Your DMA is done, now what - turning your DMA into action
Many companies have now finished their (first) Double Materiality Assessment (DMA), a significant milestone! Sustainability disclosures are undeniably complex, yet the increased transparency they provide makes it even more critical for companies to demonstrate progress. Therefore, your disclosures and strategy should not live in isolation of each other. Case in point is the EU's Double Materiality Assessment (DMA). As legislation on disclosures is becoming ever more stringent, the EU aims to provide focus in ESG disclosures by mandating companies to determine the key topics to report on through a DMA. While this is critical for disclosures, it should also play a key role in your overall strategy.
Now's the time to turn your DMA into action, ensuring not only disclosure on identified topics but also demonstrating progress to all relevant stakeholders! In this article, we'll cover setting ambitious goals, translating them into actionable initiatives, prioritizing your starting point, establishing compliant disclosures, and building a trustworthy communication strategy.
Set ambition & targets
As defined in the CSRD, each company has to set concrete targets for their material topics. In doing so, make sure to define your bold ‘North Star’ to create a goal to work towards. But also add how you plan to get there by defining short- & medium-term ambitions next to your ‘North Star’. For example, if you aim to be carbon neutral across the full value chain by 2050, also indicate where you want to be in 2030 (all owned operations carbon neutral) and 2025 (succeed at selected energy-efficiency initiatives).
Translate into actionable initiatives
Once you have ambitious goals in place, it's time to translate them into actionable initiatives that will drive progress. To achieve this, make sure to balance your initiatives over 3-horizons: optimization, transformation, and innovation. Optimization initiatives focus on improving sustainability within the existing business model. If you want to improve circularity as a fashion brand you can think of using recycled fabrics. Transformation initiatives change existing propositions to serve customers better and more sustainably, so in our clothing brand example this could entail selling garments that would otherwise be wasted due production errors at reduced prices. Innovation initiatives develop new sustainable business model, for our clothing brand this could mean launching a new proposition which collects, sorts and sells used garments.
By starting simultaneously with initiatives on all three horizons, you balance short-term optimizations of the current business and long-term disruptive newmodels.
Define where to start
Consciously decide where to start initiative implementation and make it small. Transforming your business is 80% about people, and you simply cannot change how everyone works all at once. Establish a ‘lighthouse’ (a small, controlled environment, such as one product or market) where you can test the new proposition and enablers to solve key uncertainties. On this level, you can also already start defining what organizational change it takes to make your efforts a success. Crucially, engaging C-Suite executives and cross-functional teams from the outset ensures strategic buy-in and alignment across the organization.
Set up sustainability disclosures
All companies falling under CSRD mandate will need to feed their material topics into compliant disclosures and set KPIs. We would encourage you to avoid overwhelming yourself with 170 KPIs to measure every possible sustainability figure, and rather start with focusing on the most impactful KPIs and build out from there. Remember, it's a continuous journey! Make sure your KPIs are relevant and actionable for the business as well. When it comes to allocating responsibilities within your business to do so, you don't need to reinvent the wheel – instead, leverage your existing finance reporting structures.
Set up an honest & trustworthy communication strategy
We understand that communication on sustainability initiatives is not without (perceived) risks and companies face hesitance to communicate openly. Customers increasingly question the trustworthiness of promoted initiatives and the media often scrutinizes businesses after publishing their efforts. Aim to be as specific and measurable as possible in your communication, by backing your claims up with data and communicating how you plan to reach your big goal and add targets. Finally, and perhaps most importantly, be honest about sustainability limitations.
Conclusion: Interpret your DMA as a starting point for action
Completing your DMA is a significant milestone, but the true power lies in using its insights. So don't wait! Now is the time to transform your findings into a roadmap for sustainability impact. Set ambitious goals, translate them into actionable initiatives, and prioritize where to start. Establish compliant disclosures and build a trustworthy communication strategy to engage stakeholders. After all, sustainability is a journey, not a destination. By taking action on your DMA, you'll be well on your way to achieving true sustainability leadership.
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