Business
Newsday
Every country in the Caribbean region has a critical role to play in achieving the Sustainable Development Goals (SDGs) by 2030.
While there has been some progress, the overall achievement rate is not meeting the necessary targets.
The private sector’s engagement is essential, as it forms an integral part of the regional economic system.
Yet current contributions and commitments from listed companies in the Caribbean fall short of expectations. This gap in contribution is reflective of broader challenges in transforming business practices and integrating sustainability, as highlighted by Mariana Mazzucato’s analysis in the Transformational Change in Latin America and the Caribbean report for the Economic Commission for Latin America and Caribbean (ECLAC).
According to Mazzucato, the Latin America and Caribbean region would benefit significantly from adopting a mission-oriented approach to its industrial and innovation strategies.
This involves catalysing cross-sectoral investment and innovation towards solving key goals, such as health for all, reducing the digital divide and achieving net-zero emissions across the production system.
The report emphasises the necessity for countries in the region to leverage the SDGs as a guiding framework for economic policy, focusing on overcoming structural challenges and transforming them into opportunities for sustainable growth.
Strategies for the sustainability transition
Embedding sustainability into corporate strategies is more than an ethical choice. It is now a strategic imperative for long-term business resilience and success.
The Embedded Strategies for the Sustainability Transition guidebook, by Stephanie Bertels and Rylan Dobson, outlines a comprehensive framework for companies to realign their operations and strategies with the goals of systems resilience and sustainability. This involves recognising that businesses are part of a larger system and must operate within the environmental, social and economic thresholds that define system resilience.
The guide outlines three main iterative steps for developing embedded sustainability strategies:
Scan
This step involves gathering data on relevant political, economic, social, technological, legal and environmental (PESTLE) forces, their underlying systemic drivers and interactions between them. Companies should explore key systems thresholds to identify issues particularly relevant to them, those requiring urgent action and those that should be monitored continuously.
This process extends beyond tracking potential regulatory shifts to include a comprehensive understanding of systemic trends and their implications in the company’s unique operating context.
Understand
In this step, companies should deepen their understanding of how particular issues may affect their business, how their activities may directly or indirectly affect relevant environmental, social and economic systems and stakeholders’ perceptions of key system thresholds.
This involves consulting with employees, communities, relevant stakeholders, rights-holders, subject-matter experts and organisations in the company’s value network. It includes understanding the health and resilience of underlying systems, identifying strategic business relevance, assessing operational impacts and evaluating the company’s influence on systems change.
Prioritise
This step is about transparently determining where the company will direct its efforts based on the strategic relevance of particular issues, where the organisation has the greatest operational or value chain impacts and where it is best positioned to positively influence underlying systems.
Prioritisation is critical, as companies have limited resources and need to make choices about where to allocate them, building on the knowledge gained from the Scan and Understand steps.
The prioritisation step in an embedded sustainability strategy is critical for ensuring that a company’s actions align with its most significant impacts and opportunities for positive system change.
This process transcends traditional business practices by addressing systemic challenges and opportunities rather than focusing solely on immediate financial gains or risks.
Shortcomings of traditional materiality assessments
Historically, many companies have used materiality assessments to guide their sustainability efforts. Frameworks like those provided by the Global Reporting Initiative (GRI) and International Sustainability Standards Board (ISSB) emphasise materiality as crucial to sustainability disclosure.
However, these approaches often fall short in guiding strategic decision-making, as they focus on what needs to be disclosed and typically do not incorporate systemic thresholds into their prioritisation processes.
The conventional approach to materiality involves stakeholders ranking issues based on perceived importance, which can result in a narrow focus on immediate stakeholder concerns rather than broader systemic impacts. This process, while useful for identifying topics for disclosure, may not effectively highlight critical systemic changes or emerging risks, leaving companies and people vulnerable to unanticipated shifts and challenges, as well as undermining their attempts to increase well-being impact. Over-reliance on this process can lead to strategic decisions that are disconnected from the broader context.
Radar: An alternative approach
To address these shortcomings, an alternative prioritisation method known as the Radar has been piloted with companies.
This approach aims to provide a more systematic and comprehensive evaluation of a company’s strategic relevance to emerging environmental, social and governance issues.
Implementation of the Radar begins with internal teams assessing the relevance of various issues using existing data.
This initial step often reveals gaps in understanding, which can then be addressed through further research and engagement with communities of practice. All relevant stakeholders are then identified and engaged. By incorporating the assessment of actual and potential changes for diverse stakeholders, companies can refine their understanding and ensure their prioritisation process is comprehensive, transparent and accountable.
Social Value International’s standard on applying principle two – understand what changes – provides best-practice guidance on engaging relevant stakeholders to understand both intended and unintended outcomes (changes) resulting from a company’s activities as experienced by stakeholders.
Crucially, the Radar approach requires transparency in how priorities are determined.
This means openly discussing how factors such as regional and operational contexts have influenced prioritisation decisions.
For example, a company operating in water-stressed regions may prioritise its impacts on water quantity more heavily than other issues.
However, prioritisation does not mean filtering, as is often done with disclosure materiality, where issues not deemed material are not measured.
Engagement with stakeholders on all relevant issues is maintained, and all relevant issues continue to be tracked.
Call to action: Setting targets and integrating sustainability
Having developed an embedded sustainability strategy and established a clear sustainability statement, companies need to set concrete targets and integrate them into their broader business strategies.
The SDG Impact Standards offer a framework for this process, guiding businesses through the steps to ensure their operations contribute positively to the SDGs and broader sustainability goals.
By aligning business strategies with these standards, companies can ensure they are not only mitigating risks but also capitalising on the opportunities presented by a sustainable future.
The integration of sustainability into core business strategies is no longer optional – it is essential for long-term viability and success.
Companies in the Caribbean and beyond must take definitive steps to align their operations with the principles of the UN SDGs. By doing so, they can contribute to a more resilient and equitable future for all.
Dr Axel Kravatzky is managing partner of TT-based Syntegra-360 Ltd, vice-chair of ISO/TC309 Governance of Organizations and president of EUROCHAMTT.
He enables companies to flourish through integrated governance, certified management systems and transformational leadership.
