Kathleen Enright, global managing director of sustainability consultants Salterbaxter explores the problems that arise when sustainability strategies aren’t integrated across the corporation.
- Disconnected thinking within corporates could be the biggest barrier to effective sustainability action.
- It’s critical to connect thinking about effort and impact to drive successful sustainability strategies.
- Sustainability strategy must be connected to growth amongst the C-suite for action to be effective.
We are way past the need to open up our eyes to the future reality we are heading towards. Despite the IPCC Climate Change Report warning us that there’s “no credible pathway to 1.5oC in place”, and the latest data indicating that the world is on track for a temperature rise of between 2.4oC and 2.6oC by the end of this century, we’re still finding the necessary course correction a challenge.
The issues that compete to create and destroy economic, business, social and planetary stability are all deeply interconnected, so why do we continue to see so much disconnected thinking? We see it across all areas of business, government and society. It’s a conscious disconnection, or at the very least disassociation, of ourselves from reality.
The disconnect between effort and impact is the reason why sustainability strategies, even robust and credible ones, are failing to drive change at the pace we need. But what can businesses do? It all starts with addressing the multiple interconnected disconnects within their own business.
Misalignment of strategic goals
There is an inherent misalignment in the objectives of sustainability strategies and business growth strategies – one striving for less and the other striving for more. But current economic models are not going to change anytime soon so it’s the reality we need to acknowledge and learn to work with.
When sustainability and growth goals are diametrically opposed, it creates a misalignment where business goals inevitably overpower the sustainability ones. But the question to ask yourself is; if you met all of your sustainability commitments, would this deliver against your commercial strategy? The likely answer is no. So why are we investing in something that’s not going to deliver growth?
It’s a board-level strategic disconnect that’s nothing short of epidemic. Despite this, most business leaders have the best intentions when it comes to sustainability. According to a Gartner survey, 87% of business leaders are planning to increase sustainability strategy investment over the next two years. But will this investment result in actual impact?
Few companies have developed sustainability and business strategies that are aligned and even fewer that are interconnected. But if investment in sustainable strategies is going to lead to progress then companies should be aiming for a sustainable business strategy.
Building business resilience
Despite this inherent conflict, businesses do see the value in aligning business and sustainability strategies. In Deloitte’s recent Sustainability Action Report, 86% of business leaders surveyed said that sustainability investments are protecting their organisation from disruption. This is exactly how businesses should view sustainability – it is about building long term business resilience rather than focusing on incremental reductions in carbon or plastic use.
Simply aligning your sustainability strategy with your business strategy doesn’t go far enough. It must be inherently interconnected and a key driver in the business’s pursuit of growth, profit and wider value creation. Only then does it become an essential ‘must have’ – vital to building short term financial and reputational gains whilst ensuring long term resilience in an unpredictable world.
Operational and sustainability disconnects
Strategic disconnection at Board level will inevitably filter down through a company’s operations. All too often different departments – Marketing, HR, Finance, Operations, Legal – are working independently, with one blocking the progress of another rather than all working towards a shared vision.
For example, there is often a lack of understanding of sustainability issues in the finance and legal teams which are centred around risk. This can lead to roadblocks or supressing investment which ultimately shackles progress. It is vital for businesses to bring teams together so all departments move from being sustainability blockers to advocates and enablers.
What’s hindering this is that companies are still failing to view sustainability as a hugely complex and interconnected issue. Climate and emissions, biodiversity and supply chain, social and DEI are all approached in isolation with different teams reporting on their specific areas despite them being inextricably linked. In a completely interconnected world, surely we need completely interconnected sustainability governance models?
Address disconnection from the top
Businesses need to address strategic disconnection at the top as it leads to the divergence and conflict in strategies all the way to the bottom. True change needs to be driven by the C-suite and the Board.
If leaders don’t comprehend and communicate that no business can thrive in the long term if the social and environmental systems it is reliant on are in danger of collapsing, then there is no hope that this thinking will be adopted by teams across the business. More importantly, sustainability cannot be separated from the business of making money and they cannot be seen as competing strategies.
A sustainability strategy is much more than incremental targets and offsetting. It is about securing long term business resilience alongside creating profit which generates wider value for society and planet. The harmony between these two goals is where sustainability strategy and business strategy become indivisible. Just like our 1.5oc future, it’s the ultimate outcome we must all strive for.
The theme of this piece, and the practical steps needed to facilitate a mindset shift, are explored further in Salterbaxter’s latest Directions Report which is free and accessible to all.
