Sustainable Business Roundtable on November 19-20, 2015
It´s all about the people: Embedding sustainability into organizational culture
The 10th ESMT Sustainable Business Roundtable* (SBRT) hosted by Prof. CB Bhattacharya for the Center for Sustainable Business (CSB), was devoted to “Embedding sustainability into organizational culture”, and gave representatives of multinationals like Coca-Cola, Siemens, Walt Disney, Deutsche Bank, Nestlé, Bayer, Osram and Bombardier, among others, the chance to discuss this highly pressing topic. After all, “You can´t have a healthy business in an unhealthy society,” as Stephen Pain from Unilever stated, and in an uncertain, volatile world like ours sustainability is becoming an economical imperative for companies that want to continue to grow.
How can companies actually increase their profits and at the same time reduce their environmental footprint, use resources in a responsible manner, and consider the needs of future generations? The answer implies a thorough transformational approach: By putting sustainability in the center of all business operations, companies can succeed in growing the business and improving the lives of people with innovative products as well as in supporting communities and business partners with active engagement in developing solutions for responsible production.
How such corporate cultural transformation can be achieved was demonstrated by leading companies from various industries, with presentations of best practice examples of Nestlé, Deutsche Bank, and Unilever. For Nestlé, Unilever, and other companies in the FMCG sector, the main task is to look for sustainable solutions to produce their goods. Nestle’s José Lopez, Member of the Nestlé Creating Shared Value Advisory Council, made it clear that sustainability is not only about companies giving back something to people in need, but rather about businesses acting jointly with society, i.e. internal and external stakeholders, to create shared value for all. Nestlé’s predefined commitments to environmental and social sustainability include i.e. various education and nutrition programs, responsible sourcing, engagement with and for farmers as well as efficient solutions to save on raw materials consumption during production, zero waste for disposal from Nestlé’s factories, and innovative packaging solutions.
At Unilever, sustainability is engraved in the company’s all operations – with the purpose “to make sustainable living commonplace” and to be “the trust mark for sustainable living”. According to Stephen Pain, VP Sustainable Business and Communications at Unilever, sustainability has become an economical imperative, and consequently it sits in the center of all business operations of the company. It saw the need for a systemic transformation in order to make real positive change happen. These days, Unilever for example engages with its wider publics, supports local economies and farmers, takes action to improve water sanitation hygiene and supports women empowerment. Success proves them right: 11 brands, such as Dove and Lifebuoy, are integrating sustainability into their core purpose, and they grew by double digits in 2014, which is above average.
Lareena Hilton from Deutsche Bank talked about aspects of a sustainable business approach in banking. In addition to global corporate citizenship initiatives like the youth engagement programme aimed at educating children around the world, Deutsche Bank has introduced a program to manage reputational risks which has a high relevance in the banking sector these days. Further, the bank offers assets management in accordance to sustainability criteria, such as options to finance “green” projects in energy efficiency, renewable energies, and clean technologies.
What applies to companies throughout all industries is the need to operationalize the vision of being sustainable and to integrate sustainability in the day-to-day operations. Sustained economic growth instead of profit maximization needs to be the long-term goal. But how many organizations have actually realized that sustainability needs to become central to their business? The findings of Accenture’s DAX companies’ survey on sustainability, presented by Fabienne Babinsky, bring to light that still much needs to be done to transform multinationals into responsible companies. According to the poll, only 6 per cent among the benchmarking companies are champions in the quest for “Sustainability Transformation Maturity”. Fifty-five per cent of them are actively engaging in building suitable operational models, defining sustainability skills and strengthening a corporate culture focused on sustainability. More than one third of those surveyed are “interested” in their business transforming into a sustainable organization.
According to Prof. CB Bhattacharya, the definition of sustainability goals and the transformation of business processes are not enough. The ultimate formula for companies to succeed in the sustainability movement is to have the wholesale employee engagement for it. Matching the corporate values with those of individual employees is the key to successfully embedding sustainability within a company and making it relevant to the entire employee base. Bhattacharya has found that individuals perform better if they see a higher purpose beyond just doing their jobs. Hence, businesses need to actively engage in sustainability-oriented behavior as only then employees perceive their jobs as meaningful and their actions on the job as ethical, and they are more motivated to turn a sustainable business model into business as usual. Bhattacharya’s research findings are based on continuous interviews and surveys with global companies and their employees, and they are constantly being added to a sustainability playbook, a book of rules for how to embed sustainability in strategy, systems and culture, i.e. across the entire value chain.
The highly interesting presentations were paired with practical sessions. A workshop by Prof. Konstantin Korotov, Director of the Center for Leadership Development Research at ESMT, brought “A primer in adaptive change” to the audience. A “toolkit of sustainable cultures engagement” was presented by Jo-Anne Bichard from the Royal College of Art in London. Her work is based on four types of company cultures that she identified, and each of these types has different motivations to act sustainable.
A practical focus was also set in three breakout groups in which the participants were encouraged to exchange ideas on various topics related to employee engagement in sustainability efforts, such as how to integrate sustainability into every day work life, how to make employees accountable with incentives or compensation, and how to communicate sustainability effectively within the company.
The debrief moderated by Dietlind Freiberg, Mc Donald’s, made clear that companies need to align their core strategy, operations and supply chain with their sustainability efforts, and all business decisions should be viewed through the sustainability lens. This also means that an organization should be open and willing to collaborate across all boundaries, even with its competitors, in order to create an environment that is supportive of solutions for sustainable business. Last but not least, the employees play a crucial role in the success or failure of organizational change initiatives. They need to understand sustainability issues because only then will they react and change their individual behavior. Hence, a company’s internal and external communications need to be consistent and continuous, and most importantly, organizational leaders need to act as role models and lead by example. After all, it is the responsibility of each and every one of us to make the world a better place.
*Organized for the 10th time in its history, the SBRT has grown into an international network of 26 global corporate members and now resides under the Center for Sustainable Business (CSB), a big platform that helps understand how sustainability affects all aspects of the business. The CSB was founded in 2015 and consists of three pillars: research projects, practical education and thought leadership.