At the beginning of this century, sustainability problems were not traditionally considered business issues. This scenario has vastly changed and, nowadays, major firms have sustainability as a key pillar or even as a business function. The use of data-focused methodologies such as product life cycle, environmental indexing, recycling rates, and carbon foot-printing is growing as part of the business decision-making processes. Nevertheless, there is still a lot to be done to have sustainability fully embedded into business strategies and leaders play a critical role in this journey.
Business leaders are well aware of the extensive scientific evidence on the impact of resources shortages, ecosystems loss, plastic pollution, climate change, among other issues. For example, the 2020 Leadership for the decade of action report [1] states that 76% of CEOs believe sustainability efforts are critical to corporate competitiveness and 92% acknowledge that sustainability integration with the business strategy is a pivotal step for long-term success.
So, why do we still see leaders with an isolated outlook about sustainability issues?
Incremental gains inefficiencies caused by short-term sustainability projects are almost always offset by higher consumption that typically grows at a faster rate. To catch up with the continuous market changes, value chain players are required to cooperate to achieve systemic changes and make new business models sustainable for the long run. However, the typical leadership approach overlooks all aspects of the multifaceted issues and focuses on a partial view of the scenario, which characterizes a segregated or diffused leadership mindset.
Sustainability leaders are commonly unsighted by this diffused management mindset that does not consider the whole system, rather, it focuses only on the problem part that directly affects their companies. As a consequence, they are unable to promote the initiatives to tackle the systemic changes required for solving environmental issues.
This segregated viewpoint of the sustainability questions can also be related to the concept of ‘business framing’. It took me straight into the pages of “Don’t Think of an Elephant!” by George Lakoff, who defined ‘frames’ as the “mental structures that shape the way we see the world” [2]. So, if business leaders are facing sustainability problems using only their companies’ view, they are ‘framing’ the challenges using perspectives that highlight only parts of the reality over the overall systemic picture.
In this segregated approach, business leaders are typically attracted to the quantifiable portions of the sustainability issues. Although they are indeed important, other harder to gauge social and environmental elements should be taken into account to define and implement new opportunities.
For the process of incorporating sustainability into business strategy to be done constructively, business leaders should adopt what I call the coalescent mindset. Yes, it sounds too scientific, right? I know, but it emphasizes the need to grow together, i.e. leaders should consider and combine varied contextual insights from different players and angles to put together an integrated business strategy that considers the whole ecosystem and its social-environmental context.
These contextual factors can oftentimes be hard to gauge, e.g. the impact of actions on local communicates, corporate reputational liabilities, lack of public policies or their inadequacy for different regions. Nevertheless, they are still critical to credibly engage with value chain stakeholders and local communities. This integration furthers the success probability of projects and generates robust and sustainable business strategies.
A sound approach would rely on this coalescent or integrated leadership outlook on the sustainability problems, which combines systemic factors by structuring them in three main pillars:
- Compelling sustainability framework: comprising business-specific and contextual factors to ensure internal and external stakeholders partaking in the new sustainability business narrative. Effective narrative communication is key.
- Long-term vision definition and engagement: encompassing practices and inputs that will allow a company to formalize and scale commitments to new and even status-quo-defining business models by both, internal stakeholders and external value chain players. This earlier article discusses the importance of new sustainable business models.
- Partnerships: incorporating the new sustainability narrative and vision by prompting corporate alliances across the value chain to collaborate and promote sustainable systemic changes. This previous article showcases the importance of co-creation and partnerships to tackle sustainability issues.
“The success of new sustainable business opportunities is governed by an integrated approach comprising the ability of a company to engage with all stakeholders and consider social-ecological contextual factors associated with the entire value chain.”
Leaders with a coalescent approach are able to functionally integrate both, the company-specific business drivers and the systemic/contextual factors.
Thus, combining quantifiable business targets and analytical models with qualitative aspects from the systemic problems and their environmental context is the most effective way for companies to promote truly sustainable solutions while unlocking new profitable opportunities.
The leadership mindset shift from the current segregated trend to a more coalescent or unified approach enables sustainable solutions to be implemented at a large scale and in an agile fashion to keep up with the ever-changing global scenario. This method allows moving from the partial short-term actions to the desired integrated systemic changes considering the whole value chain context. Thus, a leadership management shift is essential to consolidate high-impact, long-lasting, and more sustainable businesses
No doubt this shift has gradually begun. Now the question is…
Are you ready to be a catalyst leader to speed up this process?
References
[1] Leadership for the decade of action, The United Nations Global Compact and Russell Reynolds Associates — “Study on the characteristics of sustainable business leaders” (2020).
[2] George Lakoff, “Don’t Think of an Elephant! Know your values and frame the debate.” White River Junction, Chelsea Green Publishing (2004).
