When we recently surveyed hundreds of executives on sustainability, we started with a simple question: Are leaders doing enough? While many board chairs, CEOs, CFOs and CSOs shared stories of progress, they also noted that much more needs to be done to ensure our world is sustained for generations to come.
Based on our survey data and interviews with leaders from the study, titled Creating a Sustainable World: Are leaders doing enough?, we developed a practical list of four steps companies can take now to make progress on their sustainability goals:
1. Tap into your personal consciousness and link sustainability to your own purpose.
Our survey reveals that a single person owns the sustainability agenda in most companies (68%). But regardless of who is accountable for the work, executives and board leaders must convey the importance of an organization-wide (and personal) commitment to sustainability and ensure that every employee understands what part they can play in their daily work.
Change stems from the top, and the leaders who are instrumental to a culture of sustainability are typically those who display a personal commitment for the work. “I think it's a responsibility for all of us as directors to understand what's going on. We all have to be committed to this equally and be prepared to spend time reading, being involved in webinars, and spending time with the executives around what they're doing,” notes SunLife Financial Inc. Chair Bill Anderson. These leaders also are purposeful and tend to naturally gravitate towards an ESG agenda. “It goes to a deeper part of yourself in a way,” says Erik Berglöf, Chief Economist of Asian Infrastructure Investment Bank. “You feel like you are fighting for something that is greater than just being successful in a market or pushing a particular brand.”
2. Ensure you have the needed expertise and perspectives at the board-level.
Most of our survey respondents (82%) were confident in their board’s ability to monitor sustainability threats and opportunities. Among the 18 percent who expressed concern, the top reason was the lack of relevant skills among board members. This may change in the future, as one of the leaders we spoke with predicted boards will add a sustainability competency to their board matrix. “This attribute might focus on direct experience designing or leading sustainability initiatives, with backgrounds reflecting applicable technical skills, environmental, health and safety management backgrounds, or simply what it takes to build and implement a long-term vision for an enterprise-wide sustainability journey,” said Mark Hershey, SVP, General Counsel and Executive Sponsor for Sustainability of Armstrong World Industries.
If you do not have a director who brings that expertise, ensure you have external experts who can bring both data and context. Our survey showed that 26 percent of respondents make use of external advisors to further understand ESG issues.
3. Align on the metrics you want to use over the long term.
Companies have a multitude of options for how they are tracking and measuring ESG progress. Without a universal standard, there is no right or wrong choice, but companies must commit to their framework and KPIs of choice and consistently benchmark themselves across those areas. Setting targets is one way of tracking—86 percent of survey respondents have signed up for ESG targets, which is a strong indication that companies are headed in the right direction. We’d encourage leaders to hit those targets and then scale up for the next challenge, and that may include dedicating resources and people to carry out the work over the long term. What will set companies apart is the willingness to lead—rather than simply trying not to lose. This is a space where leaders cannot have all the answers and must be willing to take some leaps of faith to enact real change.
4. Employ a CSO and empower your entire organization to create change.
The complexities of embedding sustainability into the core of your business strategy and decision-making requires having a leader fully dedicated to its success. CSOs are often the missing link between connecting business and sustainability goals for organizations. “As someone who has led companies in that transformation to become a more sustainable business, you've always got to strike that balance between challenging the business and asking those tough questions and pushing, without losing credibility because you're seen as out of touch with the business reality,” explained Michael Kobori, CSO of Starbucks Coffee Co.
While appointing a CSO is a starting point, executive teams must also empower others in the organization to take responsibility. “One single person cannot make anything happen on their own. He or she can only drive the agenda with significant and broad support from the entire group of staff,” notes Amy Fong, COO of FountainVest. That also includes helping employees connect with the companies’ long-term environmental, social and governance (ESG) plans. “It's important to find ways for employees to feel like they're a part of that journey. In the work they do in R&D on innovation, in the work they do in supply chain operations to improve things, in the work they do in marketing to get consumers to understand the benefits, in the little things they do every day inside their own operations to make it operate a bit greener,” said Rich Lesser, chair of BCG.
Creating sustainable companies requires a long-term commitment—and the journey can take years or even decades. Our survey respondents mostly aimed to achieve their goals in the next 3-5 years (33%) or 5-10 years (37%), while 20 percent noted it would take 10+ years. Regardless of where your company is on its sustainability journey, the steps above can act as starting points or benchmarks of progress. Our collective action will be what truly creates a more sustainable world for us all.