New study identifies leadership and culture as catalysts for successful corporate sustainability

Today’s business leaders are aware of the growing importance of environmental, social and governance (ESG) considerations yet few understand the exact implications for their strategy or the impact on day-to-day activities. Why should business leaders care when there is no settled regulation on ESG standards or reporting? What are the right indicators to select to monitor ESG performance? Who in the organization and at what level, is responsible for delivery? How do corporate sustainability practices affect the bottom line and over what time frame?

To answer these questions, the Bennett Institute for Public Policy and JMJ asked global business leaders across a range of sectors to share attitudes, barriers, and enablers of successful corporate sustainability strategies from a leadership and culture standpoint. The resulting report, ‘Sustainability: Corporate Culture and Leadership Perspectives,‘ reveals common issues and concerns across businesses and highlights areas of difference.

Here we take a broad look at how the study was conducted and summarize some of the key findings.

Methodology

The research was divided into three stages: a series of semi-structured interviews, a focus group, and a survey. For each phase, participants were drawn from a range of businesses and sectors. The results highlight which issues and concerns are most pressing and recur across businesses, as well as some areas of difference.

Key findings

Stakeholders and drivers

Above all, people across the organization and its external stakeholders need to buy in to the change that is needed, putting the issue of leadership at center stage.”

• The most commonly cited drivers of corporate sustainability were external and related to financial performance.
• Some internal drivers were also emphasized, often revolving around risk management, employees’ social values and leaders’ sense of legacy.
• Organizations tend to engage proactively with their most influential stakeholders, and more reactively with less influential ones, like local communities and third sector bodies.
• Sustainability is often framed as integral to long-term corporate financial performance. Growth and profits are also seen to undercut sustainability – for example, sales growth may mean more carbon emissions.

Leadership and people

Every employee has a role to play in the fulfillment of a corporate sustainability strategy. Leaders must set the direction, management must take decisions and employees in general must be interested in, and committed to, sustainability.”

• Leaders and senior managers are critical to the success of corporate sustainability – setting direction and policy goals, but also protecting sustainability commitments if and when they come into conflict with other commercial interests.
• Consideration of sustainability helps leaders understand how their businesses function – where they make or lose money, what they are good or bad at – and ensure their sustainability commitments are feasible and fit the broader corporate aims. 
• Middle management are implicated in the success of sustainability agendas. Young employees, who are often socially engaged and sustainability literate, are also influential.
• It’s harder for an organization to renege on sustainability pledges when an array of business interests are involved.
• The interaction of these different constituencies, and the critical role played by executive managers, raises the question of engagement. How should leaders be won over to corporate sustainability?
• The best way to persuade corporate leaders to take sustainability seriously is to construct a business case. That could mean associating sustainable action with profits.

Culture

Companies (and their leaders) should try to understand their own corporate culture to make sure their sustainability priorities are compatible with the organization’s values and collective mindset.”

• Corporate culture depends on the values, commitments, and interests of the people in that business. However, not every employee within an organization or its supply chain will support sustainability.
• A corporate culture conducive to sustainability will be open, inclusive, and allow different points of view to be aired.
• Businesses must be mindful not to spread their sustainability commitments too thinly.
• Transparency is vital, as disclosing progress – even if inadequate – helps foster an environment of goal setting and (incremental) improvement.
• Participants argued for a purpose-driven approach to sustainability, rather than (or alongside) a financial strategy-driven approach. This contrasts with the idea) that sustainability should be framed as a commercial business opportunity.
• A wait-and-see attitude to sustainability is an impediment, delaying necessary action and sacrificing market advantage to more proactive competitors.

These insights help pave the way for the public debate about sustainability in business to move on from definitions and metrics – important as these are – to the fundamental questions about leadership, culture, and purpose in business.

About The Bennett Institute

The Bennett Institute for Public Policy at the University of Cambridge is one of the UK’s leading public policy institutes, achieving significant impact through its commitment to interdisciplinary academic and policy research and teaching.  It is driving forward research into the growing demand for a more equitable distribution of the world’s natural and social assets and examining the impact that technological change is having on the nature of work, community and consumption around the world. The Institute is committed to outstanding teaching, policy engagement, and devising sustainable and long-lasting solutions. For more information visit bennettinstitute.cam.ac.uk