TRANSFORMATION REQUIRES THINKING OUTSIDE OF THE BOX

INSIGHTS ON HOW TO TRANSITION TO A SUSTAINABLE BUSINESS

By Richard Howitt, Skytop Contributing Author May 11, 2021

Richard’s background celebrates three decades as a strategic thinker who integrates innovation into organizational practice. A 22-year member of the European Parliament Rapporteur on Corporate Social Responsibility, he led the EU’s Non-Financial Reporting Directive.  This initiative, recognized as the world’s foremost legislation on Corporate Transparency, brought him to new challenges.  

This includes his work as CEO of the International Integrated Reporting Council, the Task Force on Climate-Related Financial Disclosure, Advisor to the UN Global Compact, Member of the European Commission SDG Platform, and the UN Guiding Principles for Business and Human Rights Reporting Framework Eminent Persons’ Group.  

Richard is recognized as a Sage Top 100 Global Business Influencer, Thomson Reuters ‘Top 30’ Influencer in Risk, Compliance and Regtech.  He is a Member of the B20 International Business Leaders’ Group and its Climate and Resource Efficiency Task Force.  He currently serves as Strategic Advisor on Corporate Responsibility and Sustainability, and Senior Associate at the law firm Frank Bold LLC.  

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Every management course always includes the need to ‘think outside the box’. However, it is time for sustainable business advocates to do better in ‘thinking outside the bubble’.

As a regular on the burgeoning conference circuit on CSR and business sustainability, there is imperative to ensure each event is genuinely a fresh dialogue, producing new ideas. 

There is always merit too in meeting peers, comparing progress and building collective enthusiasm to pursue common goals in the year ahead. 

However, there is sometimes also a sinking feeling of ‘preaching to the converted’, of helping the best to do even better, but failing to widen the net to others who are not yet fully committed.

I once saw an educator explain climate change to a group of school children, by equating global warming to steadily inflating a balloon. Of course, it had the desired effect when the balloon loudly burst. But how do we avoid our own bubble bursting, by thinking outside of it?

Of course, part of the answer lies in the well-worn ‘business case’. The ‘risk and resilience’ agenda of recent years, presages real financial consequences for companies who fail to act or who astutely choose to do so in advance. 

This can always be complemented by dire warnings of societal and planetary devastation, linked to an appeal of self-interest for companies to act, to forestall regulatory action with negative consequences for the business itself.

But each of these is rooted in the theory of the organization. Perhaps it is also time to consider how individuals within the business can be brought into sustainability efforts and to tap in to debates from psychology as much as economics, to be able to do so? 

Relate to Personal Goals and Experience 

Just as an authentic sustainability strategy must be true to a company’s origin, purpose and values, its application amongst individual employees will only succeed if it is related to their own specific work role and life experience.

It is no coincidence that the biggest support for climate transition is centered on a two peak-distribution curve – amongst more senior, older staff who are increasingly worrying for future generations; and for younger recruits for whom a company’s values and ethics are seen as integral to their generation and its career choices. 

To incorporate such values in a work role involves demonstrating the link between the values and the practical action to achieve them, together with legitimation by the company to do so.

Sustainability in Every Business Function

For members of the Finance Department, that means natural and multi-capital accounting intrinsic to all functions. Companies provide value (and cost) to society and the environment – how will you measure and report it? How will you build this into the return projected in all investment calculations? Are systemic risks including climate change itself, fully built into the company’s risk management, with a true understanding of the potential consequences of failing to do so? 

For the internal audit function, are you assessing the processes whereby there is a genuine integration of sustainability in business strategy and operation? 

For the communications function, how far are you really aware of stakeholder expectations, and are you authentically providing information to them in response? Is your emphasis on advertising or real engagement?

For purchasers, how far do you maintain full awareness of social and environmental performance amongst your suppliers, and do you ensure this is fully built-in to your decision-making processes? 

To those in research and development, are you exploring products and processes to thrive in the very different markets, implicit in the world of Agenda 2030? Is sustainability one strand of your technology strategy or the lens through which every potential innovation is tested? 

To the Human Resources team, do your internal communications fully and continuously reflect the company’s sustainability ambitions, and does its employment practices properly reflect a commitment to social equity and rights? Do your training programs ensure employees have the necessary knowledge and skills to fulfill sustainability goals? Is this part of what you seek from potential recruits, in the first place? 

To those in production and distribution or for those directly providing services. your impact will vary greatly according to your company’s size and sector, but each of your processes has a ‘footprint’. How far are you enabled to assess that impact and have the autonomy to introduce or suggest changes in response? 

This is about sustainability strategy, but then genuinely being able to operationalize it, in each and every part of the company. 

Mindset

All of this brings us back to the challenge of engendering sustainability mindsets for active engagement by the employee – all employees – in their necessary contribution to sustainability transition within the company.

Psychologists tell us that to effect real commitment to change, strategies which involve telling employees about corporate values or mission statements will be less effective unless there is an attempt to connect these with the individual’s own core values and motivation.

Starting with the employee’s own life experience and convictions on sustainability issues also embraces the argument that people change less because of information or analysis and more because of knowledge that influences their feelings.

This is the old ‘left brain/right brain’ argument or ‘science versus the arts’ in addressing problems.

It also envisages the employee as an ‘activist’. This involves an active commitment to implement sustainable actions, as far as possible identified with the employee her/himself. 

Activists are needed within the company, not just in external pressure groups. Individual employees also need to know that they can and are making a difference. 

This has been described as ‘The Power of One, the Power of Many’ by change management specialists. By connecting with their personal values, employees can be encouraged to make their own personal commitment to change in the workplace.

As well as these strategies and psychological approaches for sustainable business, there is also a social dimension. Companies should beware of undermining their own efforts if the work culture within the firm does not match up to the company’s sustainability objectives and values.

If front-line staff perceive that the reality of their working relationships is disconnected from the professed values of their company, there will be no surer way for company sustainability efforts to fail.

Conversely, role models can play an important role in inspiring change – hence the idea of ‘sustainability champions’ throughout the business, adopted by companies such as Unilever, IBM and BASF. 

Integrated Thinking

It also intrinsic to the work I’ve been involved with, in developing ‘integrated thinking’ by Boards and Executives. This is not about changing other people’s mindsets, but also being able to challenge our own. 

Conventional business thinking – it is argued – is too often short-term, finance-led and entrenched in silos. Integrated thinking is a type of strategic thinking, which incorporates longer-term time horizons, multiple capitals and connectivity inside and external to the company.  

In the newly published ‘Routledge Handbook of Integrated Reporting’, Leonardo Rinaldi argues that integrated thinking is also a dynamic process in which judgments and choices are continuously influenced through active exchange with stakeholders. 

The skills of integrated thinking which should be developed in our businesses and for ourselves are the four C’s: creative thinking, critical thinking, communication and collaboration.

To begin or develop integrated thinking involves exposure to stakeholders, acknowledging existing shortfalls, beginning to see problems as opportunities, adopting a learning mentality and being prepared to move beyond your own comfort zone.

Above all, just as it is for our own employees, it involves examining our own sense of purpose.

Irrespective of our individual work role today or tomorrow, each of us should ask: why is it that we do, what we are doing? 

Clearly, this can all be dismissed as some sort of hippie or new age thinking, far removed from the everyday business world.

But companies have employed organizational psychology for years, in relation to recruitment, marketing or reorganization.

Perhaps it is now time to do so, for business sustainability too. 

As Einstein said: “We cannot solve our problems with the same thinking we used when we created them.”