Management Perspectives

Every day, our media channels are filled with sustainability[1]related live stories. We are no longer in a world of activists, scientists, and consultants presenting PowerPoints and white papers on what might happen in a climate-changed future, we live in it.

This has changed conversations around ESG completely. Every conversation we now have is in a reality context. When we talk about carbon reduction, there are fires and floods to relate to. When we talk about regenerative agriculture, there are droughts and polluted waterways to relate to. When we discuss ocean protection, there are overfishing stories to relate to. When we discuss human rights, there are reports around exploitation to relate to – the list goes on.

But these existential threats do not always lead to action, as the systems we are trying to change are ingrained and stuck in existing models. But the passion and desire are now much more present and no longer just stemming from the few visionary pioneers who saw it coming.

We have assumed that we can deploy infinite models for growth and prosperity in a linear model whilst on a foundation of finite resources. We face a crisis that will demand a leadership response of courageous decision[1]making. We can hunker down, tick some boxes, buy time, and shore up our pension pot. Or, we can become leaders for our time: courageous, humble, heroic, and adventurous.

In our new book The Adventure of Sustainable Performance, we show how sustainable performance is a way of operating that unlocks value creation advantages by placing the organisation in the service of an environmentally sustainable and socially just future. We believe that the adventure of Sustainable Performance will allow humanity to thrive indefinitely within the constraints of our planetary boundaries.

For leaders aiming to achieve this advantage, we suggest that there are three questions to consider when weighing up decisions that open up new pathways for sustainable performance.

1. Does this decision deliver on my purpose? Why do you matter?
Corporations used to have clear public purposes, and in some parts of the world they still do. Now, we expect businesses to exist to make money and investments to be made to make more money. But profit is the consequence, the product of purpose. Where no genuine purpose exists, the level of trust in corporations is so low that it takes a long time to get stakeholders to commit and believe in the stated mission. But where purpose is soaked in authenticity, it inspires, gives meaning, and is a driving force for change. Why? Because it gives an answer to the why you matter question and an answer to all your stakeholders as to why they matter.

 A company can have any kind of purpose—an intent to deliver something that underpins its reason for existence—and it does not have to be connected to sustainability. However, a purpose is at its most useful when used to connect an organisation’s authentic values to delivery via rigorous, meaningful, and measurable outputs. 

For those of us working in sustainability, purpose comes with a capital ‘P’. Our version of purpose is simple: it is the positive impact you want to create from the actions of your business translated into something anyone can understand.

The power of a proper purpose should ripple throughout the business, from top-down and from bottom-up through the supply chain. Across every aspect of the business’s value chain, the purpose should be living and breathing, thereby ensuring its authenticity and mobilising energy amongst its stakeholders.

2. Does this decision stem from our values?
Values and how they drive your business or organisation are a vital part of the sustainability shift. All businesses and organisations should have foundational values: the core beliefs of why they exist, the drivers of their purpose, and the reason that they create impact in the world.

We also operate inside the context of the values and norms that society holds and what we culturally, at national and international levels, subscribe to. Cultural norms shift and change with time and increasingly impact how leaders have to make decisions. Make a poorly informed or ill-advised values-less decision, that does not reflect where society is, and there will be some kind of explanation required very quickly, if you have not already been cancelled. Whilst some of this goes too far, the pendulum swing has taken us to a new place with lots powerful and progressive movements paving the way for leaders to reflect, support, amplify, or expand.

Customers, stakeholders, and citizens all need to know what is driving you and your business or organisation, how you are showing up, what you stand for, how you will fight, and what you will protect. These are all the types of questions that come with the sustainability shift.

3. Does this decision advance our sustainable performance?
To advance a company’s sustainable performance, leaders must think creatively about the trade-offs between carbon, water efficient, or zero-waste facilities operating sustainably in unsustainable regions, and the return of these investments over a longer term, to deploy capital more wisely and truly protect the value of assets.

This is about externality innovation, by which we mean understanding the externalities (positive and negative) of our value chains and identifying opportunities there to internalise the issues and make them sources of value and strategic advantage.

Recently we have been working with larger companies grappling with SBTi netzero ambitions for 2050 to help identify new technologies and ventures with whom they can partner to accelerate their decarbonisation programmes.

In this work we are already seeing interesting hybrid connections between the longer-term horizons of the corporations and the speed and agility of entrepreneurial businesses totally committed to making a positive impact.

Creating value for all

When all three answers are aligned, wise decision-making for the positive impacts of sustainable performance are clear. In conversing with Guillaume Le Cunff, CEO of Nespresso, he framed it this way: “At Nespresso we want to make each investment in sustainability a new business opportunity.”

The leaders today are the first generation of leaders to have the unequivocal truth, and in this short window of opportunity, they are also the generation we rely upon to lead us through the sustainability challenges of our time and into the next era. The leaders that people will want to follow in the future will be those who are bold and courageous, unafraid to embrace the world in all its chaos, to make difficult decisions.

It is time to reframe our definition of success, which has become an increasingly evasive word. Reframed into the reality that an existential crisis such as we face is the greatest leadership challenge we could ever imagine.

Foundational to the next era of sustainable performance decision-making will be the creation of value for all stakeholders across the entire value chain. If we get it right, we will enjoy free energy; land and oceans will be revived and become productive; and food and clean water will be abundant for all.