It is time we stopped paying lip service to driving environmental change. Lars Pedersen believes a good start is in hiring leaders with “a combined set of skills and competencies – a double competence in business and sustainability.”
For some time, the environment has dominated the conversation around environmental sustainability as it relates to business. More recently, however, other important environmental issues are coming to the fore – biodiversity for example. This is a sustainability problem, and the environmental elements to sustainable business that organisations need to address are proliferating when it comes to the number of issues and the many different features of those challenges.
A further challenge is the debate about who is responsible for driving action. I believe the idea that organisations are responsible has grown out of what we used to refer to as the corporate responsibility agenda. The positive effect of using the word ‘responsible’ is that it generates a conversation about what we expect from companies. Increasingly, however, I think the word ‘responsibility’ has taken a backseat because the concept of sustainability and sustainable business has become part of the everyday business conversation.
Conversations around a company’s footprint can also be complex. Some pollutants (such as emissions coming out of a chimney) are easy to track back to a particular company – but others (such as microplastics in the sea) are almost impossible. For this reason, we are having two conversations simultaneously. One is around the sustainability effects of the business broadly speaking, and how companies might address them by making changes to business models, strategies and operations. The other is a more value-laden discussion. What should a company act on, regardless of whether it is a win-win opportunity for them? This is exemplified when you consider it in terms of the social arena: a company must take responsibility for human rights violations, yet the discussion is more ambiguous when it comes to the environment.
Drivers for change
Right now, I see three drivers for change emerging. Firstly, environmentally conscious organisations that want to do something about their environmental footprint. I am based in Norway where we have a huge fish farming industry. Many companies here invest heavily, by their own agency, to improve things like fish health and the effect on ecosystems. That said, I am sure many companies would consider sustainable practices a competitive advantage.
At the next level is industry associations. Continuing to focus on fisheries, the Marine Stewardship Council (MSC), is an association of companies committed to upholding established standards.
The next level is government. Government regulators have a significant role to play in ensuring the worst kind of environmental damage is made impossible and often use a carrot or stick approach to incentivise or punish. For example, in Norway, we have a well-developed electrical vehicle subsidy system – which is why we have the highest electric car use per capita in the world.
I believe in having a combined set of skills and competencies – a double competence in business and sustainability. While you can hire people with sustainability skills to do specific sustainability jobs, we need people who understand how they can impact the sustainability agenda to effect real change.
We need to integrate the competencies and skills from the core fields (accounting, finance, strategy, and marketing) with sustainability competencies and skills. In this new reality, we must enable financial institutions and markets to operate in a way that supports the green transition and marketers need to enable and encourage consumers to buy greener products. We must also have reporting that speaks to both the sustainability and economic footprints of the company.
Interestingly, many organisations are quite open when it comes to saying they have a competency gap regarding sustainability. I am seeing graduates with this double skill set being fast-tracked as the current generation of managers was never taught these skills.
Does sustainability need a strong voice?
In academia and in practice, a debate is ongoing about whether or not sustainability needs a strong voice – where CEOs become “sustainability influencers”.
You can argue both sides. Some believe the visionary, outspoken style of Emmanuel Faber at Danone and Paul Polman at Unilever can create a ripple effect that sparks change. Others believe it is just as effective to initiate a silent revolution, including shared goal setting, subsidies and incentives, and conversation to integrate sustainability into the regular business playbook.
There is a place for both, but I would caution against the “superhero” CEO approach. There is a tendency here to frame the conversation as a “battle”, pushing people into opposing positions, rather than agreeing on the sustainability metrics and achieving them – where it is not controversial anymore but accepted business practice.
About the Author
Lars Jacob Tynes Pedersen is Head of the Centre for Sustainable Business at the Norwegian School of Economics (NHH). NHH is a member of the CEMS (https://www.cems.org/), the global alliance of 34 of the world’s leading business schools and 70 corporate partners. Lars is a contributor to CEMS’ ‘Leading for the Future of our Planet’ report (https://cems.org/news-events/news/leading-future-our-planet).