How Sustainability Efforts Fall Apart

How Sustainability Efforts Fall Apart The combination of accelerating climate change, rising income inequality, the Covid pandemic, and geopolitical conflicts have created a perfect storm of challenges to how businesses and economies are run.

In response, pressed by investors, employees, activists, and consumers, companies are launching sustainability initiatives at an unprecedented pace.

This is good news.

After many years of scepticism and lack of commitment, companies have finally begun taking sustainability seriously, setting ambitious goals and targets.

The bad news is that there is still a huge gap between ambition and action.

The development and implementation of sustainability programs across different sectors get stuck and are unable to scale. Without scale, long-term goals are simply not attainable — or are delayed for years, which reduces credibility and increases external pressure from customers and other stakeholders.

So, what makes sustainability at scale difficult to achieve?

These are the “hidden enemies” of sustainability: Hidden enemy #1: Structure and governance Since its first appearance in the business lexicon, sustainability has tended to be cornered and corralled into ad hoc departments.

The result is that it is siloed away from other key corporate functions like strategy and innovation and distant from business lines and operations. This segregation, still in place in most companies, makes it difficult for sustainability to percolate throughout the whole organization.

It is not surprising that managers have often seen sustainability as a nice-tohave or a marketing lever, rather than a key driver for margins and sales.

The same misperception is evident at the board level, where there is little familiarity with the strategic dimensions of sustainability.

This disconnect is a major problem.

Hidden enemy #2: Processes and metrics In most cases, sustainability is not embedded into business processes by design.

Procedures and criteria for decisions were designed in a pre-sustainability era where profit was all that mattered.

People and planet were not even on the radar when evaluating choices and trade-offs.

Price, costs, profits, market shares, and earning per shares were the most common criteria used to run a business.

If procedures, rules, and metrics remain anchored to traditional thinking, sustainability initiatives will be neutralized by corporate bureaucracy, despite the good intentions of senior leaders.

Even when there are metrics, they are fragmented, inconsistent, and lack a common standard.

For example, ESG reports are often made up of inaccurate, unverifiable, and contradictory data, without the accounting rigor of conventional financial metrics.

Hidden enemy #3: Culture and leadership Established firms, founded in the 20th century, were simply not designed for sustainability, and consequently they have not developed a culture of sustainability.

There are very few exceptions to this (e.g., Patagonia, the outdoor clothing company founded in 1973).

This means that for many older organizations, putting sustainability at the heart of their purpose requires a deep cultural transformation.

It is not simply a recalibration of the mission statement or a new manifesto of values. Changing people’s hearts and minds is the biggest challenge — and it must start with an organization’s leaders.

Sustainability at scale requires a different approach based on empathy, openness, collaboration, and trust. However, unlearning the traditional paradigm, so deeply entrenched in the leaders’ mindsets, is not easy and takes time.

Hidden enemy #4: Methods and skills The conventional manager’s toolkit is made of frameworks designed by academics and consultants over the last four to five decades and now universally adopted as standard.

Think of Porter’s five forces or financial tools like the net present value (NPV).

Too often, these methods continue to be the only compass when formulating strategies or evaluating new projects.

While new methods and tools designed specifically for sustainability do exist, they are new, and their penetration and adoption are limited.

If the methods are not part of day-to-day routines and practices, it will be difficult to reach judgements and make decisions based on sustainability.

In addition, most employees do not have sufficient familiarity with sustainability terminology and frameworks. This is largely because this domain has always been the remit solely of environmental experts.

Fighting the hidden enemies The internal enemies of sustainability are strong because they are deeply and widely ingrained in organizations. They inhibit the progress of transformational initiatives, making it difficult for companies to live up to their ambitions and pledges.

The question is how to defeat these internal enemies and unleash the full potential of becoming a truly sustainable company.

We need to learn from management history if we are to seize the potential of sustainability transformation.

1) Establish an organizational mesh to percolate sustainability through all units.

How can a company overcome the typical disconnect between the sustainability department and other business units?

One effective solution is to build a community of practice: a core team of experts (often called black belts) orchestrating a group of sustainability catalysts (or ambassadors) within the units.

Some companies go even further by reshaping the organizational design, both at the corporate level and business unit level.

2) Embed sustainability by design into every process and trade off decision making.

To rethink business processes to ensure sustainability-driven decisions - a challenge to align sustainability and financial goals.

3) Agree on a new social contract: Walk the talk with employees and stakeholders.

Making sustainable thinking and behaviours a habit is the most important and difficult part of the process.

Leaders need to be more open and collaborative with their broader ecosystem of customers, partners, and stakeholders, co-creating solutions to complex problems.

Empathy and trust are foundational to connecting authentically with all stakeholders, starting with employees.

Agree on a set of concrete behaviours to bring into their day-to-day activities, and those should be periodically reviewed and discussed in retrospective sessions. For example, rather than using abstract values like “trust,” “purpose,” “empathy,” “collaboration,” or “openness,” it is better to articulate concrete organizational behaviours. For example:  

“Include external stakeholders in strategic conversations about the broader industry ecosystem.”

“Care about people by dedicating time with collaborators to providing and receiving feedback.”

 

“Set co-creation workshops with partners to jointly define the problem space and solutions.”

“Drop projects or activities that — although profitable — are problematic on ESG dimensions.”

Stating observable behaviours in concrete terms makes it easier to monitor them and have periodic retrospective sessions to discuss actual adoption.

4) Foster ecosystem thinking and co-create with partners.

To adapt traditional business frameworks and tools to the sustainability age, make strategic thinking more systemic. One concept that is worth exploring is the link between strategy, sustainability, and business ecosystems.

Sustainability has become the new corporate imperative. Companies have begun doing their homework, diligently setting up several initiatives.

This is a good starting point, but too often, firms are unable to systematically scale these efforts to achieve a more transformative outcome.

Unless a company tackles the enemies early on, it will never be able to achieve sustainability at scale.

It is time for firms to put in practice concrete countermeasures to fight back against the hidden enemies and unleash the full potential of sustainability.