For multinationals, the question is not whether to embrace sustainability but how to do so. As many begin implementing local market strategies into their global corporate sustainability plans, here are some things to consider.
There has been a rapid increase in multinational businesses wanting to accelerate progress and deliver their global sustainability ambitions by turning their attention to the translation of their global corporate sustainability strategies into local market strategies and plans. It’s a logical next step for many global companies – but it’s not an easy task.
Irrespective of the company size, structure or culture, we are noticing many similar challenges and questions arising around how to do this. More specifically, how to meet the needs of local markets whilst still moving the global brand in one unified direction and how to manage a global strategy roll-out across markets at different stages of maturity. And the questions concerning the role of sustainability in local markets are not just coming from the global sustainability teams but from local market activist employees and marketeers who understand that sustainability can unlock internal and external brand and business opportunities in the market.
The challenges businesses face in localising and rolling out their global strategies are reflected in what they are willing, and in many cases able, to disclose in their sustainability reports and supporting communications channels. Very few have expressed how their global sustainability strategy will be and is being, translated and activated at the market level. Most have inspiring case studies showing how one aspect of their pillar has been implemented at a local level, but it rarely goes beyond this and data can be inaccurate or incomplete.
There are key issues that companies should be aware of while taking action to localise global sustainability strategies. By understanding these and considering different approaches to address them, it will deliver rewards at both the global and local market levels.
1. Global sustainability strategies are a game of global averages which are shielding businesses from their true picture.
Global sustainability strategies need to be broad and high-level enough to contain all the nuances of the different markets they operate in. The strategy is, in essence, a company average – but averages are holding us back from the transformation that’s needed to meet global goals. They don’t give a full picture of the varying levels of change needed across differing locations. This approach takes away focus and investment from the solutions and the regions that need it most, and where the greatest impact and progress can be made. There can also be an inherent bias leading to a focus on the most pressing social and environmental issues of where the corporate headquarters is located. Indeed, at Davos, many corporate leaders acknowledged that a ‘‘one strategy fits all’’ global corporate approach is not going to drive innovation and deliver meaningful progress, and a regional picture of impact and action is needed (and is missing).
This doesn’t mean global sustainability ambitions are not important. Global teams just need to understand that their location, and the maturity of that market, will often influence the scale and type of ambitions being set and not adequately consider other local markets.
We are seeing awareness and interest grow from local markets wanting to understand how they can take their company’s global sustainability goals and strategy and make them relevant to their local stakeholders. One Australian food and drink business conducted a local materiality assessment that used global issues as a basis for stakeholder engagement. It enabled them to go deeper into the high-level company-wide topics and understand how the specific topics translated to the local market. By understanding which aspects to dial up or down, and what sub-topics were most material to the market, they were able to interpret their global strategy in a way that resonated with local understanding and needs. This local market information can then be used by global teams to prioritise resources and efforts.
2. The different regulatory, cultural, risk and economic contexts of each market will influence its sustainability focus and approach. At the same time, local regulations are becoming global requirements, impacting more than just one market, and can’t be viewed as low priority by global corporate teams.
Multiple factors impact a market’s approach to sustainability, yet the specific market regulatory environment is a significant one. Nations implementing ambitious net zero or single-use plastic targets, something that is simply compliance in one market, may be bold and transformational in another. Risks and opportunities also differ by market, as do consumer and stakeholder expectations when it comes to environmental, social and governance framework (ESG).
An added complexity is that local regulations are now becoming global requirements and impacting markets far beyond one local market. For example, the Germany supply chain act, which came into force in January 2023, means that any business that is a supplier for a German company that has global impacts up and downstream will need to comply with these new requirements (relating to human rights and environmental risks and violations). As the EU prepares for its own supply chain act, businesses can no longer keep their focus siloed by market. Global corporate teams need to be able to understand the cross-market implications and take appropriate action.
When setting global ambition levels, corporate teams should be engaging with local markets to understand the implications of global ambitions in those markets, including how the global strategy will be implemented in each market. Considering and answering these questions will support prioritisation and implementation plans at a global and local level. For example, will each market be expected to deliver against the global targets equally? Will there be a minimum standard that all markets need to meet but where some markets will be hero markets? Are markets able to adapt the strategy depending on their regulatory or cultural context? And to what extent can global teams support local markets to set and deliver sustainability strategies through financial and resource support?
3. A rigid top-down, centralised global-to-local market model when rolling-out sustainability strategies constrains understanding, action and progress.
The idea of ‘‘local vs global’’ may, in itself, be an outdated concept. Is local confined to a country, a region, a state or a city? The differences between these localities can be complex. And sometimes similarities can be stronger between two countries in different continents, than between two cities in the same country. When working with a global strategy at a local level, common frustrations encountered are around the slow responsiveness of global teams, the reluctance of ambition, and the centralisation of sustainability resources. An approach that allows markets to retain flexibility and freedom to set their own goals, whilst having overarching, thematic goals, has been a more promising technique allowing markets to adopt a matrix approach rather than relying on top-down pressure.
Thinking three-dimensionally allows one market to look horizontally for support in similar markets. Companies have found that other markets with similar politico-cultural makeup often have learnings that are invaluable in understanding how to set a localised strategy and the allies aren’t always the geographically closest ones. For instance, the aforementioned Australian businesses found more similarities within the Canadian market than they did with closer neighbours. When sustainability teams are lean and global strategies rely on a law of averages, harnessing learnings from similar markets can be extremely valuable.
Finally – be bold and brilliant.
Working through these questions, challenges and opportunities reinforce the importance of designing bold and brilliant strategies that are not top-down but that are agile and adaptive. They must be built on incremental roadmaps and supported by strong internal and external governance models, which are based on constant feedback loops across the company ecosystem. This will ensure global and local teams have the flexibility to respond to internal and external priorities, can create relevant and actional narratives that go beyond averages and set a clear direction so that everyone, regardless of location, can get behind them and be a part of delivering progress.
This article was originally published on 3 October 2023.
About the Author
Danielle Allen, Sustainability Consultant, Salterbaxter
Danielle spent five years as a brand strategist before moving into the sustainability space working across ESG and brand strategy, double materiality and data-driven projects. Danielle has also worked in renewable energy consulting and has an MSc in Environment, Politics and Society from UCL, and a BBA in European Management.
