In the world of stocks, shares, funds and finance, applying environmental, social and governance criteria to build a comprehensive picture of long-term performance is fast becoming the norm. These new metrics for determining value signify a change in the air, and for many businesses, growth looks a lot greener than it used to.
Despite the common understanding that companies today should always strive for sustainability, the question of how to actually operationalise it across the organisation – by a certain date – is another story.
According to a soon-to-be-released Harvard Business Review Analytic Services study that is being sponsored by global change consultancy Daggerwing Group, 63% of respondents agree that implementing sustainability is fundamentally different from implementing other strategies and requires a different approach.
This might be attributed to how business leaders often must choose between delivering on revenue expectations today, or allocating resources to pursue sustainability goals tomorrow, says Michelle Mahony, managing partner at Daggerwing Group.
“There are real headwinds that can hamper corporate sustainability efforts, currently: inflation, supply-chain disruption, rising energy costs, the war in Ukraine and greenwashing, to name a few. And on top of that, these challenges make the calculus between short- and long-term gains even more complicated,” she says.
To ensure that sustainability doesn’t get lost in the quagmire, Mahony argues that it must be integrated into strategic thinking at a foundational level. She says: “Overcoming these challenges requires a true paradigm shift. Businesses must move on from viewing sustainability efforts as something of an add-on to seeing them as an intrinsic part of how the company makes decisions and conducts business.”
Managing targets over time
In principle, Mahony argues that sustainability is inherent to building a sustainable business. That’s the mindset that organisations must adopt as they work towards achieving sustainability goals. Otherwise, external factors have the potential to create friction and threaten an organisation’s ability to recover and succeed.
“Leaders increasingly need the ability and agility to course-correct while simultaneously keeping their eyes on the sustainability prize over time,” says Mahony. “A growth mindset in this context is critical, as it will be necessary to experiment, to learn fast, fail fast, and adjust.”
This intersection of stability and adaptability is also pertinent for addressing greenwashing concerns. Coherence and consistency are vital,
but businesses need to be ready to respond to changes in real-time. And if a company’s longer-term sustainability ambitions appear out of step with, or irrelevant to, its short-term actions, then doubt surfaces, and trust sinks in.
“Setting some aspirational goal for a date in the relatively distant future to achieve a certain percentage cut in carbon emissions, for example, is not enough. It can look like an organisation is kicking the can down the road, as time appears elastic, even infinite,” Mahony explains. “Concrete, yearly goals, involving every function, are what gets a company where it needs to be, on time and on target.”
Embedding sustainability into the DNA of the company
To convert ambition into action and intention into implementation, there is no quick or simple fix. Mahony states: “Any organisation that assumes it can just slap an off-the-shelf solution on top of its existing goal-setting, structures and strategy is in for an unpleasant shock. Employing a one-size-fits-all approach simply does not work. Different stakeholders will be uniquely impacted and, therefore, will require different levels of effort at different times.”
This all connects to the relationship between strategy and culture. As Mahony says: “Strategy is what you are trying to achieve, purpose is why you are doing it, and culture is how it happens.” She continues: “From a sustainability perspective, we see a lot of efforts now being connected to a greater purpose or values where the impetus is on doing good for the world and the planet. And that’s great! But it is not sufficient, and it will not rally everyone until it is truly part of the DNA, or the fabric, of the business and culture.”
Operationalising sustainability strategy
To truly operationalise sustainability strategies and build them into the fabric of an organisation, Daggerwing adopts a “horizontal and vertical change strategy,” as Mahony calls it. To do this, Daggerwing first fosters accountability at the senior leadership level, making sure to incentivize senior leaders to achieve sustainability goals while balancing the long- and short-term priorities.
Second, it’s essential to create collective accountability, expanding beyond the diverse portfolios of the leadership team. “It is a good thing to have a governance body that is driving the work, but the accountability must be collectively owned by all leaders, and ideally, each and every employee must be engaged and invested in the success,” says Mahony.
This process of building support across the business then calls for an appraisal of current processes and a decisive plan of action that is made to measure. This development stage should account for the needs of different functions and divisions to ensure that the transformation is embedded universally.
Finally, this change strategy gets woven into the organisation’s ethos and day-to-day decision-making.
Mahony concludes that conversations around sustainability tend to pick up momentum on Earth Day and during widely-publicised environmental summits. But for these strategies to bear fruit, they must be continuously activated, ingrained and embraced at every level of the organisation.
For more information visit daggerwinggroup.com