15 years. But the ones who put the solar panel on their house 15 years ago, their break even was probably 10 years before those solar panels was paid off. But if you do it today, I'm sure that's probably three to five years. So you're going to do that investment. And what's the right time? So it creates a benefit for you as well. So those are some of the challenges that you need to understand. And also because the topic of sustainability is still moving a lot, right? And let's just look at the roads, the electrification of our transportation system. It's still happening. It's happening as we speak, right? We're seeing more and more electric vehicles coming through. But at the same time, we're building the infrastructure for electrification of the transportation system. So some of these things are going to take time. And those are some of the risks we need to see that the risks that are going to be in front of us is the timeline. How quickly does these things move? And how can you best embed them into your business model, so to say?

SPEAKER_02: 5:34

I mean, again, it's fact, because I guess, you know, this is really where the rubber hits the road, isn't it? This whole topic is, you know, the electric rubber hits the road as well. So, but, you know, if you're an enterprise or a large business and you're already, you know, a small business, you have to make the decision to kind of adopt a strategy. So you'll obviously need somebody to create the strategy, but then, you know, you will have to be convinced that this is going to create long-term business value for you. I mean, you talked about the McKinsey thing, which I think is an excellent example. How are, you know, based on your experience, how are kind of leadership teams being brought to the table around this? I guess an example, you talk about electrification and the way that We move around. But a lot of that, there is an umbrella within sort of countries where you've got the governments who are saying this is the path. So there is a sort of framework, a kind of governmental level. So businesses can look at that and say, well, this is how we kind of can align with. But more generally, how do you think kind of you get the leadership team to the party?

SPEAKER_01: 6:47

I think it will be unfair to put the whole leadership into one box, right? The leadership comes in multiple different ways. You will have leaders that are very visionary. And honestly, I think that most of the sustainable, strong sustainability companies do have visionary leaders, right? Because you need to look beyond your 12 months ahead of you, right? You need to look from a long-term perspective and say, this will create value for us in the long-term. What are the steps we need to look into? So I think from a leadership perspective, what you need to bring together is you need to bring your leadership. And again, as I said before, you need to figure out where is the business opportunity into this or where are the biggest risks that can put our business into existential risks in the future, right? I think those are the things you need to consider. From a business opportunity perspective, if you look at that, it's basically about identifying how will our business benefit from this specifically. I think we have used a couple of examples previously about repackaging, right? But it's also very much about reading the trend,

SPEAKER_00: 7:51

right?

SPEAKER_01: 7:52

If you're a car manufacturer today, I think most car manufacturers are looking into electric vehicles, right? But if you look at car manufacturers 10 years ago, there's actually very, very few who was really investing into electric vehicle. And I'm sure that there has been a lot of people who probably don't have their job today because they went into somebody's office and said, we should look into electric vehicles 10, 15 years ago. But purely because you need to find the mega trend, like what's the direction things are going to within your industry specifically, and how is it that we're going to implement sustainability within this business line specifically, and then find the business model. Because if you keep putting sustainability and keep seeing that as a cost and cost and cost, you're not going to have a lot of leaders who's going to support you and see the value in this, right? So you need to find that business case specifically. And the business case might still be costly, but then there will be another value it's going to be adding to you. I think an example I have in the book I use as well is the IKEA had this initiative about a better cotton initiative, which does not necessarily, I don't have that insight, but I don't think they did this because that was going to be a better business case specifically, or they were going to make more money about this. But this was about doing more responsible sourcing of the cotton into their products, right? So this was more about the value chain, that how do you create a stronger value chain specifically to ensure that the sourcing you're doing gets much, much better as such, right? You also had the King Arthur baking as an example, who basically also looked into that, how do we do more organic products specifically, right? And more responsible products. So I think this needs to link into your products specifically in the organization, that how can you fix it from that perspective? Because otherwise you have the risk of, are you going to exist in the future, right? And I mentioned this in the book as well. And I don't know whether all the audience of the podcast will know the company Blockbuster, right? But I think Dave, you and I would know them, right? I think we are brought up with them. You will go on the weekend and you will borrow three DVDs to watch over the weekend, right? Or you will stand in the queue to figure out... VHSs, exactly. Well, you will go and try to figure out that, spend hours to figure out which are the three titles and DVDs you were going to, or VHSs you were going to watch for the weekend. But that company, Blockbuster, did not change themselves as the trend of the streaming versus pure old-fashioned movie usage was moving towards, right? And today, they don't exist, right? So I think also there are going to be companies, and I think there's going to be many more companies that we actually think that are not going to exist in the future because they did not embrace sustainability. And I think that is going to be the case. And I think we're seeing more and more research that is looking towards that direction because the consumers are looking for more sustainable products or sustainable practices. So if as companies does not look towards sustainability, they're not going to exist, right? And we have this cliche, and I mentioned it in the book as well. There are research out there that clearly indicate that companies that are more focused on sustainability shows better returns. Is it a coincidence? I don't know, but we do have factual research that highlights that, right? And I think that's very important to underline as well, that sustainable practices are good for business and you need to figure out how to integrate that into your business. Start with your product. look into your governance in your organization. How do you embed sustainability in your policy? How do you ensure that you're becoming a more diverse and inclusive organization? It doesn't only have to be to quotas or anything else. It's basically just about creating an environment that is promoting inclusiveness and diversity. That is something you can do. This is something you can put as part of your policy. So I think the focus pretty much needs to be about how can you do this? It also, and I think we discussed this in one of our previous episodes, the risk aspect. How are our products at risk from a ESG perspective? This could be your workforce, as an example, that could be at risk. This could be your production facility that could be at risk because of the climate changes we are seeing around us. How do you tackle those, right? It can also be in the geopolitical situation. The world has been in, for the past three, four years, unfortunately, that creates some security concerns, depending on where you operate in the world. How do you address those?

SPEAKER_02: 12:45

Yeah, I mean, it's so true. I mean, we've looked at, I guess, over the last few years, we've seen supply chain risks as well, you know. So boats getting stuck in various places and, you know, the knock-on impact that's had in terms of... Delay

SPEAKER_01: 13:00

in delivering your products. As simple as that, right? So I think there's so many aspects that you can integrate this. A key thing that most companies can start immediately... is about raising awareness within your organization,

SPEAKER_00: 13:12

right?

SPEAKER_01: 13:13

So when you're trying to integrate your ESG strategy within the organization, how are you going to raise awareness of your organization on the topic of sustainability, right? A simple thing that some very successful companies do is, I think you have Google, you have Microsoft, you have others who have done this, is to create both voluntary but also mandatory training on sustainability, right? To say, okay, You as an employee will need to take this one hour mandatory training to understand the basics of ESG, right? So we start raising our awareness. Next time, it will be at the next level. And that's the way you continue. You can also have subject matter expert specific training. So if you're an expert on IT in your organization, well, how is sustainability impacting the whole data center setup? That could be another topic that you could, based on your role, get that specific training to. Or if you are as a salesperson, how could that specifically look into the practice you're using from that perspective that could support from a sustainability perspective? That could be to learn more about some sustainability features of your product. So I think there are different aspects into this that can get integrated. And awareness for a company is a good place to start. Besides that, you will have risk as well. And then of course, the big thing that we discuss is the whole opportunity aspect that is super important.

SPEAKER_02: 14:42

So one of the things you mentioned in this chapter is the role of the chief sustainability officer. And I think, you know, that's for larger organizations, but you're always going to need a champion, aren't you? Because, you know, as we're talking, like completely love the point about, you know, actually sustainability should be about value creation for a business. It's not just sort of compliance driven box ticking exercise, but you need somebody to ring master this. So can you talk a bit, I mean, and obviously you're chief sustainability officer for First Abu Dhabi Bank, but can you talk a bit about the role? Because it really does feel like this is a critically important one. And to me is a real, potentially a real test of how serious an enterprise or a business is about the whole ESG topic and using that from a kind of value creation point of view.

SPEAKER_00: 15:36

Yeah.

SPEAKER_01: 15:37

No, I think, and Dave, I'll probably be a little bit biased in this, right? But I do think that chief sustainability officer is a critical role. Exactly as you mentioned, not all companies will be able to afford this, right? For large companies, yes. I think this is a critical thing. I think that the role of chief sustainability officer comes in multiple ways, right? I speak with a lot of my colleagues, my peers across the world. And I think when we sit and compare notes and knowledge, a lot of us has different responsibility within the roles, depending on how your organization is set up. Exactly like if you look at the chief technology officers around the world, there are different ways that those roles get structured and what is in the mandate of that role specifically. But I think the critical aspect of the chief sustainability officer's role, as I see it, is to drive sustainability within the organization. But that unfortunately often get misunderstood as, oh, you just want to make me a more sustainable company. That is just cost, cost, cost. No, it's about driving sustainability, which means you need to drive sustainability into your core product. You as a company have a core product. How do you drive sustainability within that? Right. I think that's what it comes down to is the same. And I keep using and I think you're probably tired of me hearing using digitalization as an example. But it's exactly the same thing. Companies that were just creating digital as a standalone thing. Oh, we're going to optimize our IT. Well, those were the most successful ones. But once you start integrating digitalization into your product, right? You can buy your product online. You can buy your product on an app. You can buy it through a phone. That's where digitalization really started creating value, right? It wasn't just about, oh, you put a website up and saying, what is this company's name? What is its location? And so on. That's not what created a value. That created visibility. What created a value when you start using digitalization into the product itself That was the big transformation. I think it's going to be exactly the same with sustainability. There are companies right now who can claim, oh, they have some sustainability practices. Yes, fantastic, great. But when you start integrating into your products, that's where the value gets created. And I think that is the role of the chief sustainability officer. It's about bringing your organization together, looking at its value chain and say, where is it that we're going to create value through sustainability? That is the critical aspect. And I think that's the key part of the role. Yeah, I mean, I'm going to sort

SPEAKER_02: 18:14

of pick on you because I've done some work with you. But it's been interesting that in the past, I've been in meetings where actually you've turned up as a representative, you know, on topics which are not to do with sustainability, but being there as a sort of stakeholder. And I think that's been really interesting within the bank to see that kind of working, that actually, you know, you have a say and an opinion, which we have been taking into account in some of the things that we've been doing. So, you know, I guess that's a really good example where this isn't just about sort of the communication side of things. It is critical that, you know, as we're talking about, this is embedded into the operations of the organization.

SPEAKER_01: 18:59

Absolutely. I think that is critical, right? And I think if you I almost see, right, in my mind, and this is purely in my own mind, I always seen the role of chief sustainability officer somehow mirroring the role of CFO, the chief financial officer, right? For me, a good CFO has a touch point around multiple aspects. Yes. A CFO does not only sit and say, oh, doing a financial report or making sure you meet the budget. What they also do is to encourage the businesses, how can they do more through implementation of different things, et cetera, that it's going to create more value for the company,

SPEAKER_00: 19:42

right?

SPEAKER_01: 19:42

And more value for all its stakeholders. That's the role of the CFO. The same way, the role for a CSO is not, like my role is not to just say, I'm going to make a fab more sustainable on this. No, for me, it's about impacting the organization on the topic of sustainability, right? And I have touch points with hundreds, if not thousands of people across the bank because all different aspects of the organization, you need to touch them on the topic of sustainability. I can't just have one product that becomes sustainable if nothing else is, right? Because if you go to a shop to buy a product, if that shop just has one sustainability product, Well, great, if you need that one product, that's fine, but what about the five other products you need, right? Why are they not sustainable? So it's about embedding. The speed will be different to get to that point, but it's about creating that impact across the full value chain that is so important and critical.

SPEAKER_02: 20:46

So I guess, again, we're running out of time, but I was kind of keen to ask this, which is embedding in the business operations supercritical We've talked a lot in sort of previous episodes and, you know, a bit today about the length of time. One of the problems with, I guess, large businesses or corporations is the kind of short termism which often happens. You know, you have a change of CEO or whatever, and the whole thing kind of changes directly. How do you kind of ensure that this is really

SPEAKER_01: 21:24

embedded for the long term? I guess the short answer is you can never ensure that happens, right? Because the companies can always change priorities. And I think they should be able to do so, right? That's how it is. If that's for the betterment of the company, sometimes things are also outside your control. I think we're seeing a good example right now in the U.S., right? You have a leadership and administration in the U.S., that is going in the very opposite direction than the previous one. And then you can only do so much as a company because end of the day, you're impacted by the surroundings you operate in, right? So there's only so much you can do. And that's a different impact. But I think one thing that I do think that is critical, as I mentioned before, and I think I highlighted this probably in the first chapter in the book is the leadership buy-in, right? The visionary leadership. that sets that to say, you know, this is what's going to create value is important. And again, and then you find the balance, right? You will have one leadership that will say, sustainability is one topic that's going to set us apart from everything else. For us, this is not just a long-term mission. We're going to focus on this 110%, right? Then you might have another organization that will take a different balance approach, right? They might say, okay, you know, we will focus on sustainability, right? but it will mature over the next five to 10 years, right? So we're going to have a lot of our short-term goals taking place as well. But at the same time, sustainability is going to be at the background. And as things start maturing, we're going to mature on this topic as well and so on. So again, as I mentioned, there's not a one size fits all, but I think what's the important part is that you need to start opening your eyes to the world of sustainability and say, how do we start taking this into our organization, right? I don't think that, you know, the same speed benefits everyone, right? It's the same on a marathon. People have different approaches, different tactics of how they're going to run this marathon. And the same on the sustainability. I don't think that because Microsoft do things in one way that Google exactly needs to do them in the same way in order to both be great sustainability examples, right? They can do these things in different ways and still create a huge impact on the topic of sustainability. So I think it's very important. that we recognize that the journey to this is going to be very different. But the key thing is, and I think that, you know, a timeline is of the essence here because our planet needs the efforts from everyone that you get started on this journey, right? And then you mature on this journey step at a time.

SPEAKER_02: 23:54

And I guess the more embedded it is into the operations and the more value it's creating. Absolutely.

SPEAKER_01: 24:01

The more you can create it into your business, the more you can embed it in your business, right? The more value creation you're going to see and the more buying you're going to get from your shareholders, your customers, your employees. So, yeah, that's the good circle you want to get into, right? That once you show the value of this, you're going to get more and more support. You're going to get more and more engagement on with this topic.

SPEAKER_02: 24:22

Yeah. My father, before I started work, he said, my one piece of advice to you is make yourself indispensable.

SPEAKER_01: 24:28

Yeah.

SPEAKER_02: 24:29

And in this topic is the way to go is make yourself indispensable and then nobody wants to get rid of you.

SPEAKER_01: 24:35

Yeah. And I do hope at one point we come to a point that will be a success criteria that if at one point we come where CSOs are not needed because the whole role of CSOs gets embedded with everybody, you know, everybody should be a CSO, right? Like end of the day, everybody should be focusing on sustainability. It shouldn't be that it just needs to get embedded. And I honestly think that when my kids will grow up, I have young kids now, but I think that when they will grow up, sustainability will be so much embedded in them and in their generation that I don't think that CSOs in the way we know them today will be required at that time because everybody would have sustainability on their mind. And a lot of the things that is in focus right now, will just get done automatically.

SPEAKER_02: 25:18

Fantastic. Fantastic. Well, thank you so much for that. That was a really, really interesting episode. Thank you so much, Dave.

SPEAKER_03: 25:28

Thank you for tuning in to Dave and Darm Demystify. We hope you enjoyed the show. Don't forget to like and subscribe and tune in next time as we take another topic and demystify it.