Sustainability: Are You Contributing to the Communities You Serve?
“I wish I had been more thoughtful about our company’s impact on its communities” was a comment I didn’t expect to hear from CEOs I’ve interviewed.
Yet that is what many of them shared upon reflection. Leadership research has shown the value of airing one’s vulnerabilities as an expression of authenticity and is important in building trust.[i] Yet it remains unusual to hear CEOs admit regrets and personal shortcomings. While they often enjoyed financial success and earned sizable shareholder returns, many of these leaders came to realise that these results were not the only barometers of career success. As we are witnessing today there are a host of significant challenges businesses face worldwide, with how to become more sustainable foremost among them, no doubt due to growing global concern over our rapidly changing, deteriorating climate. Perhaps this regret has a simpler explanation: CEOs recognise that the climate crisis is a threat to the people in the communities they serve and, consequently, the economic viability of their company as a going concern. Therefore, to strengthen their company’s value proposition it makes good business sense for leaders to include the three commonly recognised pillars of sustainability: environmental, economic, and social;[ii] in their strategy-making process.
Scientists have been warning us about the climate for decades and their research indicates that the extreme planetary conditions we are living through would not have occurred in the pre-industrial era.[iii] As individuals, we may be aware of larger systemic problems, but how we experience them on any given day can feel incremental, an extension of life’s normal rhythms. Yet evidence shows that people worldwide are personally feeling the effects of the climate crisis. Storms are more severe, heat waves are more frequent, and droughts are more enduring. That means the lifestyle many countries have enjoyed for decades cannot continue unabated without severely negative repercussions for all life on earth, inarguably the most important community of all.
Consider the consequences of inaction. Worsening severe weather patterns disrupting agriculture and food production. Heat waves leading to significant health risks to affected people. Drought conditions eliminating access to water for increasingly desperate populations. People in low-lying regions forced to move to avoid the worst effects of rising seas. Melting polar ice caps and receding glaciers rapidly releasing dangerous quantities of methane and carbon dioxide, previously trapped for eons deep in the ocean and in the soils below frozen land masses, into the atmosphere.[iv] Ocean environments acidifying, risking entire species extinctions.[v] These environmental impacts negatively affect the global food ecosystem, putting billions of lives at risk. And these are just a few of the obvious effects of the climate crisis confronting us right now.
Now consider the impact to your business. If your company is among the deniers, or slow movers, hoping to eke out a few more years of economic growth to please shareholders, you are willfully disrespecting the communities you serve because while your financial decisions might feel good for now (and perhaps your own personal wealth increases) your success will be short-lived when markets realise you failed to address harmful business practices when you had the chance, increasing negative public perceptions, harming your brand value and market capitalisation (and reducing shareholder wealth), and distracting from building responsible, efficient, and effective operations. Investors increasingly expect companies to demonstrate their sustainability bona fides, with 73% of them saying that corporate efforts to be socially responsible have a positive return on their investments.[vi] That’s encouraging. There’s also discouraging news: only 36% of consumers trust business leaders to do the right thing.[vii] That means greenwashing won’t work. You’ve got to strengthen your economic viability by building trust through deeds that match your words.
View the actions you intend to take through the lens of what will enhance the quality of life and wellbeing of your communities both inside and outside the company. While quality of life and wellbeing are abstract constructions that aren’t easily quantified, precise measurement isn’t the point, nor terribly helpful when you want to understand the general happiness and wellness people feel. Instead, raise your proverbial antenna to detect and observe the signals of the social dynamism both inside and outside your company. That means doing something leaders tend to do less of as their careers progress: listening, walking, talking, and relating. Meaningful impact happens when your company demonstrates it cares, with employees recognised as genuinely good people whose participation enriches and strengthens the community’s sense of social connectedness. Global surveys show that the public expects companies to demonstrate greater concern for sustainability. 88% of consumers in the UK and US, for example, want companies to improve their sustainability footprint[viii]. Actively engaging in local communities provides important insights company leaders can use to bolster their understanding of how to improve their sustainability efforts to help the community flourish.[ix]
To build a reputation as a responsible corporate citizen, start with the basics: ensure your ethical compass is pointing toward true north. My work in over 40 countries has been across multiple sectors, including high tech, extraction, energy, professional services, financial services, healthcare, and manufacturing. A clear sense of ethics is embedded deeply into the most consistently successful firms. Evaluate your ethical compass heading as follows:
- Are ethical expectations and behaviours explicitly identified as non-negotiable in your stated values?
- Are you linking those values into employee performance criteria?
- Are those same values applied when considering where to do business?
- When lapses occur, how does your company share lessons learned internally and externally?
Cultivate a sense of genuine concern and care for your communities. Do people talk about your company to share praise or derision? Praise suggests you are viewed as a true supporter and energiser, whereas derision signals you are a de-energiser, abusing the goodwill of the community that generously shares its resources with you.
- Identify the sustainability choices will you make to determine community impact (i.e. absolute carbon footprint reduction; alternative, more responsibly-sourced raw materials; disease eradication; environmental health; education attainment; economic equality; social justice…)
Setting Ecosystem Standards
Determine what is expected of your ecosystem partners. Your company’s prosperity is impacted by the health of your ecosystem partners. Include and expand on the following:
- What criteria are being used to guide good partner behaviour in the ecosystem?
- What is the reputation of each partner within?
- What aggregate value should partners expect to gain from the ecosystem?
- How financially stable is each partner?
- Do you have criteria outlining whether struggling partners should receive support from other ecosystem partners and/or suspension criteria in the event of low or non-performance to ecosystem standards?
- What indicators would show that your ecosystem has contributed meaningful value to the wellbeing and quality of life in the communities you serve?
- What human rights policies and practices are expected of ecosystem partners and the places where your company does business?
- What are you doing to ensure diversity, equity and inclusion that goes beyond a numerical reporting exercise?
Our businesses are far more than economic engines; they are vital contributors to the lifeblood of communities everywhere and can be influential role models for ‘doing well by doing good.’ Consider the alternative; if your company is not making a positive impact on its communities, and society more broadly, then what purpose does it serve?
John A Davis is an award-winning academic, business leader and author of Radical Business: How to Transform Your Organization in the Age of Global Crisis published by Emerald.
[i] Seppälä, Emma. What Bosses Gain by Being Vulnerable. December 2014, Harvard Business Review. Retrieved from https://hbr.org/2014/12/what-bosses-gain-by-being-vulnerable. [ii] No author. Sustainability Primer. 2015. EPA. Retrieved from https://www.epa.gov/sites/default/files/2015-05/documents/sustainability_primer_v9.pdf. [iii] Hersher, Rebecca. Researchers can now explain how climate change is affecting your weather. July 7, 2022. NPR. Retrieved from https://www.npr.org/2022/07/07/1107814440/researchers-can-now-explain-how-climate-change-is-affecting-your-weather [iv] UiT The Arctic University of Norway. Methane release rapidly increases in the wake of the melting ice sheets. April 21, 2021. Phy Org. Retrieved from https://phys.org/news/2021-04-methane-rapidly-ice-sheets.html [v] Kaplan, Sarah. Ocean Animals Face Mass Extinction from Climate Change, Study Finds. April 28, 2022. The Washington Post. Retrieved from https://www.washingtonpost.com/climate-environment/2022/04/28/mass-marine-extinction-event-science/ [vi] Stobierski, Tim. (2021). 15 Eye-Opening Corporate Social Responsibility Statistics. Harvard Business School online. Retrieved from https://online.hbs.edu/blog/post/corporate-social-responsibility-statistics. [vii] No author. (2018). 2018 World Value Index. Enso. P.18. Retrieved from https://www.enso.co/wp-content/uploads/2018/09/World-Value-Index-2018-Brand-Report-enso.pdf. [viii] Townsend, Solitaire. 88% of Consumers Want You to Help Them Make a Difference. Forbes. 2018: Retrieved: https://www.forbes.com/sites/solitairetownsend/2018/11/21/consumers-want-you-to-help-them-make-a-difference/?sh=474a800c6954. [ix] Barnes, Melody; Paul Schmitz. Community Engagement Matters (Now More Than Ever). 2016, Stanford Social Innovation Review. Retrieved from https://ssir.org/articles/entry/community_engagement_matters_now_more_than_ever#