By Matt Gitsham
At the close of COP26, an article in the Financial Times reported that although global executives welcomed the deal reached at the close of the UN summit, many felt that it didn’t go far enough. Indeed, the article continued, business leaders pointed out that some companies are showing greater urgency than governments when it comes to global warming. The fact that there was a significant CEO presence at COP26 underlines recent research conducted at Hult, which shows that a new type of business leader is beginning to emerge.
The research, which involved interviews with CEOs at the forefront of this trend, suggests that many of today’s business leaders have come to recognise they need a different mindset and skillset to their predecessors.
A new leadership role
A generation ago, a leader’s role was to keep their head down and focus on the numbers. Challenges in society were the job of political and activist leaders. For business leaders to get involved would be a distraction, would lack legitimacy and would end up adding cost to the bottom line.
But in today’s world, many business leaders have come to realize they need a different mindset to be successful. They need to see addressing societal and sustainability challenges as at the heart of their job description – it is core to their job to be playing a leadership role—alongside civil society and political leaders—on tackling global challenges. And doing so is core to how they create and add value for their organizations, their investors, and their other stakeholders. They are leaders in society as much as leaders of the business. Rather than seeing a trade-off between doing good and making money, leaders need to aim to achieve each through the other.
This shift in thinking about the scope of the leadership role of today’s senior executive leads to a shift in emphasis regarding the kinds of activities business leaders devote time and energy too, both inside and outside the organization.
Leading culture change in organisations to embed sustainability
Many leadership teams have been putting action on global sustainability challenges at the heart of their corporate strategies. Bringing such strategies to life requires substantial cultural change in organisations that have been geared toward maximising short-term returns to shareholders above all else. This creates a leadership requirement for helping facilitate the kind of cultural change that helps all employees across an organisation put prioritising action on sustainability at the heart of their work.
The chief executives we spoke to talked of seeing their own role in influencing change in their organisations in terms of opening up the space for others to behave differently – through the goals they articulated and the rationales they developed for pursuing them, the stories and people they celebrated, the conversations they started, the questions they asked, what they were seen to spend their own time doing, and which individuals and groups got recognised and rewarded and for what. All of this helped create the space and safety for others in the organization to depart from the norm and embrace action that helped achieve sustainability goals.
A broader leadership role – leading change among customers, suppliers, competitors and policymakers
But our interviews showed that senior executives are also realising they have a leadership role in the wider ecosystem around their organization. They shouldn’t just take their external environment as a given they have to respond to, but something they have a role and responsibility to actively shape, proactively leading change in consumer and supplier behaviour, industry norms and government policy. Some are leading collaboratively with industry competitors, NGOs and government where challenges need to be tackled and only collective, systemic solutions will do.
This new horizon to their role has required leaders to develop skill in areas that historically have not been a conventional part of their repertoire; contributing to public debate with an informed point of view, relating well with multiple constituencies, engaging in dialogue to understand and emphathize with groups and communities with perspectives different to their own, and engaging in multi-stakeholder collaboration with unconventional partners.
Take consumer goods giant Unilever for example. Former CEO Paul Polman launched Unilever’s Sustainable Living Plan in 2010, a ten-year strategy to double the size of the business by 2020 by setting targets such as helping a billion people improve their hygiene habits, bringing safe drinking water to 500 million people, doubling the proportion of the food portfolio meeting stringent nutrition standards, halving the greenhouse gas impact of Unilever products across their lifecycle and sourcing 100 per cent of raw materials sustainably.
Over the ten years of the implementation of this strategy, many of these targets were met and good progress was made on many others, and Unilever has become a benchmark for others to emulate. A corporate strategy with goals like this has required leading cultural change within the organisation, but also leading change in consumer behaviour, leading change among suppliers and competitors across industry sectors and engaging with governments to lead change in policy frameworks.
Take the goal to halve the greenhouse gas impact of Unilever products across their lifecycle, and think about laundry detergents for example. Part of achieving that goal is within Unilever’s control, through for example reducing energy usage in the manufacturing process of the laundry detergent, and innovating in product design to bring to market detergents that work well at lower washing temperatures, reducing the carbon footprint of heating water during the consumer use phase. But consumers still need to be influenced and persuaded to switch to washing at lower temperatures – influencing that behaviour change is part of the leadership role senior executives must now embrace. And both Unilever’s own manufacturing facilities and consumers’ washing machines rely on electricity supplied through national infrastructure – for Unilever to achieve its own goal of halving carbon footprint across the product lifecycle, they need governments to act to boost renewables and phase out fossil fuel power generation – Unilever executives have a leadership role to help encourage that government to happen.
It is because more and more business leaders are embracing this new kind of leadership role that we see them turning up at COP26 and other UN summits, pushing governments to be more ambitious, and criticising them when they are not.
Leadership selection and development
But whether or not an organisation ends up with senior executives willing to embrace this new kind of leadership role has tended to happen more by chance than design. With the pressures now pushing organisations to embrace the sustainability agenda, there is a need to be more deliberate in consciously looking for these kinds of outlooks and skills in recruitment and succession planning, and nurturing them through leadership development and executive education.
It is time for more business leaders to step up and play their part in developing a sustainable, responsible future for us all.
About the Author
Matt Gitsham is Professor of Sustainable Development and Director of the Centre for Business and Sustainability, Hult International Business School (Ashridge).
Matt has led numerous research projects on business and sustainable development over nearly two decades. Recent projects include exploring CEO perspectives on the implications of sustainability for business leadership, CEO lobbying for more ambitious public policy on sustainable development and the role of business in shaping the UN Sustainable Development Goals (SDGs). He has worked closely with networks including the UN Global Compact and Business in the Community, and companies including Unilever, IBM, HSBC, GSK, De Beers, Cemex and Pearson. Matt leads courses on Business and Global Society on the Hult MBA and Global Human Rights on the Hult undergraduate program.