Wednesday, January 8, 2014

Sustainability Leadership Needs a New Mindset

In the last ten years sustainability has emerged out of virtual obscurity to become a central theme of business. This is being backed up by sophisticated metrics and reporting that documents things like carbon assessments, lifecycle analysis, and ecosystem services valuation in support of better decision making and business innovation. Despite major advances in sustainability, we still have a long way to go. The business community still needs to do far more to combat climate change, ecosystems loss and water related issues.

A 2013 Accenture study on sustainability, polled 1,000 CEOs of large companies in 27 industries across 103 countries, while 84 percent of those surveyed believed business should lead the way in addressing sustainability challenges, less than one third (32%) said that they believed that the global economy was on track to address sustainability needs.

An article in the Harvard Business Review (HBR) offers some compelling reasons why we are not seeing more progress on the sustainability front.

1. Gains in efficiencies are almost always offset by increased consumption.

2. The system changes required to make value chains sustainable require unprecedented levels of trust and cooperation among economic actors.

3. Our current tools, methods, and models for sustainable business are not being adopted at the scale and speed needed to shift the numbers noticeably.

4. The disconnect between business and nature. The HBR article refers to this phenomenon as an isolated mindset, which entails a focus on those elements that can be quantified and analyzed. They ignore wider social and ecological issues because they are construed as extraneous context.

The first three may be widely known, but the fourth factor is a key success factor that is far too often missing from a comprehensive understanding of the failings of current sustainability mindsets.

By ignoring context the isolated mindset fails to engage non-corporate stakeholders (such as local communities and NGOs) in sustainable development initiatives, and corporate stakeholders (such as employees or suppliers) in corporate sustainability initiatives.

To drive sustainability forward leaders need to be able to emotionally engage these stakeholders. We need an integrated mindset that sees business, civil society and nature as deeply and existentially interconnected, acknowledging the limitations of what can be formally analyzed or valued in the marketplace. We need to marry analytical focus with contextual insights.

Examination of the Two Approaches in Sustainable Development

Isolated mindset: economic valuation of natural capital, laws and regulations regarding biodiversity and ecosystems preservation, the availability of economic incentives for sustainable development, return on investment of sustainability efforts, and other factors amenable to quantitative analysis.

Integrated mindset: would consider both the above factors and contextual factors — such as the existential value of nature for many local and indigenous people, the customary rights to ecosystems that are not encoded in the legal systems, the considerable risks related to land tenure and property rights, local perceptions that can damage a corporation’s “social license to operate,” and the impact of poor local and regional governance on sustainable development.

In corporate sustainability engagement with stakeholders like employees and suppliers an integrated mindset would go further, and ask the following questions:

1. What are the insights and practices that will allow us to scale inspiration and commitment to sustainable business inside our company, industry, and value chain?
2. What are the insights and practices that will encourage a critical mass of corporate coalitions to work together to create a sustainable value chain?
3. How can we create compelling narratives that combine the head and the heart and inspire employees and business partners to embrace sustainable business practices?

Without eschewing quantitative approaches we need to inculcate a new mindset. Contextual factors are indeed harder to measure and model, but we will not be able to travel the ground we need to cover without making a sincere effort to go beyond what can be precisely quantified.

We need business leaders to address more than quantifiable sustainability metrics if we are to change our current perilous trajectory.  We need a new mindset.

© 2013, Richard Matthews. All rights reserved.

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