A2.5.4 Continued (2)
Step 4: Develop your business case
To create a ‘whole of development’ business case you should determine estimated capital costs and operating costs. Determine and evaluate costs, benefit and risks of both the ‘Business as Usual’ and the sustainability approach using a business case.
When developing your business case, it is important to:
- Use technical working groups to estimate the ‘Business as Usual’ delivery procedures and related costs of specific infrastructure.
- Engage technical consultants to specify the nature of specific sustainability options.
Several steps are needed to build a business case that focuses on opportunities to create and conserve value:
Step 1: Identifying Significant Impacts
The route map starts with an analysis of the company’s current and planned activities. This step is designed to provide a better understanding of the types of activity that are generating, or have the potential to generate, significant impacts on environment and society.
Step 2: Identifying Key Issues
This involves an analysis of identified impacts to establish whether they are, or could become, key issues from an external perspective. Included in this step is an option to confirm internal findings using external dialogue techniques.
Step 3: Establishing Sources of Potential Threat and Opportunity
Step 3 is designed to highlight issues that present potential sources of opportunity as well as threat. At this stage, most companies would normally apply internal controls to manage identified threats. However, the route map provides a basis for further analysis before a decision is taken on a preferred business response.
Step 4: Identifying and Prioritising Proposed Actions
The next task is to identify proposed actions within a strategic context, assessing and prioritising them based on their potential to create, as well as conserve, value. Suggested techniques for carrying out an analysis of potential benefits draw extensively from current practice in the equity market sector. The main output from this step comprises a short-list of proposed actions for inclusion in a business case, tested in terms of their ability to generate additional benefits to a company’s operating strategy.
Step 5: Highlighting Actions with Strategic Implications
The penultimate step is to review the short-list of proposed actions to assess whether they offer opportunities to create and conserve value in strategically important parts of the business. It also aims to emphasise the fact that under some circumstances, proposed actions may also point towards underlying weaknesses in aspects of overall business strategy, prompting a more fundamental review of long-term strategic options. While companies may elect to include a broader range of actions in their business cases, this step will help senior managers identify the range of actions that are likely to be of most direct interest to financial stakeholders, and equity market managers in particular.
Step 6: Determining Preferred Actions for Inclusion in a Business Case
The final step is to establish a preferred list of actions for inclusion in a business case that focuses on logical and viable options. A series of tools is suggested, again drawing from current company and equity market practice. These are designed to help senior managers identify the optimal combinations of proposed actions, based on direct financial measures, or described in terms of links with key indicators of financial performance.
Having completed this final step, senior managers should have a good understanding of the range of actions that are most likely to generate business benefits. This information will, in turn, provide the basis for a business case for improved performance in ethical, environmental and social dimensions that focuses on opportunities to create and conserve value in strategically important areas of business activity. In some instances, it may also point towards the need for a more fundamental review of overall company strategy, supported by evidence of the potential to destroy or limit value in the event that a company chooses to do nothing.
Source: “To Whose Profit? Building a Business Case for Sustainability”, WWF-UK, 2001
The IEMA consider that the presentation “Building the Business Case for Sustainability” may be of interest to delegates. This is available here: A2.5.4 Building BC for Sustainability