Sustainability Strategy in the Annual Report and the Project Portfolio
Corporate annual reports and special sustainability reports nowadays describe strategies such as the creation of environmental value, the protection of natural capital (petroleum as a feedstock rather than a fuel, replacement of coal and petroleum by natural gas), the sustainability of agricultural raw materials such as coffee or cocoa, the reduction of waste, water usage, and air pollution. Movement towards green energy is often discussed, local natural gas or non-fossil fuels. Investors reflect this trend, Stanford University for instance, has recently divested from coal companies.
Annual reports and websites also contain examples such as weight reduction in aircraft and motor vehicles, or production processes producing more durable materials or making use of no-dig underground pipes. Food packaging advances allow simpler distribution and longer shelf-life. These claims are an important feature of corporate communication, but how can they be linked to the content of the innovation project portfolio? Does the sustainability of your portfolio jump out and position you clearly?
In her post Roadmaps and Scorecards as Innovation Tools , Zahra Manshande has described the importance of scorecards, employed by most of Sopheon's customers. Often based on examples derived from Dr. Robert Cooper's Stage-Gate models, these generate a Project Attractiveness score, for instance, which can be used to compare and prioritize innovation initiatives. A significant number of our clients have, however, also created further scorecards specifically covering topics of sustainability:
- The impact on company operations: Is there some reduction of waste or energy usage and, if so, how much?
- The impact on raw materials: To what extent can the materials be recycled, or is use made of green or natural raw materials?
- Keeping up with new or anticipated legislation: Is the company ahead of this legislation, or lagging behind, in comparison with the competition?
- Products for environmental applications: Can we minimize environmental damage, or prolong the life of existing products?
- Consumer safety and durability
- End of life: Can the product be easily disassembled or recycled?
These topics can be used not only for products, but also for processes and underlying technologies. Apart from the scoring, of course, the details can be more fully described in deliverable documents. This enables the team to link the innovation even more tightly to the corporate or business unit strategy.
The sustainability scorecards can be used early on, for example to assess ideas or concepts, and updated as more research is done. The topics mentioned above are, in my experience, those most frequently addressed, but considerable discussion is often required to create a relevant set of possible responses. Users may also wish to weight the different topics.
A slightly more complex approach is to formulate the topics in such a way that each is systematically compared with the competition, in particular with an incumbent market leader. This leads to a more competitive score.
When presenting a new project to the gatekeepers or other executives, a high sustainability score may well be considered a selling point, both for small improvements and highly innovative initiatives. However, most customers are hesitant to integrate the sustainability score in the general list of project attractiveness, I suspect on account of the fact that it is new and executives feel uncertain about the early version. For this reason, the automated sustainability scorecard will usually be set up to generate a general sustainability score and insert this separately in the project portfolio. It can then be used to generate graphical views showing high scorers or, for instance, labor-intensive projects with high scores. Links can thus be created between resource usage and sustainability. Of course it is possible to show the scores of the individual topics listed (e.g. water usage), but this level of discussion is normally too detailed for portfolio managers.
The use of automated scorecards and the generation of a sustainability score in the portfolio enables all those involved with the project at any level to clearly situate the effort within the company's sustainability strategy.