The "Real" State of Sustainability

By Kurt Harrison and Sarah Galloway, Co-Heads, Global Sustainability Practice at Russell Reynolds Associates

The perils of climate change, social inequities and a still-raging pandemic have put unprecedented pressures on businesses. How many leaders are rising to the challenge and taking concerted action to deliver lasting change for people, planet and profit? The short answer is not enough.

This is the headline finding of Russell Reynolds Associates’ latest global research on sustainable business. We surveyed 9,501 C-suite executives, next-generation leaders and employees across 11 countries to understand the real state of sustainability today. The resulting global study, Divides and Dividends: Leadership Actions for a More Sustainable Future, exposes the divisions and barriers hindering progress—and the sustainability actions leaders must take to yield both financial and non-financial dividends.

Organized into five key themes, the study’s findings and implications enable leaders to face and bridge the divides challenging businesses and society today:

Macro, Micro and “Me” Priorities Leaders must keep focused on both macro and micro issues to mutually benefit individual and business interests. While C-suite executives and employees agree on the big issues that most affect the future of society—climate change, pollution and global pandemics—employees also want to see action on the work-level challenges that affect them. When asked about the specific issues they wanted senior leaders to solve, employees cited health and wellbeing, work-life flexibility, equal pay for equal work, and equal opportunities to advancement.

The best sustainable leaders are able to devise and embed sustainable strategies that produce tangible outcomes relevant to all people, planet and profit. By effectively managing and addressing macro-level issues along with employees’ more present and immediate concerns about economic and job security, flexibility and greater equity, leaders have a significant opportunity to increase trust, engagement, loyalty and productivity.

Brand-Centered Motivation versus Value Creation When asked whether the driving force behind their company’s sustainability strategy focused on brand management, risk avoidance, impact reduction or value creation, almost half of C-suite executives (45%) say their company’s approach to sustainability is driven by brand management. Only one in five (21%) believe that value creation sets the agenda.

Unless organizations engage with sustainability through the lens of value creation, they will not be able to put in place the long-lasting changes that will accrue present and future value for people, planet and profit. They also run the risk of green-washing accusations. In our study, organizations that see value creation as their North Star expect to make greater progress towards sustainable business in the next five years. ?

The Say/Do Divide Despite how important C-suite leaders say climate change and pollution are, when it comes to environmental sustainability, what CEOs say they do is markedly different than what employees see them do. While 79% of C-suite executives say the environmental practices of their company are as good as the best practices in the industry, only half of employees agree (54%). Furthermore, 73% of C-suite leaders say that their organizations place the same importance on sustainability as they do on profits, but fewer than half of employees (48%) say the same. Senior leaders need to address two inter-dependent factors at play: effectively assess the level of importance they are placing on sustainability—and whether those efforts are enough—and how well these efforts are both communicated to and understood by employees.

Next-Generation Leaders at the Vanguard Next-generation leaders are the most engaged drivers of sustainability action. Propelled by prior experience (40% have had three or more sustainability responsibilities) and enabled by their front-line responsibilities for executing sustainability strategies and programs, next-generation leaders are advancing and accelerating sustainability strategy and results.

Leadership + Culture = Impact The greatest barriers to embedding sustainability into business strategy is slow-changing company culture and organizational complexity, followed by a lack of drive from senior leadership and lack of organizational investment. There is no doubt that leaders need soft skills to galvanize action. Yet when it comes to leadership attributes, only around a third of employees say the senior-most leaders at their organization exhibit transparency, humanity and hopefulness. Even fewer say they display humility (23%) and self-awareness (24%), or that they are authentic (29%) and lead by example (29%). Leaders must urgently step up to this challenge, or risk a lack of trust in their leadership capabilities, as well as a loss of engagement and loyalty

Ultimately, contending with people, planet and profit priorities must not be reduced to either/or decisions. Today’s leaders on the forefront of strategically embedding sustainability embrace the value of integrating all three. They fundamentally understand that their businesses cannot thrive in a world of inequity, unrest or environmental stress and that bridging the gaps is vitally important to the health of their companies.

-???????Ana Botin, Executive Chair, Santander, states that “we’ve worked together to deliver profit with purpose—ensuring that our day-to-day operations help more people and businesses prosper in a sustainable way.”1

-???????Unilever CEO Alan Jope says: “I don’t think sustainability forces a choice between long- and short-term when it is embedded in the strategy.”2

-???????Michael Corbat, the CEO of Citi, says: “We remain laser focused on contributing to a strong global economy. Our clients, colleagues and stakeholders expect no less.”3

To achieve a more sustainable tomorrow, leaders must take their next steps today. With its key insights and actions to guide you, Divides and Dividends gives you the roadmap.

1.?????The Rise of the Sustainable Banker , Russell Reynolds Associates, 2020

2.?????Leadership for the Decade of Action , Russell Reynolds Associates and the United Nations Global Compact, 2020

3.?????The Sustainable Banker , Russell Reynolds Associates, 2020