Embedding ESG & Sustainability in the Operating Model

What does it take to make the sustainability transformation truly happen?

Corporates are now well aware of the sustainability imperative and the role they must play in transforming themselves and society towards more sustainable business models and systems.

Climate change scientific research, extreme weather patterns, critical resources scarcity, regulatory and reporting standards as well as voluntary disclosure frameworks, governance overhaul and boards collective and individual responsibility have all accelerated the definition and implementation of sustainability roadmaps.

And yet the commendable efforts done in the last 5 years have not delivered at the speed and scale that are necessary to:

-??curbing GHG emissions, in line with the agreed 1.5°C trajectories to Net Zero,

-??or really implementing a more circular economy (5 to 10% of the economy today),

-??or reversing the biodiversity loss acceleration experienced during the last 30 years.

At the same time citizens, consumers, NGOs and other stakeholders like investors or employees are getting more vocal and proactive on the need to act now and get the impact we really need.

Thought leaders and sustainability experts volunteer and experiment (or argue and disagree on-) inspiring and sometime radical new concepts: regeneration, de-growth, doughnut economy, carbon accounting, sustainable value creation…

In our experience talking to most of these stakeholders and engaging deeply in our clients’ transformation, one under-leveraged dimension of the sustainability agenda is simply the most obvious: the people!

We all have heard the powerful incantation about “people will make the difference” and yet do we really internalize it and let it guide how we think and work on those sustainability challenges?

The focus on sustainability impact, risks and challenges, the multiplicity of stakeholders and the ever-strong demands to deliver on the financial and economic performance regardless have led most corporates to address the technical complexity of these 3 dimensions: business performance, sustainability impact, talent development, in sequential plans and discrete or even siloed approaches.

Most corporate are still allocating the resources needed for the sustainability transformation according to their past model of constrained CAPEX and headcounts. Sustainability initiatives are driven mainly by the necessity for compliance and reputational risk mitigation and viewed as costs rather than with a potential for driving performance and differentiation. Talent performance and development is often addressed conventionally in a discrete way, disconnected to both the business and the sustainability agendas and priority areas!

CSOs, BU leaders and HR teams all do undisputedly truly great ‘state-of-the art’ initiatives with tangible benefits, yet without getting the full potential of connecting these completely for maximum impact.

Sustainability must be better embedded in the company operating model to unlock the power of the ‘triple win’ by which business performance, sustainability impact and people development mutually reinforce one another and allow the company to reach the full potential of its effort and a better return on investment.

Business performance and sustainability impact are both a question of Mindsets, Abilities, Structures and Systems. Unlike digital transformation, Sustainability is not a means to an end, it is the endgame. Business will be redefined in another paradigm. How we lead, influence, and collaborate on the complex systemic challenges of our time depends heavily and maybe only on people, their behaviors, competencies and clarity of purpose. Performance for business and people will become multi-dimensional to incorporate in the same time horizon the ability to both perform and transform.

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So, the strategic priorities and challenges of the business must always have a connected business- and sustainability- impact component and be seen systematically as a unique opportunity to further attract, retain and develop talent and leaders within the company, as well as across its wider ecosystems, collaborative platforms, strategic partners, value chains and stakeholders.

The greatest challenge of all remains the race against time and the necessity to get an ‘all-in, all at once’ mindset, as well as the critical ability to understand when to cooperate and when to compete, so that the systemic challenges are truly addressed by all interested and co-dependent parties as a foundation for further differentiation and competitive advantage eventually.

Therefore, building speed and scale is critical to sustainability transformation, so that society and companies get the impact we all need!.

Embedding Sustainability in the operating model calls for a ‘movement making’ mindset and capabilities, not for another sequential roadmap. It is our single biggest bet on the future if we are to have one…

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You want to know more, please reach out to me at [email protected]

Olivier DUBRAY - +33 607297312

Senior Client Partner Korn Ferry - Co-lead ESG & Sustainability Practice EMEA