Senior leaders believe sustainability is critical to their organization’s survival

The second part of our series based on findings from the JMJ and Bennett Institute for Public Policy research paper, ‘Sustainability: Corporate Culture and Leadership Perspectives,’ focuses on how senior leaders view their organizations’ commitment to sustainability.

Methodology

Senior executives from a range of industries and business sectors were asked to reflect on cultural and leadership dimensions to their organization’s sustainability outlook in a semi-formal interview with the Bennett Institute for Public Policy. The aim was to understand how participants understood the relationships between their organization’s commercial and environmental concerns, and how they viewed their company’s current culture; their internal capabilities and limitations, and the consequences of action or inaction on sustainability.

The evolving definition of sustainability

Overall, interviewees described the sustainability field as something of a ‘name game’ – overcome with definitions, labels and subcategories. Most businesses already had longstanding interests in corporate social responsibility (CSR) but recently, they’ve begun engaging with environmental social and governance (ESG) metrics. According to many of the interviewees, the meaning of ‘sustainability’ has become more complex, as sustainability practices have gained prominence and the pressure to ‘walk the walk’ has intensified.

There’s no room for failure, nor is it acceptable to simply get near to, but not fulfill, one’s pledges.”

Sustainability has three dimensions

The interviewees identified three main dimensions to organizational sustainability – environmental, social, and financial. The environmental dimension, which began life as a narrow focus on, say, waste or water and air quality, has expanded into concerns about biodiversity and, now principally, decarbonization. This shift was attributed to the heightened visibility of climate-related issues in the media; the fact that companies increasingly engage with national or global communities, rather than just local or regional ones; and the spike in environmental anxieties following the COVID-19 pandemic. Several interviewees pointed to carbon abatement as the most common or prominent component of organizational sustainability. This, again, is a relatively recent phenomenon.

In just a few decades, decarbonization has gone from an activist concern, to something that might burnish a firm’s reputation, to an investor-demanded, politically regulated obligation.”

Other interviewees noted the social dimension to organizational sustainability. This includes issues such as diversity, inclusion, anti-slavery, anti-money laundering etc. Finally, several people stressed the financial dimension, claiming that sustainability was ultimately about ensuring a company’s long-term existence and durability.

Summary of findings

Drivers and stakeholders

• The external drivers of corporate sustainability tend to be about financial performance – attracting investment, customers and clients and improving brand reputation
• The internal drivers are more value-oriented – relating to employees’ social values and leaders’ legacies
• To persuade any business to take sustainability seriously, a compelling business case is essential

Leadership

• Sustainability strategies are usually owned and developed by senior managers
• Sustainability departments are seen either as helping focus attention on sustainability or absolving other personnel and departments of responsibility
• Leaders must have clear sustainability objectives and understand the workings of their businesses to affect the necessary changes

Culture

• A business’ people determine its culture. People can be open to learning and development, or they can be resistant to change
• While corporate attitudes to sustainability are becoming more serious and credible, all companies are at different stages of development
• Sustainability practices are likely to take root in science-oriented organizations, or businesses that want to be market leaders
• Sustainability requires a long-term business perspective

Capacity

• Resources – money, physical and human capital – are needed to make a success of corporate sustainability. These are often in short supply
• Leaders must understand how their business works and makes money as well as its strategic direction. Only then will they know how to bring about the institutional changes required for a business to be sustainable

Challenges

• Acting sustainably can be costly and get in the way of businesses’ primary function – to make money
• In some cases, regulation is needed to make sustainability more economical
• There are multiple economic incentives for businesses to act sustainably, such as attracting investment and customers
• Leaders must be aware of the opportunities and know how to pitch corporate sustainability to their stakeholders

How far do the opinions of these senior managers correspond with the views of leaders at other levels within organizations? Where is the common ground, and what, if any, are the areas of misalignment? Our next article provides an overview of the second phase of the study, in which the Bennett Institute’s researchers dived deeper into some of the themes and ideas that emerged from the interviews with a broader focus group.

Read the first article in this series: New study identifies leadership and culture as the catalysts to successful corporate sustainability

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