Sustainability: The Leadership Challenge

November 2014 – How do you solve a problem like climate change? There is no easy answer, and while business leaders are increasingly recognising the gravity of the problem, they often find themselves powerless to make a real impact beyond their own organisations. Here Mike Peirce explores the need for wider cross-sectoral collaboration, and the role that education can play.

Sustainability: The Leadership Challenge

Mike Peirce, Programme Director

November 2014

The greatest risks we face as a society are, unsurprisingly, those that are complex, inter-connected and tough to tackle. Climate change is the most touted example and the oft-quoted findings of the World Economic Forum’s Global Risks Report highlight that this is squarely on the radar of senior leaders.  But other social and environmental concerns also come to the fore, such as inequity within and between societies, the rise of mega-cities in Africa, Asia and beyond, and the accessibility and price of food, water and energy.

Whilst an increasing number of organisations recognise the significance of these issues to their future operations – and so to future prosperity – they have also understood that they cannot sensibly tackle them alone. Over 25 years, the University of Cambridge Institute for Sustainability Leadership’s (CISL) work with senior executives has highlighted how leaders with a commitment to change can soon become frustrated by the apparently limited influence of their own teams and organisations in shaping change. We can pose the problem like this:

It is rare to find an executive who, when presented with authoritative data and analysis and given enough time to have their questions satisfactorily answered, does not conclude that the currently dominant business models and economic paradigms are set to lead us into ever-increasing social and biophysical risk.

When these same executives then ask “what can I do to change this?” the obvious place they start to work is within their own organisation. While this is usually beneficial in itself, sooner or later they realise that their organisation exists within a tightly connected web of other systems over which they appear to have little or no influence. Getting change of the scale required thus looks dauntingly difficult and, usually, the demands of running their own organisation take precedence over resolving this dilemma.

So what can be done to break this deadlock? Firstly, what would it look like for an organisation to go beyond internally-focused and largely tactical actions towards a more systemic approach to change? And, secondly, how can executives be prepared and supported in leading their organisations on this adventure?

Changing the system

Born of the leadership frustrations conjured above, the language and agenda of ‘changing the system’ has become increasingly common currency. For example, Unilever’s Sustainable Living Plan and Project Sunlight are predicated on encouraging consumers to take small actions that make a difference; Ikea’s PR campaigning has highlighted the necessity of strong climate change policies; and Kingfisher’s Net Positive approach includes a focus on closed-loop innovation to open up sources of raw materials and foster productive partnerships with its supply chain.

To test business leadership thinking on these issues, CISL held a series of conversations in Summer 2014 with senior executives from business, government and civil society. The discussions formed part of an event to mark the 20th Anniversary of The Prince of Wales’s Business and Sustainability Programme (BSP) – a unique, strategic forum for senior decision makers and key executives to explore innovative and pragmatic approaches to reconciling profitability and sustainability. In true BSP character, the event was full of scientific evidence, innovative case examples, and practical thinking focused on the future.

A survey of participants before the event suggested that, whilst much has been achieved around the sustainability agenda in the last two decades, companies (in general) are not yet delivering an adequate response to the sustainability challenge. More than 60% felt that a substantial minority of companies are making a significant contribution, but more than 80% still saw the majority as making modest or little contribution.

This survey of senior executives also suggested that more than 90% of leaders consider that their own business needs to shift, at least somewhat, to be compatible with a sustainable economy.

The conversations on the day narrowed down to four priority ‘systems’ in which business could play a role in leading or influencing change: policy and legal, finance, supply chains, technology and consumers & citizens. The common themes that emerged from the leaders represent a positive starting point for a business narrative on its contribution to system change. The leaders attending the event argued for:

1. A clear and commonly accepted sense of business’s purpose and value, which would provide the space for

2. acts of individual business leadership, which would give

3. the licence for companies to build capacity, which would enable

4. the broader cross-sectoral collaboration that is essential for system-wide action.

The role of executive education

As these ideas suggest, executive education programmes and other approaches to capacity building can be some of the most effective ways to inspire and reshape business leadership.

A helpful starting point, of course, before launching into the delivery of a leadership development initiative, is to understand where you are now. To support this stage of needs analysis, CISL has recently developed a simple framework – the Cambridge Sustainability Maturity Assessment – to help organisations understand how ready and prepared they are to incorporate sustainability issues into the heart of their business practice.

Unlike other assessment tools that focus on measuring, assuring and reporting the quality of an organisation’s performance, the assessment has a future-facing focus on a company’s capacity for action in the context of its strategic objectives. As such, the assessment takes into account the organisation’s existing plans and goals and the risks and opportunities it is likely to encounter, and then drills down to the knowledge, understanding, skills and experience of its people, and its underlying systems of learning and knowledge management.

At CISL, we find that this needs analysis increasingly highlights the importance of collaborative solutions – that education for sustainability can best be delivered with the involvement of organisations that are potential future partners. Certainly we see strong demand amongst leadership companies to use education as a platform to engage with others in the value chain to build a common understanding and plan of action. And our sense is that this is a trend set to extend into the mainstream.

© EBR Media Ltd, 2014.  The definitive, and edited version of this article is published in The World Financial Review November/December 2014, www.worldfinancialreview.com