Unlocking the Secrets of Sustainability Leadership

June 21, 20168:03 am
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As consumers, governments, and citizens awake to the challenge of limited resources and a finite planet, top companies across industries and geographies have made sustainability a core element of their brand identities and organizational cultures.

At the same time, many other businesses don’t know where to begin with sustainability—or have hit a wall in their efforts. A report by The Conference Board, The Seven Pillars of Sustainability Leadership provides a comprehensive guide for overcoming these obstacles, built on the experience of senior executives who have addressed the sustainability imperative for the world’s leading organizations.

“In 2015, ‘sustainability’ was named a top-five global challenge for the first time in The Conference Board CEO Challenge®, our annual survey of chief executives conducted since 1999,” said report author Thomas Singer, principal researcher in corporate leadership.

“Over the past decade, concern about long-term environmental and social impacts has clearly moved from the periphery of corporate radar screens to become a central element of how companies think about growing brand equity and shareholder value. For executives seeing these issues merely in terms of costs, regulations, philanthropy, or PR, this report is an invaluable resource that distills the sustainability strategies of myriad industry leaders down to seven decisive practices and principles.”

Between October 2015 and January 2016, researchers surveyed 84 senior sustainability executives belonging to The Conference Board Sustainability Councils and The Conference Board Chief EH&S Officers Council.

Representing companies with average revenues exceeding $50 billion, these council members were asked to detail the practices most indicative of leadership in corporate sustainability. From their responses were drawn The Seven Pillars of Sustainability Leadership.

Using a rich array of case studies and performance metrics, here’s how the seven pillars works together to support a world-class sustainability program—and how forward-thinking leaders can begin constructing them in their own organizations:

  • The board of directors is actively engaged on sustainability issues

Global megatrends such as resource scarcity and climate change are becoming ever more relevant to board discussions about strategy, risk, and performance. Boards that are engaged on sustainability issues are more likely to take a longer-term view and thus are able to better foresee and prepare companies for potential risks and opportunities.

  • The CEO and C-suite champion sustainability 

The role that strong sustainability leadership by a company’s CEO and senior management plays cannot be overemphasized. The report details some bold strategies taken by the best sustainability-focused executives, including: prioritizing long-term growth over short-term profits, setting ambitious sustainability goals that “stretch” their organizations, realizing sustainability as a driver of innovation and business opportunities, promoting radical transparency, and embracing business-model transformation.

See: 97% Businesses and HR Leaders in Southeast Asia Prioritize Leadership over Talent Issues as the Top Human Capital Trend

  • Sustainability is embedded in strategic planning

Sustainability-related issues can no longer be ignored by companies wishing to remain competitive in the long term. Environmental risks, such as climate change and water scarcity, have been climbing up global rankings of business risks.

  • Sustainability goals are strategic, ambitious, and long term

A fundamental change in the way companies think about value creation is evident in the types of sustainability goals leading companies are setting. Strategic goals ensure targets are in line with companies most important sustainability issue, typically identified using a materiality analysis process. Companies that set bold “stretch” goals often achieve significant improvements in performance, even if those goals are not ultimately met.

  • Executive compensation is tied to sustainability performance 

Companies that are serious about sustainability are placing sustainability performance metrics squarely in their incentive compensation schemes. This is crucial as business leaders point to lack of incentives as a significant obstacle to achieving their companies’ sustainability potential.

Linking incentive compensation to a set of sustainability targets helps make sustainability a priority for the organization and can steer company leadership to consider initiatives with long-term benefits that may otherwise have been ignored.

  • Sustainability is part of the innovation process

The motivation for launching corporate sustainability strategies is shifting significantly from achieving compliance, risk, and operational efficiencies to spurring innovation and market growth opportunities. Companies are increasingly pointing to revenue growth and business opportunities as a primary reason to get started on with sustainability.

  • Sustainability is woven into company reporting and engagement

Companies at the forefront of sustainability excel at transparency; they are comfortable with openly reporting sustainability challenges and not just opportunities, and they see value in discussing company financial and nonfinancial performance side by side.

For these companies, sustainability is woven into communications with stakeholders and is an integrated and core component of the company’s reporting process.

News credits: conference-board.org

Image credit: olemiss.edu