Spot the difference: ESG and sustainability
ESG assesses risks to the business; sustainability focuses on the business’s impact on the world. Understand the difference to lead with purpose and insight....
Brain Circuits
How to get sustainable business transformation right
Sustainable business transformation is a difficult act to pull off. Julia Binder identifies the roadblocks and the drivers of change to enhance your chances of success.
Five roadblocks
1: Fragmented vision
A sustainability transformation usually requires adjustment to a company’s core business, and the transformation is slow and incremental. Top management often fails to develop a shared understanding of what sustainability entails.
2: Risk and compliance myopia
To avoid a shift in strategic focus to managing risks, trade-offs, or regulatory compliance, sustainability needs to be deeply embedded into the organizational purpose rather than simply a core pillar of it.
3: Strategy and execution disconnect
A lack of clear top-down guidance and limited organizational follow-through hampers the translation of sustainability strategy into action. A common issue is the gap between top-level vision and on-the-ground execution.
4: Small-scale thinking
Sustainability transformation is an outcome of numerous underlying holistic changes. Many companies make only incremental changes to the current operating mode, failing to recognize that restructuring is required to operationalize sustainability ambitions.
5: Resource misalignment
Poor resource allocation is a key bottleneck experienced by companies. Decision-makers need to make appropriate resources available for their schemes.
“A practical roadmap identifying drivers for effective change makes success more likely.”
Eight drivers of success
1: Visionary leadership
The board, C-suite, and executive management teams must demonstrate commitment and a clear sense of purpose. Leaders must also prioritize developing a shared leadership agenda.
2: Opportunity-oriented strategy
Viewing sustainability initiatives from a risk-management perspective limits potential. A more holistic view balancing risks and opportunities is needed.
3: Strategic CFO engagement
Enabling the CSO to work in partnership with the CFO enables better access to funding for initiatives and a more unified approach that builds business value over time.
4: Revisited success metrics
Sustainability must be deeply embedded in corporate purpose and strategy and reflected in how organizational performance is measured to translate ambitions into actionable strategies.
5: Empowered middle management
Successful companies exhibit strategic clarity on sustainability at the top, which translates into actionable plans developed with mid-management.
6: Digital leverage
Companies that prioritize both sustainability and digital transformations by leveraging digital platforms, data streams, and connectivity experience enhanced agility and resilience, and the ability to navigate external challenges.
7: Innovation for sustainable business models
Cross-functional management teams are needed to implement sustainability transformation and monitor progress. These teams break down the silos and provide better access to information.
8: Ecosystem play
Companies need an ecosystem approach to business models – especially those that cultivate and utilize robust, mutually beneficial relationships within their ecosystems.
Key learning
Companies need clear guidance to achieve sustainable business transformation. A practical roadmap identifying drivers for effective change makes success more likely.
Authors
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