The concept of sustainability is not new to Sri Lanka but over the past two decades, its interpretation and implementation have changed for the better.

“Initially, organisations addressed sustainability based on environmental or social initiatives but the emergence of environmental, social and governance (ESG) frameworks – and the alignment of sustainability with strategy – probably took place in the last 10 years,” Associate Director – Climate Change and Sustainability of KPMG Australia Charith Jayasundera observed, during a recent LMDtv interview.

He continued: “I’ve seen a massive increase in the adoption and alignment of sustainability to strategy; a few large and some medium-scale enterprises have seriously gone into it. I think we are on the right track now.”

“Sustainability is always a long-term investment but a lot of people see it as a cost or something that’s ‘nice to have’,” he asserted, highlighting that it should be a strategic approach for organisations instead.

The adoption of sustainability into the core strategy of a corporation has become ever so critical today, and it is fuelled by many factors including climate crises.

Jayasundera explained: “In Europe and even globally, the International Financial Reporting Standards (IFRS) board has imposed a mandatory requirement to report on sustainability disclosure – it is very similar to financial disclosure. At the moment, this is limited to emissions, and there are plans in the future to bring in other sustainability related topics into play.”

“Sustainability reporting was never a mandatory requirement but from 2025 onwards, it’s going to be,” he noted, and added that this implies that organisations have to be very clear and transparent in terms of their data, and have necessary processes in place.

He added: “It can’t be about ad hoc initiatives or something you want to try and test. You need to follow the necessary processes and have sufficient data integrity.”

There are several necessary ingredients that ensure alignment of sustainability with a company’s strategy. Jayasundera places senior management leadership as the main element on his list.

He explained: “Sustainability has to be a top-down approach where the senior leadership, including the board of directors, completely buys into a particular strategy and drives it downwards through the organisation’s hierarchy.”

“Secondly, sustainability has to address all stakeholders and not only your financial stakeholders,” he opined, underlining the need for companies to understand the impact of the organisation on them: “That’s what we call ‘double materiality.’”

A company must also set aside a “significant allocation of capital and resources” when embarking on a sus­taina­bility journey: “You also need to have a couple of sustainability champions to instil a sense of accountability,” he averred.

With these factors in place, the alignment of sustainability and corporate strategy becomes smoother.

He noted: “Then comes ancillary aspects such as having internal processes and systems, to capture data and ensure governance. There have to be multiple tier checks and balances throughout the year because capturing information is almost live today – and that’s when it adds value to your organisation.”

“If sustainability is only driven by a sustainability report or when applying for awards at the end of the year, that’s not the right method.”

In the past, enterprises that embraced sustainability did so on a more voluntary rather than mandatory basis. Jayasundera explained: “Organisations had the comfort of taking their time and trialling methods.”

He elaborated: “Since there are so many frameworks in place and being sustainable is becoming mandatory for organisations, the lead time to get to where one should be has shortened.”

Jayasundera concluded that “it will be a bit of a scramble to get your house in order – especially if you haven’t looked into sustainability seriously.”