You’ve probably seen this question: “Who is the key driver of digitalisation in your company? a) CEO; b) Chief Transformation Officer; c) COVID-19.”
But you haven’t seen this before: Who is the key driver of sustainability in your company? a) CEO b) Chief Sustainability Officer; c) CEO’s child.
In both cases the right answer is C.
The first question is a viral online joke (or is it!). The second one is a true story. Even if the leaders of a company have not yet started to consider the topic of sustainability seriously, their children, nephews or friends’s kids will soon make them do so.
A few days ago I got a real-life proof of that. Many parents of kids in school chat among themselves in closed groups in instant messenger platforms. I happen to be in such a group with the other parents of students from my 6-year-old son’s class. In a recent chat a few mothers expressed concerns how deep the kids were affected by a class discussion about the environment, depleting water and other world resources, pollution, etc. Some children were brought to tears, they shared. And then a mother, the CEO of a company, wrote this post:
“Ah, so this is why my daughter was asking me “Mom, how come your new company cars are not electric? You should buy electric cars”.
And that is how, more often that you think, sustainable business practices begin in companies. The reason behind is that the 6-10-15 year-old-son or daughter of the company CEO asked an uncomfortable question. Prof. Rebecca M. Henderson from Harvard University seems to agree with that. She is the creator and instructor of Sustainable Business Strategy, an online program of HBS that teaches how businesses thrive and grow while simultaneously solving some of the world's biggest challenges - like climate change, income inequality and social injustice.
But I am not (yet) the CEO, you may say, what can I do?
A lot. Start by implementing sustainability practices in your daily work. And then talk to your manager. Bosses respond best to data and results. Here’s three ways to approach such conversation:
Show what matters - the industry-specific ESG KPIs
There is a common myth that sustainability is mostly about green initiatives and the environment. For instance it comes natural to Patagonia, a company that markets and sells outdoor clothing, to have a purpose “we're in business to save our home planet.” After all, if there is no outdoors, clients will have nowhere to go with the Patagonia clothes. But what about a software development company, a tea producer, a bank? As said, green does not even begin to describe the idea of these businesses sustainability challenges. A concept that better fits the key factors is ESG - Environmental, Social, and Corporate Governance (ESG). It refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.
There are different relevant ESG factors in the different industries. The Sustainability Accounting Standard Board’s Materiality Map® for instance identifies sustainability issues that are likely to affect the financial condition or operating performance of companies within an industry.
As seen in the table, while in Technology and Communications the most relevant ESG factors are Energy management, Customer privacy and Material sourcing and efficiency, in the Financial sector the more relevant ESG factors are Business Ethics, Systemic Risk Management and Selling Practices. Click here to see and show your boss what ESG factors affect your industry.
Show to whom sustainability matters - what does Larry think?
Who’s Larry? If you work in a listed company, you may want to listen to Larry. Larry, as of Larry Fink, an American billionaire businessman, is the CEO of BlackRock, the world’s largest asset manager. For many years he writes a much anticipated annual letter to other business leaders. Mr. Fink believes that factors like global warming for instance are driving a “fundamental reshaping of finance”. And this is why he committed that BlackRock would launch new products, consider environmental, social and governance issues in their investment decisions. Why does it matter? With its size, BlackRock made sustainability in investment decisions mainstream. Mr. Fink’s annual letters were welcomed, though scepticism is still strong, especially because in reality there is no clear cut business model of sustainability.
But if the investors and shareholders are not convincing enough for your boss, another vital stakeholder may be: The Customer. According to a global research of Unilever, the British multinational consumers goods company,
“Consumers are increasingly interested in buying products with social and environmental benefit."
In fact 33% say they are already buying with sustainability in mind, and further 21% report that if brands they love tell them what they are doing regarding sustainability, they would buy more from them. Another important fact: the survey showed there was no significant difference across income, age and whether it was developed or developing market.
Sustainability is work in progress - the quest for the right business model
There is no business model that can promise 100% that building the business around the ESG factors is a profitable endeavour. The HBS Online Sustainable Business Strategy program does not overpromise that. Using the classic Harvard case study approach, prof. Henderson shares the story of Transatomic, a star start-up founded by MIT alums, which claimed its technology could generate electricity 75 times more efficiently than conventional light-water reactors. The company seized operations two years after starting its quest to transform the world energy sources. Despite the failure, one of the company founders, Leslie Dewan, selected as TIME Magazine’s “30 People Under 30 Changing the World”, is still engaged in advocating the benefits of nuclear every. As a zero-emissions source of power, some consider nuclear an important complement to renewable energy in the transition away from coal-fired generation.
Even without a proven model, there is growing evidence that companies “that adopted environmental, social and governance policies in the 1990s have outperformed those that didn’t”. This means ESG expertise may be a new and less explored competitive advantage.
“It's possible to do the right thing and make money at the same time. Indeed, there's good reason to believe that solving the world's problems presents trillions of dollars worth of economic opportunity. But finding these opportunities and making them successful takes both real courage and grindingly hard work. And it's often the firms who have a purpose beyond simply making money that make the first move.”, advises Prof. Henderson.
A bonus and possibly the most important tip from me on how to talk to your boss about sustainability: If none of the above arguments work, just remember who is often the first driver of implementing sustainability practices in business?
Go talk to the boss’s kid.
Victory Corners, 2021, by Viktoriya V. Blazheva
Disclaimer: Some of the quotes and materials are mentioned and referenced from the HBS Online Sustainable Business Strategy program. Although the author has taken the program, this is not a suggestion for you to do so. This is not a sponsored article.
References:
https://www.powermag.com/the-power-interview-technology-can-solve-problem-of-nuclear-waste/
https://www.ft.com/content/d7e83ba0-c90b-46c0-9233-ad06187606c1
https://www.theguardian.com/sustainable-business/sustainability-key-corporate-success
https://online-learning.harvard.edu/course/sustainable-business-strategy?delta=0