Most of us are yearning to do something about the dire situation facing us. Issues such as global warming, inequality, and poverty – and many, many more, as outlined in the UN’s Sustainable Development Goals (SDGs) – are now becoming visible and in consequence have gained urgency. Taking ownership of sustainability issues like these and acting in their name forms the new leadership mandate for you and your executive team.
- Busting Sustainability Myths
- Changing Senior Leadership Mindsets by Instilling Sustainability Ownership
- Defining Corporate Purpose key to Sustainability Ownership
- Cascading Purpose
- Conclusions
- The Author
I was visiting the Chief Operations Officer of a Fortune 500 financial services company in May 2015, trying to learn about their efforts to become more sustainable. This firm managed large pensions and insurance assets, touching the lives of millions and if any company needed to address the big issues such as climate change or water, it was this one. The executive spoke eloquently about the firm’s desire to do well by doing good. It wanted to be a “responsible corporate citizen” that looked out for different “stakeholder groups.” For that reason, the company was actively engaging with public-interest groups, he said. It was acting on environmental issues and measuring the impact of these actions. He noted that he and the company’s Chairman had given speeches about rising to meet big sustainability challenges. Both were posted online, he added with some pride.
Dr. CB Bhattacharya
I found myself wondering whether the executive was giving me the whole truth or merely feeding me the company line. He sounded very impressive and the company as a whole seemed to “get it.” But then why was the company making only mediocre progress in investing in renewable energy, or coming up with green solutions?
The answer would reveal itself during my conversation with a more junior executive who on probing, revealed that the company had been struggling for some time to get ahead of emerging changes in markets and societies. “We have too many different approaches,” he said. “The messages from the top are mixed, and as a result, my colleagues and I are confused. We certainly don’t feel all that responsible to actually do our part.” This manager seemed relieved about finally being able to communicate what he had long felt but couldn’t openly express; he had been “uncomfortably numb” this whole time. He was frustrated that his everyday reality on the job didn’t measure up with the company’s professed ideals, and he assured me that others in the company felt the same. Now I understood why the senior executive had been so nervous about speaking with me. The company had a glossy sustainability report and website, but not much else to show for itself. Leadership didn’t regard enlightened, forward-looking policies as key to the company’s own future success; they viewed the sustainability imperative as “someone else’s problem.”
I wish I could say that this company is unique, but it isn’t. Over the past five years, I’ve visited dozens of large, publicly listed companies and spoken with hundreds of employees, middle managers, and senior leaders. I’ve been to branch offices, mines, stores, and factories. I’ve traveled from Madagascar to the heartland of India to the streets of London to the outskirts of Shanghai to Chile’s Atacama Desert. I’ve solicited the observations of top-level executives, senior managers, and a host of regular employees. The result of this research is my latest book, “Small Actions, Big Difference” that offers a framework for leaders who want to leverage the human capital in their employees bases and be long-run sustainable.
Why is something as important as sustainability – the very wellbeing of our planet and people – given short shrift by so many in the corporate sphere despite so much hype? I found that while most companies today pursue the right goals in reducing their environmental footprint, they do so in the wrong way, often because of certain “sustainability myths” they hang on to.
First, there is the aforementioned “someone else’s problem” syndrome that plagues sustainability. Many leaders suffer from collective inertia and wait for other companies or governments to react first. Such inertia is exacerbated as several leaders continue to believe that sustainability is the next iteration of corporate social responsibility (CSR). However, while CSR is ultimately something optional that companies can do out of the goodness of their hearts, sustainability, i.e., our long run survival is a strategic imperative, something companies must do in order to prepare for the future.
Second, leaders believe that sustainability can be fixed by bringing in change management experts, which is fallacious because sustainability touches upon profound questions about the philosophy of business and engages the entire organization in a way traditional change management doesn’t.
Third, funds that flow into sustainability initiatives are often mistakenly defined as costs rather than investments that will bring returns. Finally, leaders believe that sustainability eats into profits and that the latter needs to be maximized at all costs. In reality, not only is there no long run conflict between sustainability and profitability, but also, the primary fiduciary duty of leaders is to protect the long run health of the company (i.e., sustainability).
Changing Senior Leadership Mindsets by Instilling Sustainability Ownership
Once leaders get past the myths, they can start to build traction by taking personal ownership of the problem and instilling that sense of sustainability ownership among their employees. This is what drives inaction to action as I observed in several best in class companies. So, what does “ownership” mean and why would we want to take ownership of sustainability?
Psychological ownership refers to feelings of possessiveness and connection that we develop toward people, companies, things, or even ideas like sustainability. Ownership is an inherent part of the human condition; as Jean Paul Sartre opined, we are what we have. Research has shown that feelings of ownership lead to greater job satisfaction, engagement, productivity, and profits. It is an especially helpful concept for companies seeking to align their ideals and practices and galvanize their stakeholders around sustainability. Why? Because, confronted daily with media reports about climate change and other environmental ills, most of us yearn to do something, but don’t know what or how; we’re “uncomfortably numb.” By taking ownership of sustainability, and by instilling that sense of ownership among their colleagues, leaders can create meaningful solutions to the problems that torment their company. That’s because taking ownership of sustainability prompts all stakeholders – both internal and external, from the mailroom to the boardroom – to contribute to coming up with sustainable solutions to business problems.
Defining Corporate Purpose key to Sustainability Ownership
Francesco Starace, chief executive of Enel, has driven his company to transform itself proactively from a large, traditional electricity company into a renewable energy powerhouse. He told me a story from the 1980s, when he was still a middle manager. He was on a team of engineers building a power plant in a remote corner of the Middle East. The company was transporting crude oil to power the plant, one truck at a time. This had him scratching his head. “You had all the trucks coming down, unloading the oil to fuel the plant. And there was a transmission line from the plant – but with no load to feed,” Starace recalled.
Doing some digging, he discovered that the power plant was actually the cornerstone of a dubious piece of social engineering. “The idea was that the whole area needed to be electrified. Houses needed to be built, air-conditioning needed to be put in these houses, so that the nomad tribes living in the area would finally stop moving around and sit in these air-conditioned homes and watch TV.” None of it made any sense to him, and he could see the plan wasn’t sustainable.
Decades later, he remembers this experience as an epiphany – the first time he had thought about sustainability of an energy company—and the spur to his efforts in this area. Whereas his bosses saw profit as their corporate purpose, he took a broader view, weighing narrow financial interest against its social and environmental effects. An energy company’s business could not be about foisting new habits on social groups in order to boost electricity consumption. It had to be about asking these groups what use they could make of electricity. It was about enabling customers, not dictating to them. It was about rethinking why a company does what it does. It was about purpose before profit. Starace saw purpose could drive profit.
Ray Anderson, the former CEO of carpet manufacturer Interface, got his push for purpose another way. In 1994, he was at the height of his success with Interface, a company he had built with grit and determination. But that year, one of his customers asked Anderson a question that would define the rest of his life: „What is your company doing for the environment?“ In an effort to discover the answer to that question, Anderson read a book by Paul Hawken, “The Ecology of Commerce.” It made him aware for the first time that Interface was doing much more to harm the environment than it was doing good. Anderson came to describe himself as a “plunderer” and to believe he should go to jail for his deeds. This „spear in the chest“ epiphany led to what Anderson later called his “mid-course correction.” He went on a quest to prove that sustainability was not just the right thing to do, but the smart thing to do. His mission led him to deliver his message from shop floors to the White House.
Purpose goes beyond strategy to ask almost philosophically about the role of business; “why do we do what we do?” Answering this question allows companies to define themselves and contour their purpose in terms of the societies they both belong to and serve. The cereal maker Kellogg’s sees its purpose as “nourishing families so they can flourish and thrive,” drug maker Pfizer says its “purpose is grounded in our belief that all people deserve to live healthy lives,” chemicals manufacturer BASF says: “We create chemistry for a sustainable future.”
Purpose combines reason and passion, head and heart – both as an exercise in empathy (putting your workers in your customers’ shoes), and as a motivational tool (I want to help our customers). The switch from shareholder to stakeholder primacy that happens in the process of defining purpose leads to a more sustainable way of doing business. A company isn’t just looking for profit, it’s looking out for “everyone,” which includes the all too important natural environment. Purpose is all about sustainability. And sustainability about purpose. As Unilever’s Paul Polman told me: “Sustainability is totally driven by purpose. It starts on a macro level, with the firm belief that you are here to serve society – that you’re not here just for yourself, or just for your shareholders.”
How does contouring corporate purpose enable psychological ownership of sustainability? Well, the process of defining purpose – i.e., asking that all important question of “why do we do what we do” makes us realize that ultimately all businesses are about helping their customers achieve something, they not primarily about profit. If a business creates value for its customers and other stakeholders, profits will follow. Looking at things from this point of view can inspire us to understand that business exists in society – it contributes to a cause bigger than itself, and thus is worth preserving. Whenever and wherever this epiphany comes, a new dawn arises that inspires us to take ownership of sustaining that business. In other words, this process of contouring one’s business purpose leads somewhere new; prompting leaders to redefine their businesses to be economically viable and also sustainable from a people and planet standpoint.
But it is not enough for the CEO to have an epiphany. How do you create epiphanies for senior leaders that lead to action? Mike Barry who served as chief sustainability officer of the UK retailer Marks and Spencer till mid-2019, told me that most leaders today want to change, but don’t know how. He asserted that people have to get viscerally connected to the need for a new business model and move beyond the notion that it is a theoretical concept. Personal experience often has more impact on a person’s behaviour than a rational argument, or an abstract concept. It allows senior leadership to cross an emotional barrier to identify with the company’s purpose in a new and very personal way. Working in communities affected by climate change, going to the frontlines to see first hand how consumers are impacted by the company’s products and services and talking to employees about the future of their children and grandchildren are all tested ways to have that epiphany, bring that purpose to life and take ownership of sustainability. And there is a contagion effect to such ownership. As one leader told me: “When people see other business leaders in their peer group trying things, doing things, and being supportive through the process [of corporate change] – that inspires them.”
Most of us are yearning to do something about the dire situation facing us. Issues such as global warming, inequality, and poverty – and many, many more, as outlined in the UN’s Sustainable Development Goals (SDGs) – are now becoming visible and in consequence have gained urgency. Taking ownership of sustainability issues like these and acting in their name forms the new leadership mandate for you and your executive team.
Dr. CB Bhattacharya, founder and Director of the Center for Sustainable Business, is the H.J. Zoffer Chair in Sustainability and Ethics at the Joseph M. Katz Graduate School of Business, University of Pittsburgh. He is a world-renowned expert in business strategy innovation aimed at increasing both business and social value. Prof. Bhattacharya has published over 100 articles and has over 31,000 citations per Google Scholar. His latest book entitled „Small Actions Big Difference: Leveraging Corporate Sustainability to Drive Business and Societal Value“ was published by Routledge in 2019.
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