3sustainability

Sustainability Governance

  • Sustainability Governance is the system that manages the environmental and social interactions of entities that results in the entity’s sustainability performance.
  • Sustainability Governance is the system through which entities are managed through their internal regulations, and society evaluates them from the point of view of sustainability.
  • Sustainability Governance is managed from the implementation of policies, strategies, processes, decisions, and behaviors, which determine the entity’s performance in the areas of sustainability.
  • The benefits of Sustainability Governance are measured in the better economic performance of the entity thanks to its better relationships with the social and environmental performance perceived by the actors of the economic system. A Bain study shows that 90% of companies think they have to change their business model to adapt and compete from sustainability.
  • Triple Sustainability helps entities to develop, improve and manage their systems to deliver the best outcomes.

What is Sustainability?

Conditions for Sustainable Economy

  • Generates more Revenue than Operational Costs including:
    • Full Social Costs.
    • Full Environmental Costs.
  • Granted Social License.

Conditions for Sustainable Society

  • Social System functioning at an acceptable level of Social Well-being.
  • Wealth generated covers the costs of the Social Well-being.

Conditions for Sustainable Environment

  • Renewable resources harvest rate is lower or equal to production rate.
  • Non-renewable resources are recycled-reused.
  • Pollution rate is lower or equal to natural treatment rate without harm.
  • Biodiversity indices are stable.

What is Sustanibility Governance

Sustainability Governance

Sustainability Governance (SG) is the system by which entities are 1) managed through their internal regulations and 2) held accountable for their actions from the sustainability standpoint.

  • S.G. Sets the System:
    • Policies and Goals.
    • Identification of Risks and Opportunities.
    • Organizational Structure.
    • Management Plans.
    • Stakeholder Engagement and Communication System.
    • Monitoring.
    • Reporting.
  • SG implements the system through the behaviors of the entity members at all levels.

Objectives for Sustainability Governance

Objectives for Sustainability Governance

  • Enhance Performance:
    • Achieve Endless Profitability.
    • Hold Indefinitely a Social License to Operate.
    • Operate Indefinitely within the boundaries of Net Zero Environmental Impact.
  • Involve all Stakeholders in the creation of value for the company and for themselves.
  • Increase and Maintain the portion of company market value based on Intangibles.

Stakeholders in Sustainability Governance

Project Level Stakeholders for Sustainability Governance

  • Project Sponsor who invest in equity.
  • Equity Investors.
  • Off-Takers who receive the product.
  • Lenders who lend the funds.
  • Multilateral Agencies and Export Credit Agencies who also lend funds.
  • Project Finance Facilitators:
    • Legal Advisors.
    • Technical Advisors.
    • Financial Advisors.
  • Regulatory Agencies who grant the permits and licenses.
  • EPC or Construction Contractors who may engineer, procure and construct.
  • Equipment Suppliers.
  • Insurance Providers.
  • Hedge Providers.
  • Operator who will operate the facility once constructed.

Company Level Stakeholders for Sustainability Governance

  • Shareholders.
  • Customers.
  • Communities.
  • Franchisers / Subsidiaries.
  • Lenders .
  • Company Advisors:
    • Legal Advisors.
    • Technical Advisors.
    • Financial Advisors.
  • Providers.
  • Press / Media.
  • Regulatory Agencies who grant the permits and licenses.
  • Equipment Suppliers.
  • EPC or Construction Contractors who may engineer, procure and construct.
  • Competitors.
  • Operation and Maintenance.

Governmental Organization Stakeholders for Sustainability Governance

  • Citizens.
  • Press / Media.
  • Civil Servants.
  • Communities.
  • Departments of the Administration Below.
  • Departments of the Administration Above.
  • Members of Parliaments.
  • Advisors.
  • Non-Governmental Organizations (NGOs).
  • Business Associations.
  • Lobbies.
  • Labor Unions.
  • Regulatory Agencies.
  • Service Providers.

Risks for not implementing Sustainability Governance

Project Level Risks

  • Worst lending terms or even no loan financially feasible.
  • A borrower is unable to repay a loan due to Environmental & Social risks.
  • Non Technical disruptions causing delays and increased implementation costs.
  • Reduced benefits due to unexpected Environmental & Social costs.

Company Level Risks

  • Worst lending terms or even no loan financially feasible.
  • Legal complications, fees, and/or fines for rectifying social and environmental damage.
  • Reputational issues may reduce company value.

Governmental Organization Risks

  • Citizens unsatisfied with policies and performance.
  • Legal complications, fees, and/or fines for rectifying social and environmental damage.
  • Reputational issues may force the governing party to exit.

Benefits of Sustainability Governance

Top Benefits of Sustainability Governance

    • Increased Value of the Project, Company or Entity.
    • Better Decisions on Capital Allocation.
    • New Angles for Strategic Planning to Minimize Risks and Exploit Opportunities.
    • Strategic Alliances and New Markets through Circular Economy.
    • Increased Business Resilience and Continuity.
    • Sustainability Materiality Understood.

 

  • Strengthened Stakeholders Relationships.
  • Enabler to meet Social Expectations.

Sustainability Governance Implementation

Sustainability Governance Implementation

The Sustainability Governance implementation process is conceptually summarized and further explained.

Two complementary approaches should be the basis to properly develop your Sustainability Governance System:

  • The Adaptive Governance (AG); and
  • The Plan-Do-Check-Act (PDCA).

Adaptive Governance

The Adaptive Governance approach is an intentional approach to making decisions and adjustments in response to new information and changes in context.

The wheel presented on the right is the way USAID operationalized the concept in a very practical way.

Plan-Do-Check-Act Approach

The Plan, Do, Check, Act approach provides a balance between the systems and behavioral aspects of management:

  • Plan. Define and Implement the Sustainable Management System (SMS).
  • Do. Follow Plans and Procedures and Register both Actions and Results.
  • Check. Verify Compliance with the SMS. Review Results and Deviations and Propose Changes.
  • Act. Implement Proposed Changes.

Standards for Sustainability Governance

United Nations Global Compact

Equator Principles

IFC

Sustainability Reporting Standards

Sustainability Assurance

What is Sustainability Assurance?

Sustainability Assurance

Objectives for Sustainability Assurance

Objectives for Sustainability Assurance

Stakeholders in Sustainability Assurance

Project Level Stakeholders for Sustainability Assurance

Company Level Stakeholders for Sustainability Assurance

Governmental Organization Stakeholders for Sustainability Assurance

Risks for not implementing Sustainability Assurance

Potential

Benefits of Sustainability Assurance

Top Benefits of Sustainability Assurance

Verification Sustainability Assurance

Sustainability Assurance Verification Process

Standards for Sustainability Assurance

Sustainability Assurance Standards