The misconception that leaders need to be green activists in order to champion sustainability is slowly ebbing away. Now the world is changing, policies are maturing and green investments are proving to be profitable. Sustainability isn’t primarily an activist agenda or a good PR move, it’s the competitive edge that every leading business in the future will need.
At the moment, these shifts in the market and regulation are primarily affecting multinationals and other large corporations. But soon the evolving expectations of consumers, talent and investors will trickle down to affect every business, no matter how small or locally-focused.
To stay ahead of the ever-sharpening curve, leaders need to consider every aspect of their operations and profit-making potential. A key part of this is addressing the environment in which leaders and management make decisions. The predominant attitudes and norms in a company will shape their direction from the macro to the micro. If a company wants to be part of where the market is going, they cannot afford to ignore their organisational culture.
Culture is inseparable from business strategy
Leaders sometimes begin addressing culture by drawing up values that are separate from their core business strategy. But the first step in intentional culture is not found in words only but in a will.
Decisions made at the top of an organisation affect everything else. For sustainability to permeate the organisation, there needs to be a commitment from the key players. And not a PR-inspired decision either. A decision for the bottom line, because those leaders understand that sustainability is crucial if they want a chair at the table of tomorrow.
If the leadership of a company realises – like Larry Fink, co-founder of BlackRock – that “climate risk is investment risk,” they will go beyond mitigating. They will take more significant action than the minimum required to survive until the next regulatory update, and instead they will proactively prepare for greater market shifts to come. As Fink wrote in his letter to CEOs, “In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”
People, Planet and Profit increasingly frame the agenda of investors like Karina Funk, co-manager of Brown Advisory Sustainable Growth. She spoke highly of Etsy to Barron’s because the company has prioritised people through diversity and inclusion to the extent that “women represent 50% of the board, 66% of the executive team, and almost 40% of the technology roles…” Funk believes Etsy “have a good shot at being one of a handful of very, very large e-commerce vendors.”
While impact on a seismic scale is commendable, companies don’t have to achieve everything at once to turn the tide of their organisational culture. As long as the commitment is there, businesses are free to experiment, to start with one sustainable project or two and measure the results. But before the wider organisation can grow a culture of sustainability in any meaningful way, this commitment from the top must be in place.
A system that self-perpetuates sustainability
Although culture starts at the senior level, the boardroom cannot control wider organisational sentiment. The inner-workings of culture are far more organic than that. So while you cannot compromise on strategy, you need to gauge the importance of sustainability to your employees too. Both for their perspective and to integrate their commitment with that of the wider organisation.
Henkel, the German chemical and consumer goods company, helps their employees to share sustainability knowledge with others in the company, and with customers and even schoolchildren.
Their Sustainability Ambassador program has taken over 50,000 employees through sustainability training and has opened up the lines of communication so that opportunities can be spotted by anyone. Like Henkel’s finance team, who linked their revolving credit facility to sustainability.
Creating a sustainable culture is about engaging all stakeholders with a view to listen, collaborate and set sustainable processes into motion. Leaders cannot assume they will get buy-in across the company immediately. And it’s important to strike a balance so employees don’t feel that they are being shoved towards a green agenda.
Over time though, as sustainability soaks through the culture, your company will attract those who value it. Crucially, this will help future-proof your talent acquisition as Generation Z becomes more influential. They, as Deloitte research reveals, still place climate change and protecting the environment as their number one concern. And even after the pandemic, the priorities of Millennials appear not to be dissimilar.
Starting the shift
If you integrate sustainability into your culture well, it can only be good for business. Unilever, for instance, who made moves towards sustainability long before it became a trend, saved €1bn by using less material, producing less waste, and improving water and energy efficiency in their factories.
As the EU Sustainable FInance Disclosure Regulation comes into force, the US administration turns towards a pro-ESG future, and $8tn asset management groups like BlackRock shift the flow of funding, the sustainability landscape is bound to morph globally too.
Majad Al Futaim, the first company in the Middle East to adopt a net positive strategy, displays how an ambitious vision can set the tone across an organisation’s culture.
On an employee level, Majad’s Central Cashier Office introduced sustainability training across their teams in conjunction with an organisational shift towards green cash counters and reusable bags. Then on a partner level, they worked with Fashion Revolution to host a sustainable fashion runway. While on an infrastructure level, they introduced the first hydroponic farms to the Abu Dhabi region, which use 90% less water than traditional soil agriculture.
Get the expertise you need
Sustainability means your business can continue to exist, grow and profit far into the future. But if you don’t have it within your culture, you can’t sustain it. You need people who will do the work, who will carry out the due diligence. The more integrated sustainability is — into employee culture, supply chains and stakeholder relationships — the easier it is to execute sustainable action across the board and to reap the rewards in the long term.
A sustainable culture begins with top level commitment, but to see it through successfully, you need the right expertise. Tap into Mashora’s expert network to access leading insight into how to transform your organisation’s culture, receive sustainability training or begin the transition to becoming a b-corporation.