how to embrace the sustainability challenge
Adapt to survive, transform to thrive
The Sustainability Challenge
The question these days is not whether an organisation should embrace sustainability but how they should. The data is clear. According to a McKinsey Global survey 83% of C-suite executives and professionals believe that ESG programs will generate more shareholder value in five years’ time than they do today. Accenture’s research on responsible leadership showed that companies with high ratings for ESG performance achieved operating margins 3.7 times higher than those of lower ESG performance. Put simply, the debate on sustainability has moved from a moral imperative to a business case necessity.
To adapt or transform?
Most effort to drive improvements in sustainability comes from adaptions of the current business model, often reacting to or in anticipation of new legislation, or pressure from employees, customers, and activists. Indeed, we were recently invited to bid for a piece of sustainability work which had a heavy focus on governance and reporting. While these things are absolutely necessary, they won’t be the drivers which transform an organisation’s competitive ability and trigger new thinking, potentially deriving benefits that adapters could only dream of.
Plenty of research has been done on the benefits of purposeful leadership. This research has reached into the current debate on employee retention: what is it that employers can do in today’s highly competitive labour market to engage and retain their employees? A recent HBR article, Rethink your employee value proposition, lists meaning and purpose as one of the four key jigsaw pieces in designing and implementing an employee value proposition. “Meaning and purpose are the organization’s aspirational reasons for existing. They align with employees’ desire to improve local and global society. They’re the answer to the core question of why employees do the work they do.”
Adapting your current processes, getting your reporting right and improving your stakeholder communication alone are unlikely to answer the inspirational and aspirational core question of why employees do the work they do.
We believe that the organisations that thrive over the next ten years and beyond, will be those that recognise sustainability as a competitive advantage and proactively transform to become sustainability driven businesses. We’re already seeing investment markets shift – the Norwegian Sovereign Wealth Fund has started challenging board positions where it sees a lack of oversight, governance or action on climate issues.
Sustainable transformation pays off
Whether you are an energy company whose core business is at the heart of the debate over sustainability, or you provide consumable products or professional services, your limitations are your current paradigms – and your customers’. Change the paradigm, change the future.
The Finnish oil-refining company, Neste, transformed its product offering over a multi-year period by focusing on renewable fuels and setting an ambition to “become a global leader in renewable and circular solutions”. This ambitious transformation has resulted in 85% of its profits generated by renewable diesel, catapulting it ahead of its competitors. Companies like Neste and “market darling” Orsted that have aggressively pursued sustainability transformation have attracted investor support and insulated them from the market fluctuations experienced by more traditional energy companies.
Our partner QSA Partners, have worked with Bandvulc to transform their operating model from selling tyres as products to selling miles of service. This directly aligned them with their customers’ needs: to keep the truck fleet running. As a result of developing this service Bandvulc cornered over 2/3rds of the UK grocery fleet truck market. Bandvulc can now focus on preventative maintenance and ultra-fast response to punctures – quite a jump from simply selling tyres!
The five steps to making it real
The opportunity – and challenge – of Sustainability Transformation starts with changing your paradigms. It comes to life by rethinking your operating model, engaging your people and your customers and, of course, is kept on track through active governance and reporting.
Define your vision and strategic intent for a purpose driven future. Challenge your paradigms and business model to create environmental, social and economic value.
Work back from your stakeholder’s needs to construct a future ready, data-informed operating model, that will bring clarity, focus and better decision making, while removing friction and interference. For further tips, see our article on sharpening up your operating model
Then, directly link your end-to-end initiative and performance management back to your strategy and bring it to life through a KPI cascade. See our article on the triple bottom line strategy map for more detail
Create robust, resilient, repeatable processes with clear visual management which continuously evolve and improve, bringing together the best of your data and your people to support the delivery of your financial, social and environmental objectives. You might be interested in this case study
Lead with curiosity, authenticity and courage to inspire your people, & foster a culture that balances high performance with wellbeing whilst focusing on delivering your purpose driven business outcomes. You might be interested in this video
Our Breakthrough transformation expertise helps you to develop the strategy, operating model, processes and culture to make sustainability a competitive advantage. Together with our sustainability partners, QSA, we help you to transform, creating the change that others will adapt to.
To find out more please get in touch / +44 (0) 20 7298 7878
More about the authors
Alec Brazier
Alec supports clients to design and embed transformational change. “Achieving Net Zero is often firmly on our clients’ agenda, but I want to see organisations take bolder steps to become more sustainable”
Catherine Newman
Catherine loves finding the right path through complicated problems by breaking things down into logical steps and is excited by thinking about how we can meet the sustainability challenge
