LESSONS IN LEADERSHIP There are countless examples from the business world to inspire CEOs. Some of my favourites include Unilever’s refusal to supply generic soap to UNICEF but its willingness to donate large volumes of its best-selling Lifebuoy soap product. This not only generated incredible health and social benefits for impoverished communities but also cemented Lifebuoy as the go-to soap brand in emerging markets. Another, excellent “win-win” is the “right turn rule” implemented by logistics behemoth UPS. By only turning right (in countries with lefthand drive vehicles) UPS’s trucks rarely turn against the flow of traffic. This leads to faster delivery times, less engine idling, and, according to some estimates, savings equivalent to millions of litres of gasoline and hundreds of thousands of tons of carbon dioxide. UPS’s efforts highlight a broader opportunity – waste. Every CEO has a waste reduction opportunity, from electricity, to manufacturing by-products, to packaging. Cutting waste is inherently margin accretive and nearly always simultaneously positive for sustainability. In a politically polarized environment, looking for “win-wins” is an unexpected opportunity. What people say and do are different Thirdly, CEOs can seize an unexpected opportunity and be more nuanced in their understanding of customer attitudes to sustainability. Repeated consumer and investment studies find that large majorities of the population – particularly younger generations - are prepared to pay more for sustainable products or would like to invest sustainably. However, the follow-through of these altruistic declarations is often muted. Certain academic studies find that, when it comes to sustainable topics, the gap between those who “say” and “do” can be as large as three-fold. Understanding this nuance is a critical opportunity for CEOs. When seeking to understand their customers, CEOs also need to be mindful of succumbing to “linear bias.” For example, when reviewing consumer sustainability preference data, let’s say on a zeroto-five scale, it is tempting to think that “fives” are more likely to act sustainably then “fours” and that “fours” are proportionately more likely to buy than “threes.” The reality is consumer actual consumer behaviour is non-linear and purchasing choices are near identical, except in the “zero” and “five” extremes. With societal attitudes to sustainability polarising, understanding what your potential customers really think and – more importantly – what they will actually do, is essential if one is to design a successful sustainability strategy. In 2023, CEOs have an unexpected opportunity to out-think their competitors, by understanding the nuance of their customer views and planning accordingly. Unexpected opportunities include “getting on with” sustainable actions without the corresponding public grandstanding; ensuring that sustainable activities are grounded in solid business rationale to create “win-wins”; and fighting one’s own heuristics to correctly differentiate between what potential customers “say” and “do.” All of these will be required in 2023 if CEOs are to construct a successful business strategy that also addresses sustainability. James Purcell is the Group Head of Sustainable Frameworks at Credit Suisse and co-author of new book, Sustainable Investing in Practice (available to purchase now for £34.99, published by Kogan Page). 37
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