Sustainability Leadership

What’s That?

“Anyone who takes responsibility for understanding and acting upon complex sustainability challenges qualifies as a sustainability leader whether or not they hold a formal leadership position or acknowledged political and social-economic influence.”
Mary A Ferdig

In last month’s newsletter, we showed how sustainability investing is not only a growing endeavour but also an endeavour that requires changes in mindsets and behaviours, if we are to succeed. As there is no stronger force to influence mindsets and behaviours than leaders, in this edition we will ask some questions around what sustainability leadership actually means and looks like, both at the organisational and the individual levels.

Starting with the organisational level, the 2020 survey conducted by GlobeScan’s and SustainAbility offers a useful window into the current state of the evolution of the sustainability agenda:

• Climate change, biodiversity loss and water scarcity remain the most urgent sustainability challenges according to experts, with climate change generating strong concern almost universally. In the wake of the global pandemic and economic recession, concern about poverty, economic inequality, access to healthcare and food security – along with the spread of infectious disease – are increasingly seen as very urgent. The challenge of diversity and inclusion also receives increasing attention among sustainability professionals in 2020.
• Experts’ perceptions of the private sector’s contribution to sustainable development continue to decline, although less sharply than last year. For the first time in years, the United Nations is also seen as contributing less to sustainable development. Research/academia and citizen-led movements have seen their perceived performance steadily increase, while national governments and institutional investors continue to be perceived as contributing the least.
• For the tenth consecutive year, Unilever is most frequently named by experts globally as a corporate sustainability leader, but the list has seen some interesting shifts this year with four new companies recognised for their efforts. After dipping in 2019, mentions of Unilever have rebounded, while Patagonia and IKEA have kept their second and third positions. Thirteen companies are mentioned by at least three percent of experts, with four new companies reaching this threshold this year – Microsoft, Ørsted, L’Oréal and Tata.
• While having sustainability as part of the core business model continues to be key to sustainability leadership, setting ambitious targets and committing to the SDGs is also increasingly recognised by experts and is now seen as an equally significant attribute of leadership. As we confront a global pandemic with resulting economic hardship, efforts around communications and advocacy as well as health, social engagement and human rights have also become increasingly important criteria.

While there is a clear sense of urgency to address sustainability, it seems that only a small number of organisations are proactively engaging with this challenge: “Only 17 percent of respondents believe that companies are doing their part to advance the sustainable development agenda, with the private sector’s reputation steadily declining after peaking in 2018.” In addition there is a worry that the economic and social challenges created by the pandemic – which is far from over – have led to the eyes being taken of the ball over the overarching, and perhaps even more critical, challenge of achieving true sustainability for our planet.

In this webinar you can hear representatives of Unilever, Tata, Natura, Ikea, SustainAbility and GlobeScan discuss the insights on the 2020 findings, and answer questions on the current and future state of sustainability leadership.

• Ensure decent working conditions – living wages, healthy & safe workplace, equality, personal growth – not only for the organisation itself but also up and down the supply chain.
• Get involved in the community – cultural activities, engaging and involving all stakeholders including future generations.
• Ethical foundation – a strong moral compass, exemplified by leaders at all levels of the organisation.

    2. Economic sustainability

• Financial robustness – focused on securing a future-proof business model.
• Future-orientation – keep an eye on emerging trends, not least broader contextual ones such as  the concepts of circular, social, green and sharing economies.
• Embeddedness in economic structures – be aware of the wider context – competitors, subcontractors, clients and administrations,  in short, all stakeholders, and seek ways to positively influence it.

    3. Environmental  sustainability

• Protection of the biosphere –  includes compensating for negative externalities, particular when legal frameworks are lagging.
• Improved resource management – shifting to renewable resources..
• Design for life cycles – designing for longevity, re-usability, recyclability and ease of repair.

    4. Procedural sustainability

• Connected leadership – understand requirements for operating in a VULA (Volatility, Uncertainty, Complexity, Ambiguity) context – which means ensuring that everyone understands their own contribution, and those of others, and has the right skill and mindset to take action.
• Diversity – in order to achieve sustainability a wide variety of skill and mindsets are required, diversity is essential; assessing diversity, norms and practices (e.g. discrimination or harassment) is the first step managers can take.
• Precaution – consider unindented consequences and morally unacceptable harm to humans or the environment.
• Transparency – clearly communicating targets, challenges and achievements can avoid reputational damage.
• Innovation – innovation is a key factor of production alongside the classic triad of soil, capital and work.
• Inclusion and participation – identifying and involving all affected stakeholders.

    5. Personal sustainability skills

• Mindfulness – being aware of, but avoid identifying too closely with, one’s own thoughts, feelings and sensations; being aware of one’s own limitations and abilities, listening deeply, being compassionate.
• Continuous learning – remain curious, learn from experience – and be open and courageous enough to apply new learning and insights.
• Adaptability and flexibility – letting go of a belief in ‘the one best way’, look for appropriateness, and to rebalance nature’s systems.
• Sense of responsibility and ethics – following key values helps to give orientation as well as find inspiration for the future.
• Thinking in multiple perspectives – requires openness and willingness to listen to those with different viewpoints.
• Team building – this requires for trust, respect and appreciation to be built between people of diverse skill and mindsets.
• Formulating vision – it is essential that the vision is clear, shared and meaningful.
• Building networks and trust – worth mentioning this again as it is absolutely critical.
• Facilitating – the role of leaders shifts from being the ones who know it all to being the ones who support and enable others (servant leadership).
• Understand social settings – understand the specific context, and the history.

Moving on to the individual level, perhaps a first question to ask is, why leadership for sustainability is actually different from leadership generally. David Key and Morag Watson of Natural Change have identified 5 reasons:

1. The degree of complexity that needs to be understood and embraced – The sustainability web includes ecosystems, social systems, beliefs, values, stories and identities, and all of them are interconnected. It takes a unique and highly specialised form of leadership to navigate such complexity. Anything generic is inadequate.
2. The degree of novelty that is encountered – Leadership approaches need to be able to cope with completely new and wildly random events – without depending on being able to predict or control them.
3. The need for embodiment and sense of connection – Sustainability leaders must develop a tangible and conscious personal relationship with the rest of nature.
4. The ability to foster specific cultural characteristics – Sustainability leadership development needs the courage the challenging of our dominant culture… to its core. If it looks like business as usual, then it is.
5. A time perspective that goes against grain  – Sustainability leadership has to overcome a culture of impatience and convenience, and pursue ambitious and demanding long-term goals instead.

In their publication “Sustainable leadership: talent requirements for sustainable enterprises” (2015) Russel Reynolds introduce three prerequisites for sustainability leaders:

• Sustainability mindset
• Systems thinking, and
• Relationship building;

While all are important, the ‘mindset’ is of particular importance as it is here that the greatest departure from traditional leadership thinking can be seen. The cornerstone of a mindset for sustainability leadership is a shift from ‘me’ to ‘we’, encompassing the following 7 characteristics:

• Enlightened self-interest – valuing and considering the interests of ALL stakeholders.
• Long-term orientation – not being pressured by those with short term agendas.
• “Presencing” –  this require a few more words: the concept of ‘presencing’ is is linked to Otto Scharmer’s Theory U, and is about achieving one’s (as individual or organisation) highest future potential through a process of ‘letting go and letting come’. Well worth checking out – see also the image below.

• Courage – ‘Courage is not the absence of fear but rather the assessment that something else is more important’ – Franklin D Roosevelt.
• Integrity – pervading both, the professional and the persona.
• Open-mindedness – approaching the ideas and insights of others without prejudice or judgement.
• Transparency – hiding neither the good nor the bad.

Both lists emphasise mindset and soft skills rather than the hard skills that much of today’s management and leadership education and development focuses on.

A tall agenda for both organisations and individuals – and an exciting, worthwhile and absolutely essential one.

Given this impressive honour roll, it’s perhaps no surprise that the country also comes very high in the Good Country Index, the Rule of Law Index, and the Human Development Index, all of which feature sustainability metrics in their calculations.  It also suggests there is much to be learned from the Swedish approach to sustainability.

That’s certainly the hope of Henrik Henriksson, CEO of Scania, and Elaine Weidman-Grunewald, long-term sustainability veteran and founder of the AI Sustainability Center, who explain the Swedish approach to sustainability leadership in their recent book .

Sustainability Leadership
The book highlights how Swedish organisations have come to lead the way in terms of corporate sustainability, and includes findings and analysis from dozens of CEOs, entrepreneurs, and policymakers.  Their sustainability leadership model consists of three core elements:

• The foundation – where your purpose is discovered, your footprint understood, and trust built throughout the organisation.
• The core – where sustainability is embedded into the core of your organisation and then made real by linking it to sales and customer value creation.
• The leap – where a societal and planetary lens is adopted to take things to another level via unconventional partnerships that amplify your efforts.

The Foundation
The first part of establishing your foundation as a sustainable leader is to have a very clear idea of your purpose as an individual and as an organisation.  This is the “north star” that guides everything else.  For many years this has been seen as fluffy and inconsequential, but not only do younger workers today demand organisations with a clear purpose, but those same organisations have been shown to outperform peers who lack such direction.

By working with stakeholders, this purpose can then manifest itself in a series of commitments and ambitions that underline that you’re not just talking the talk but are determined to deliver on your purpose.  This delivery is then crucial in underpinning the trust that stakeholders have that you are serious about sustainability.

The Core
A baseline goal for any sustainability initiative is for it to become a part of the DNA of an organisation.  This includes incorporating sustainability in the strategy, in the business model, and in the value proposition.  As with most change initiatives, there are areas that can deliver the best bang for the buck, and the authors suggest these should be focused on first to build momentum and support for sustainability internally.

It’s also important to ensure that these efforts are oriented in such a way that they drive sales.  Just as younger employees want their employer to have sustainable leadership, so increasingly do customers.  We spoke in last month’s newsletter about the growth in sustainable investing, and this is a perfect illustration of the growing value being placed on sustainability by society.

The Leap
The final step then underpins the ambition the organisation and its leaders have for their sustainability initiatives.  The authors highlight that the sky really can be the limit and it is perfectly feasible to aim for the sky and change the world with efforts that have an exponential impact.

The authors urge leaders to achieve this via a societal ecosystem approach, which can both help organisations to better understand how they fit into the sustainable development goals and how they can work to make a positive impact towards the achievement of those goals.

The book contains lots of examples that bring the strategies and operational tactics to life.  As we emerge from the Covid-19 pandemic, there is a clear desire to rebuild the world in a better way than that which preceded the pandemic.  Sustainability is likely to play a crucial role in that rebuilding, and as the book highlights, we could all learn some valuable lessons from our Nordic cousins in that regard.