“The bottom line is that growth and sustainability and inclusivity, there need not be trade-offs between them. They need not be antagonistic to each other.”

Ngozi Okonjo-Iweala, director-general of the World Trade Organization

Darina Elencheva is a Strategic Sustainability Management Consultant with over 15 years of experience. She has helped companies across various industries, sectors, and geographies develop and activate their ESG strategies. Darina specialises in translating these strategies into actionable roadmaps, engaging communication, and dynamic stakeholder engagement opportunities.

Question 1: Defining sustainability in today’s world

Fairvue Partners: Darina, sustainability is a term used in many different ways across industries and sectors. From your perspective, how do you define sustainability, and what does it mean in today’s world?

Darina Elencheva: That’s a great question with countless possible answers, depending on who you ask. Many people often associate sustainability with installing rooftop solar panels or switching to electric vehicles. However, these are merely pragmatic measures to address specific environmental issues. In my field, sustainability is about recognising that societal and environmental changes will significantly impact businesses over time — it’s about building a future-proof, resilient organisation that can thrive for many decades amid these changes. For example, we have already seen how public concerns about safety and working conditions in global supply chains and the scarcity of natural resources have reshaped the dynamics between companies, their employees, business partners and suppliers.

Furthermore, having a holistic vision and strategy around sustainability within your company can lead to numerous other business benefits. A focused and ambitious strategy can enhance your performance and external ratings, making attracting ESG investors and Socially responsible investing (SRI) funds easier. It can also make your company eligible for new financial instruments like sustainability-linked loans or specific governmental subsidies. Additionally, it can significantly boost employee morale.

Question 2: The pressures of adoption

Fairvue Partners: Thank you, Darina. In our field, instead of embracing sustainability as a key enabler or integral part of their vision, we see many companies feeling overwhelmed by the pressure to adopt a sustainability strategy and reporting. Why do you think that is?

Darina Elencheva: I see two obvious reasons. Firstly, there has been a surge in much-needed sustainability regulations in recent years, leading to a shift in focus from sustainable business development and product innovation opportunities to ESG reporting and compliance. This shift has significantly affected the dynamics within sustainability teams. For instance, the European Union Corporate Social Responsibility Directive (CSRD) has been widely misinterpreted as a compliance exercise rather than a strategic opportunity, keeping many companies busy collecting, verifying and consolidating a massive amount of new ESG data. This has taken a significant portion of sustainability teams’ resources, time, and attention. Secondly, management teams have had to guide their organisations through some challenging years. The war in Ukraine and the pandemic have underscored the importance of focusing on the energy transition and social well-being. However, financial constraints and a focus on cost have made it challenging to balance short-term expectations with long-term impact ambitions. Furthermore, many senior and board members still lack a comprehensive understanding of the breadth and depth of sustainable business transformation and require training and support in this area.

Question 3: Navigating the chaos

Fairvue Partners: Leading on from what you just said — how should business organisations ‘navigate the chaos’ and deploy an effective sustainability strategy? Where should they start?

Darina Elencheva: A great starting point would be to ask yourself, “What will make my business more resilient, future-proof, efficient, and effective? What will enhance operational excellence across my company?” instead of asking, “What’s sustainable?” Then, identify which ESG issues are the most material to your organisation — those with real sustainable and economic impact — and focus on them as the pillars of your sustainability strategy. It’s possible that you’re already doing many great things but not strategically thinking about and communicating on these points. Additionally, check your ESG ratings. Consult sources like Sustainalytics, MSCI, and S&P to understand the public perception of your sustainability performance. Finally, determine your ambition level. Are you aiming for regulatory compliance, or do you want to lead the pack? Or something in between? This will define the necessary course of action to achieve your goals. After this reflection exercise, you should be able to outline the following:

• The link between your sustainability vision and corporate purpose
• Three to four ESG focus areas based on your material topics
• A simple, actionable roadmap with goals and KPIs to operationalise and track progress
• Ownership regarding governance, strategic and operational responsibilities, and reporting

Question 4: Building a sustainability strategy

Fairvue Partners: Thank you. Is the approach to building a sustainability strategy different across companies, for example, private equity (PE) backed companies versus listed companies and small and medium enterprises (SMEs)?

Darina Elencheva: The starting point is the same for every company when building an effective sustainability strategy. You must identify your ESG material topics, select three or four focus areas, and establish a strong link between your sustainability ambition and business purpose. The differences one may encounter lie in the regulatory and reporting framework that needs to be applied depending on the legal structure and size of the company. For instance, in the European Union, many listed and private companies will fall under the compliance and reporting expectations of the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). In contrast, the US Securities and Exchange Commission (SEC) will require public companies to disclose extensive climate change-related information in their SEC filings.

Question 5: Getting C-Suite onboard

Fairvue Partners: So, how should companies get C-Suite onboard? This is a recurring question that we hear from Investor Relations teams.

Darina Elencheva: To gain support and buy-in from the C-Suite, it is essential to have a clear and well-defined sustainability strategy and roadmap based on materiality. It is also crucial to highlight the potential benefits for all involved, such as enhancing reputation and valuation based on public interest, investors’ preferences for companies with low ESG risk ratings and eligibility for green financing and government subsidies. Finally, it is also vital to establish and maintain good relationships with sponsors on the Board of Directors by keeping them informed and involved in the sustainability journey.

Question 6: Clear and granular communication

Fairvue Partners: Given the breadth and depth of the topic, how can you create clear and granular communication around sustainability?

Darina Elencheva: Building a clear and engaging communication strategy around your sustainable transformation is crucial for keeping stakeholders engaged and willing to contribute. It’s important to avoid using complex language and focus on simple storytelling with real-world examples and visuals to explain abstract concepts and complex data. Tailoring the message to your audience’s interests is also crucial. When it comes to sustainability communications, what is effective is humanising the story and making people the ‘heroes’ in the narrative. Consider the human impact angle, and include best practice examples and case studies from your operations or partnerships. Using a talking-from-experience approach has helped the companies I’ve worked with communicate their sustainability goals and progress, get management on board and foster a strong sense of pride and belonging across a wide range of stakeholders.

Thank you, Darina.

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