Around the world, businesses big and small are turning their attention to sustainability. Often that means changing company culture, tackling complex issues, and doing big-picture thinking.
None of that can happen without sound leadership. Founders who want to build forward-thinking businesses can use sustainable leadership strategies to reach that goal.
What is sustainable leadership?
Sustainable leadership is when individuals drive a sustainability agenda within an organization.
Sustainability is about making sure that a business can operate for a long time without depleting the physical and human resources required for its operations. It also extends to safeguarding the community and the environment.
Offsetting carbon emissions, protecting consumer privacy, and adopting fair hiring processes are all examples of sustainable business practices.
Sustainable leaders build those values into the business strategy and influence others to foster a culture of sustainability.
Why sustainable leadership is important
“There are three main drivers for sustainable business: moral, legal, and financial,” says Andrew Griffiths, a director at sustainability and net-zero certification provider Planet Mark.
Here are some of the arguments for sustainability:
- It’s the right thing to do: Many people feel that businesses have a moral duty to help tackle social, economic, and environmental issues like climate change and gender inequality.
- It can save you money: Sustainable businesses are efficient. There are opportunities to save money by reducing energy use, cutting waste, and maximizing your resources.
- It attracts investment and financing: According to Luma Saqqaf, CEO of Ajyal Sustainability Consulting, investors are increasingly looking to invest in sustainable businesses.
Sustainable financing (general-purpose loans linked to a business’ sustainability performance) and green loans (loans for sustainability projects) are also on the rise. - It attracts talent: Research suggests that workers prefer sustainable employers. A sustainable agenda could help you recruit and retain top talent.
- It attracts enterprise customers: Some larger companies, especially in Europe, are legally required to report on the sustainability of their value chain.
If you want to become a supplier to one of those companies, they may require you to invest in sustainability. Even if they don’t, green credentials can help you stand out from the competition. - Consumers love it: Sustainability can drive the popularity of your brand. Consumers are even willing to spend more for sustainable products.
- It could be required by law: Griffiths warns that if you don’t get started with sustainability now, “new and emerging legislation in the US, UK, and Europe will see you playing catch-up with all of your rivals who saw sense and got ahead of the curve on their sustainability strategies.”
- It could future-proof your business: “A company that has not yet started on the path to embrace sustainability is losing the opportunity to create a resilient business model as some of our challenges, such as climate, are real and will have an impact on small and medium enterprises sooner or later,” says Saqqaf.
But won’t a sustainability agenda hurt the bottom line?
Sustainability experts say that view is outdated. Green technologies are advancing and becoming cheaper, culture is changing, and new laws are being made. All that leads to sustainable practices having a positive impact on investor returns.
Multinational conglomerate 3M, for example, has saved $2.2B by introducing a pollution prevention initiative, and FedEx has reduced fuel consumption by 50m gallons by converting part of their fleet to electric vehicles.
And a study from Deloitte found that companies with inclusive cultures have 27% higher profitability and outperform other companies on the stock market.
Some companies are also reevaluating what really matters. Organizations like Unilever, which has a strong reputation for sustainable leadership, focus on maximizing value to all stakeholders — including employees, customers, and surrounding communities — over the long term.
Why startups should invest in sustainability
There are many benefits to incorporating sustainability into your venture right from the beginning.
For instance, two out of three investors take sustainability into account when choosing investment prospects. Showing a commitment to sustainability could help you attract investment during the early stages of your business.
Startups tend to pay their employees 30%-40% less than large corporate employers, and sustainable practices can help attract talent. Creating an inclusive culture may lower turnover rates by 22%, while a majority of workers would prefer a job with environmentally friendly companies.
Efficiency is another key concern for startups as you try to manage cash flow and achieve profitability. Minimizing waste and energy use are other sustainable practices that can cut costs.
Finally, company cultures build over time. Embracing sustainable values from Day One will allow you to develop the right culture. Startups are also more agile than large corporations, making it easier to alter your approach and set new directions.
How to get started with sustainability
Start small
Saqqaf recommends focusing on two or three clear goals. “The goals must emanate from the business itself. They have to be relevant but also create an impact for the business and its stakeholders.”
Goals that tie into the business model are more likely to get buy-in, feel natural, and make the business more resilient.
For example, Ikea’s program to buy back used furniture fits perfectly with their goal of making affordable furniture and even creates a new revenue stream from secondhand furniture sales. It’s easy for customers and investors to get on board with that initiative.
Measure
Start by evaluating where your business is now in terms of sustainability, says Griffiths. Just as you use budgets and financial metrics to improve your profits, you need data to manage your sustainability. Setting a baseline allows you to demonstrate how much you’ve improved after you implement your strategy.
You could start by calculating your carbon footprint and gender pay gap. You could also survey employees about their well-being or speak to local representatives about how your business impacts the community.
Engage
Talk to your employees, suppliers, customers, and investors to understand the sustainable goals that matter to them. That will help you prioritize the goals that will reap the rewards and also lay the groundwork needed to get buy-in for future sustainability projects.
Grab low-hanging fruit
There are many simple ways to become more sustainable. For example, widening your candidate pools when recruiting can help make your company become more diverse. Instituting mental health practices can build a healthier workplace for your employees.
You can cut carbon emissions and save money by installing energy-efficient light bulbs, or planning your annual staff getaway closer to home. Payback periods for investments into energy efficiency are quicker than ever, and in many countries there are government incentives available to sweeten the deal.
Find a mentor
Taylor advises anyone interested in this area to become a lifelong student of leadership. Seeking out mentors who have experience running sustainability initiatives is a good place to start.
Characteristics of a sustainable leader
Sustainable leaders come in every shape and size, from activist Greta Thunberg to cosmetics entrepreneur Anita Roddick, to former Unilever CEO Paul Polman. According to Taylor, there are some key characteristics or principles that these leaders have in common.
Big-picture thinking
Sustainable leaders think about the long-term impact of their business. They see their company as part of something bigger: an industry, a community, a global supply chain, the environment. Paul Polman, for example, got rid of quarterly reporting to investors at Unilever to avoid short-term thinking.
Boundary-crossing
Sustainability issues can be complicated. Leaders who can work with people in different departments, industries, and disciplines are more likely to succeed. It could mean engaging with local government and experts or reaching out to different stakeholders to get them on board with your goals.
Influence
Some of the most successful sustainability leaders, like Greta Thunberg and David Attenborough, are not in positions of authority where people have to do what they say. Instead they lead by being authentic, building relationships, demonstrating their knowledge, and inspiring a shared vision.
Comfort with complexity
Implementing a sustainability strategy often requires leaders to deal with competing interests, uncertainty, and technical challenges. Patience, creativity, conflict-management skills, and a willingness to experiment are all key to leading in this context.
Passion
“People want to hear passion,” says George. “People don’t just want to be customers or employees — they want to be a part of something bigger than themselves. Something that matters.”
If you can get other people as excited about your sustainability mission as you are, you are in a better position to get things done.
Who can be a sustainable leader?
Sustainable leadership is not just for founders, CEOs, and chief impact officers.
Griffiths used to work in a business development role at an electronics company where he initiated a recycling drive. He started by finding a group of colleagues who were passionate about sustainability. They went to their manager and made the argument that recycling could save the company money.
“We ended up directly recycling 87% of our waste, and the remainder went to a waste-to-energy plant rather than landfill. Oh, and we saved [$1,200] per month on waste.”
According to Saqqaf, “every person in the organization has a part to play.” It is much easier for employees to find the role in driving sustainability if the sustainability goals are a natural extension of the business model.
Anyone can be a sustainable leader. The key is to pick something you care about, find a way to get other people invested, and stick with it.
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