While large organisations clearly understand the importance of creating and driving a focus on sustainability, many of them still fall asleep at the wheel.
Addressing and driving sustainability is, today, an accepted focus area for most businesses, but while a few progressive corporations take sustainability seriously, many still don’t get it. It is not only important for global leaders to drive sustainability because it’s the only way to do good business, but also because they need to set an example for smaller emerging and growing businesses. Critics have been on record to state that not a single major corporation is adequately addressing sustainability issues, while a few do make an effort. Only a small, though growing number of organisations top the list across multiple sustainability areas such as supply chain, carbon emission reductions, community/social, EHS, etc. So, even though they understand its importance, why do organisations still keep falling asleep at the sustainability wheel?
Sustainability needs to be driven from the top. Top management must create and nurture a strong culture that empowers proactive initiative and lead employees to drive change. Unfortunately, many times it is seen as a distraction from revenue and profit growth. Sustainability, at times, is seen as an expensive process; often given a back seat to other critical business initiatives. Global businesses have for decades operated with the profit first approach. Top management and leadership needs to lead this change and drive sustainability.
Investors motivate companies to focus on ESG
BlackRock’s CEO Larry Fink in a letter to companies that they invest in said “Your company’s strategy must articulate a path to achieve financial performance. To sustain that performance, however, you must also understand the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth.” This statement clearly demonstrates BlackRock’s shift from a focus on short term financial performance to long term value creation that rewards a focus on sustainability. BlackRock’s sustainable funds are designed to meet the performance characteristics of traditional investments while investing in companies with superior ESG performance.
IT systems & Legacy System
Technology intervention for sustainability is an important aspect for monitoring, measuring, analyzing and reporting. Many large global companies continue to be dominated by old legacy IT applications. Companies need to invest in upgrading their systems, newer application are easy to use, quick to deploy and need minimal change management and training. Newer platforms also encourage and support clients to add apps. The rapidly changing and transformational technology landscape makes overcoming resistance to change easier.
Stake Holder Communication
Since High Sustainability firms are characterised by a distinct corporate governance model that focuses on a wider range of stakeholders as part of their corporate strategy and business model, it is predicted that such firms are also more likely to adopt a greater range of stakeholder engagement practices. This is because engagement is necessary for understanding these stakeholders’ needs and expectations in order to make decisions about how best to address them.
Other internal barriers
These can be lack of understanding and the need for training & goal setting around social, ethical and environmental principles and processes in the supply chain. Organisations may have advanced systems for dealing with responsibility principles within the organisation, but only if these systems are effectively used to include the supply chain can the true benefits of sustainability be seen.
Focus of leadership on sustainability, technology enablement, stakeholder communication and addressing training and adoption barriers will lead to a strong focus on sustainability, which in turn leads to a virtuous cycle of enhanced brand and reputation, community and customer appreciation, and long term strategic and competitive value. These organisations also become visible role models for emerging fast-growing companies, which in turn adds to the virtuous cycle. The importance of sustainability has been well accepted and recognised, now large, global companies need to step up their game and rather than fall asleep at the wheel, make sustainability a self-driving culture of focus, disciplined practice and execution, leading to the creation of a long term virtuous cycle.
The author, Ankush Patel is the Co-founder & CEO of Treeni Sustainability Solutions, an organization committed to help companies reimagine and embrace sustainability.
Views of the author are personal and do not necessarily represent the website’s views.
The CSR Journal Team