A greener economy: how we make sustainability central to business
By Sarah Birrell Ivory & Brad McKay
The coronavirus pandemic could change the world in ways that were unimaginable only a few short months ago. While the climate crisis has been temporarily knocked off the front pages, there is a silver lining in the unprecedented decline in economic activity that has been a casualty of measures to battle the virus. We are now presented with the opportunity to think about how to rebuild greener, more sustainable economies when business activity resumes.
Currently, the approach and commitment to sustainability from business varies dramatically. Most companies now accept the rhetoric of sustainability, if only for PR reasons, and many have adopted strategies to “be less bad” – such as reducing emissions, decreasing resource use and addressing poor working conditions in supply chains. But it is also the case that very few companies have committed to integrate sustainability principles such as the circular economy into the core of their business strategy – that is, to contribute to a sustainable society.
At a time when we need to reduce greenhouse gas (GHG) emissions to zero and stop plundering the earth’s resources, throwaway culture is the backbone of many business models in industries from food and fashion to technology and household appliances.
But what role can individuals within businesses play in actually achieving a more profound change? How can just one person help turn what has been a traumatic period in human history, into one that future generations will benefit from, and create a more sustainable world?
We studied 44 heads of sustainability at companies around the world, exploring what they did to build sustainability into their organisation. Most were responsible for the environmental and social impacts of their companies, and were tasked with addressing these specific areas. Crucially, we wanted to know what was special about those who are able to reach – and alter – the strategic heart of their business. That is, how can individual people contribute to making sustainability a central plank in business?
Three approaches to sustainability
We found that people adopt three distinct approaches: assimilation; mobilisation; and transition. Each approach is characterised by distinct micro-strategies individuals employ to scale up sustainability across their company.
1. Those adopting an assimilation approach focused simply on conforming to the existing organisational mindset focused on profit: examining how sustainability contributed to costs savings, efficiencies or sales. With this approach, sustainability remained peripheral to the organisation’s core strategy.
2. People who adopted a mobilisation approach continued to conform to the existing mindset in some ways, but also began leveraging pockets of the organisation, such as “warming up” specific senior executives, exciting interested departments like research and development, or initiating pilot sustainability projects. They achieved greater integration of sustainability than the assimilation approach, but still not wholesale transformation.
3. Those adopting a transition approach continued to conform to some elements of the existing mindset and leverage specific pockets, but also focused on shaping policies, processes and attitudes towards sustainability principles. They did this through organisation-wide training, communication and recruitment. These individuals achieved a high level of integration of sustainability within their organisations. In other words, they ensured sustainability became a central element of their business model and approach, affecting key decisions and future direction of the company – they made it mainstream.
A pattern of progression
Some built complexity into their approach as they went along – starting with just conforming to the existing mindset in the assimilation approach, then adding leveraging, and finally adding shaping to actually change aspects of the organisation such as the drivers for bonuses or promotion, to form the transition approach. So, rather than finding three distinct approaches, we found a pattern of progression through the three approaches.
While assimilation may seem unambitious, it can be an important first step for the individual to gain “insider” status and for the sustainability strategy to gain credibility in a business. This is important because it demonstrates that sustainability leaders need a long-term plan to achieve proper integration.
We also identified the factors that enabled people to progress, and not remain stuck in the early approaches. The most significant factor was support of top leadership, which stymied progress when absent and facilitated progress when present.
To progress beyond an assimilation approach, introducing outside influences and drivers was key. This included pointing to competitor strategies or actions, and customer expectations or plans. And to progress beyond a mobilisation approach, embedding sustainability into internal company policies and metrics became the focus, such as key performance indicators (KPIs), and recruitment expectations.
Lessons for sustainability leaders
So what are the lessons for heads of sustainability? Integrating sustainability into the strategic heart of an organisation is a long-term endeavour: it needs to be to carefully and tactically planned. Buy-in from top leadership is essential throughout the entire process: developing and maintaining their support and commitment should be the primary and ongoing focus.
Introducing drivers from the external environment is key: leaders should be on the lookout for ways to bring competitor behaviour or client expectations into play, and not be afraid to embrace them opportunistically.
Ultimately, internal policies and metrics are essential in integrating sustainability to the strategic heart of an organisation. Working with HR on performance, recruitment expectations and remuneration/bonus criteria, as well as the finance department on adjusting internal rates of return for long-term projects, is vital to successful transformation.
The post-COVID world may open the door to a number of conversations about mainstreaming sustainability in business. Our research provides a roadmap for those keen to take advantage of this, and to see business become a serious contributor to a more sustainable and just world.
What the coronavirus crisis has shown us is that humanity has the capacity to rise swiftly to global challenges when they are urgent. But it is also the courage and actions of individuals that, in the end, combine to make the difference.