Sustainability leadership: Managing for the health of your company and the planet

It's nearly impossible to find a corporation that doesn't list sustainability, climate, and the environment among its highest priorities

By Thunderbird School of Global Management

Published: Jul 1, 2022 11:54:28 AM IST

Effective leaders have long understood the importance of taking a public stand on environmental, social and governance issues. Yet, business leaders taking action toward securing a healthy environmental future and doing something to reach that goal are two very different things Image: Shutterstock

In 1996, Starbucks reduced its paper cup waste by 50% when using an insulated sleeve to keep customers from burning their hands. Goodbye double-cupping.

In 2003, McDonald’s leadership developed a global policy to reduce the use of antibiotics in its poultry production. Suppliers were able to eliminate 17,900 pounds of antibiotics used every year.

In 2017, Walmart launched Project Gigaton, a collaboration with suppliers to reduce one billion tons of greenhouse gas emissions from its global supply chain by 2030.

These are three examples among hundreds of massive scale efforts by business leaders to begin addressing global climate change. Companies, their leadership, consumers and investors focus on communicating sustainable goals, collaborating to achieve scale and dedicating resources to environmental innovation.

It’s nearly impossible to find a corporation that doesn’t list sustainability, climate, and the environment among its highest priorities.

Environmentally savvy corporations are not new. Effective leaders have long understood the importance of taking a public stand on environmental, social and governance issues. Yet, business leaders taking action toward securing a healthy environmental future and doing something to reach that goal are two very different things.

That’s where sustainability leadership comes in.

Why should business care?

Climate change doesn’t just threaten the ecological balance; it can also threaten (or strengthen) corporate balance sheets and financial performance.

As oceans fill with plastic and landfills grow, business leaders become increasingly aware of the moral imperative to play a role in sustainability. At the same time, investors are also monitoring corporate diligence ESG (environmental, social, and governance) metrics. Leadership paying attention will recognize that it is be good business to keep an eye on its environmental impact.

In a 2021 open letter, CEOs from around the world called on governments to set policies that meet targets consistent with the Paris climate agreement. Sustainability isn’t just a corporate responsibility; it’s a mindset and an opportunity. Businesses require a plan of action that sets out goals and buy-ins, and it has become increasingly important for industries and large corporations to take the lead.

Also read: World Environment Day: Noise, climate change, and the disappearance of species

The growth of sustainability leadership

In 1994, British management consultant John Elkington introduced an economic theory of the triple bottom line (TBL). Elkington contended that companies should commit to focusing as much on social and environmental concerns as they do on profits, giving the business three bottom lines: profit, people and planet.

By May 2021, according to a report by the Weinreb Group, the number of executives dedicated to steering the sustainability efforts of a Fortune 500 company rose to 95 chief sustainability officers (CSO). That’s up from 29 in 2011. The increase in CSOs is a good sign that these companies are looking to reduce their corporate environmental impact and are also engaging employees in sustainability practices.

Ellen Weinreb, CEO of the Weinreb Group, says the CSO role is expanding, and more companies hired their first CSO in 2020 than in the previous three years combined. The percentage of women CSOs nearly doubled, but the cohort remains overwhelmingly white. (Check out this complete list of people who influence how America’s largest corporations focus on global challenges.)

Embracing sustainability goals

A key to creating a healthy, sustainable company is to expand the pool of stakeholders, engaging employees, customers, investors, vendors and suppliers.

In 2015, inspired by the company sustainability slogan “small actions can make a big difference,” a team from the PG Tips shop floor in Trafford Park, England, suggested that they could reduce the end seals of each tea bag by three millimeters and save 15 large-scale reels of paper every shift they worked. That success bred more sustainability innovations. Today, PG Tips has converted their tea bags to biodegradable packaging and removed the plastic from their tea boxes. The switch to biodegradable tea bags saves 330 tons of traditional plastic per year –equivalent to the weight of 66 million plastic bags annually.

PG Tips’ innovations is a case study of new ideas bubbling up from the workforce. The people who make the product understood how their roles might contribute to tackling global challenges. But individuals’ goals would never have been encouraged, accepted, or achieved without a culture of sustainable leadership comprised of consistent sustainability communication. And that culture doesn’t happen on its own. It takes the skill and dedication of leadership to foment opportunities like PG Tips and its now very sustainable tea bags.

Also read: Why philanthropy needs to include a climate lens

Key competencies for sustainable leadership

Anyone who has ever led a business knows that most things will not get done unless it’s someone’s job. As sustainability becomes more essential for corporate success, so does the need to hire sustainability leaders, people, or departments dedicated to steering companies on a sustainable path.

Organizations are looking for not just a sustainable leader, but for the right person to create a culture of sustainability and effective organizational leadership. They need to look for someone who can balance short-term and long-term priorities and motivate various stakeholders. Sustainable leaders set goals, devise strategies, and ensure delivery of results.

According to recruitment advisors Russell Reynolds Associates, core competencies for sustainability leaders can be broken down into three categories:

Sustainability mindset: A strong interior sense of purpose combined with a long-term orientation and an inherent motivation to meet the triple bottom line.

Systems thinking: The intellectual flexibility and ability to see the bigger picture, as well as appreciate the details — and shift perspective between competing interests in order to develop a strategy that inspires all stakeholders.

Relationship building: An understanding of people across cultures; becoming an advocate of diversity; and building productive, long-term relationships with key stakeholders through effective people skills and strong communication.

Current hiring practices that prioritize candidates with narrow, but deep, expertise can overlook the value of cross-functional and international experience. It’s important to find a person who can help orient company activities and brand and consumer awareness toward sustainability goals without taking their eye completely away from profitability.

Defining and tracking sustainability goals

Sustainable leadership skills are all about adopting a responsible approach to the way business leads, considering the wider impact of a corporation’s actions on society and the environment, and communicating these goals consistently.

Here are some thoughts from three sustainability executives on leadership, and management style, working with team members, decision making, and communication:

Rebecca Best, vice president sustainability & market engagement at Material Bank in Montreal: “I’m inherently passionate and excited about driving forward an organization and having sustainability at the forefront of everything we do. I better exude that. I better really feel that. I better really believe it, because that’s the only way I’m going to get everybody else working with our company to actually start caring, too.”

Also read: Graviky Labs: Turning air pollution into everyday use products

Jennifer Gootman, vice president sustainability: social + environmental impact for Williams-Sonoma, in an interview with Business of Home, a news site covering the home industry: “The key is focus. Our pillars are planet, people, purpose. Last year, we announced a goal to have 75% of our products represent one or more of our social and environmental initiatives by 2030. That’s the umbrella goal. The biggest impact is materials and production within our value chain. It’s using that purchasing power. It ties everything together, and it makes it relevant for our customers too.”

Jane Abernethy, chief sustainability officer of Humanscale, is a leading designer and manufacturer of ergonomic products that improve the health and comfort of work life. Abernethy’s overarching goal has been to eliminate environmentally harmful products: no more Red List chemicals, which are often found in coatings, finishes, and additives; and no more hexavalent chromium, also known as chromium-6, a highly toxic form of chrome and a known human carcinogen.

As for other measurable goals, she would like to see the percentage of climate-positive Humanscale products climb from 60% to 100%. And when it does, the company will have officially made good on its promise to go, as it says, “beyond sustainability.”

Perhaps the discipline of ‘beyond sustainability’ is a good goal for tomorrow’s leaders. If you are one of tomorrow’s leaders and are interested in exploring sustainability education opportunities, these Thunderbird programs can help open the door.

[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]