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Sustainability Progress Is Stalled at Most Companies

Jul 20, 2023 | Public | 0 comments

While many companies talk the talk of sustainability, claiming to be integrating environmental and societal concerns into their business models, far fewer walk the walk: Managers typically treat sustainability as someone else’s problem and relegate it to a department or even a single individual.1 On the other hand, companies that have been successful in transforming their business models to be more sustainable have embedded sustainability into their corporate DNA. This means that they have endowed their employees with a sense of sustainable ownership, spurring them to engage in more sustainability-supporting behaviors. When every employee integrates environmental and social concerns into every business decision, sustainability progress is accelerated — an aspirational goal for all companies.

To shed light on the state of play in embedding sustainability and identify key bottlenecks, the Center for Sustainable Business at the University of Pittsburgh collaborated with The Harris Poll to conduct a survey of U.S. employees. We wanted to find out whether their employers were taking measures that our earlier research had identified as important to prompting employees to conduct business through a sustainability lens. Our survey drew responses from 1,056 employees, representative of the U.S. employee base. We defined sustainability for the respondents as “integrating environmental and societal concerns into business decisions and actions.”

Roughly one-third of the respondents asserted that their employers have made significant strides in their sustainability journeys. Although that number might sound low given the enormity of the task facing us, the good news is that there is momentum, which we can help accelerate by pointing out the roadblocks as perceived by employees. Below, we provide six key recommendations that emerged from our data for managers seeking to embed sustainability in the organizational culture and business models.

Establish a purpose based on values. Purpose is a business’s raison d’être — the answer to the all-important question, “Why do we do what we do?” Paul Polman, former CEO of Unilever and a leader in the corporate sustainability movement, has said, “Sustainability is totally driven by purpose.”2 Organizations that are successful at embedding sustainability articulate the societal benefit they aim to deliver to their stakeholders, and this overarching purpose guides everything the organization does.

In our study, 36% of the respondents strongly agreed with the statement “My company wants to make a difference in people’s lives, not just make profits,” while 33% strongly agreed with “My company has a higher purpose beyond profit maximization.” If purpose is the starting point for sustainability, we aren’t doing very well; it is apparent that the profit-maximization narrative is alive and well. Consistently, 43% of employees cited short-term focus, a lack of investor interest, and, importantly, “Our leaders don’t believe in sustainability,” as challenges. Unless CEOs and top management teams realize that profit is the consequence of value creation for all stakeholders and not the starting point for strategy development and execution, progress will be stifled.3

If purpose is the starting point for sustainability, we aren’t doing very well.

Bake sustainability into corporate strategy. Academic researchers and others have noted that efforts to make meaningful progress toward sustainability must be driven by corporate strategy.4 Doing so increases the likelihood that, over time, “doing the green thing” will be seen as a normal part of employees’ jobs, and more and more decisions will be made through the lens of sustainability. With only 29% of respondents strongly agreeing with the statement “My company has a clear business case for improving our sustainability performance” and 27% with “Sustainability is core to how my company executes our business strategy,” it appears that we have a long way to go. Consistent with the status quo, 43% agreed that their company’s failure to build sustainability into its business strategy represents a challenge.

Train employees, and incentivize actions that advance sustainability. Companies that are successful in engaging their workforce have invested in training that gives employees guidance on how to improve sustainability. With only 30% of employees surveyed strongly agreeing with the statement “I understand how I can improve my company’s sustainability performance through my role,” there seems to be a dearth of role-specific knowledge at the individual employee level. Lack of training was cited as a major/moderate challenge by 44%, while a similar number (45%) indicated that they don’t know what actions to take to improve sustainability performance. Companies need to invest more in training and sustainability knowledge creation so that employees know what they can do in their roles and how to do what needs to be done.

Managers must also do more to provide employees with incentives to advance the sustainability agenda: Forty-nine percent of those surveyed found the lack of such incentives to be a major or moderate hurdle to improving sustainability performance. Leaders should also consider whether the management culture encourages engagement and intrinsic motivation by giving employees the autonomy to solve sustainability challenges, which often require creative thinking. However, when we asked survey respondents to rate their level of agreement with the statements “My company allows me to make a lot of sustainability-related decisions on my own” and “My company gives me a chance to use my personal initiative or judgment in carrying out sustainability initiatives,” we found that, at most, 29% of respondents strongly agreed.

Create a sustainability culture in your organization. Managers can keep sustainability salient in the organizational culture by communicating progress, celebrating milestones, recognizing achievements, and collaborating on solutions both internally and with industry partners. Our research has identified the lack of a sustainability culture as one of the biggest impediments to progress, with 48% of respondents indicating that that is a major or moderate impediment at their organization. Communicating sustainability progress to employees is a key component of a sustainability culture, because it keeps issues top of mind. Celebrating successes will pique employee interest and legitimize the importance of sustainability to the organization — but only 31% of respondents strongly agreed that their company celebrates sustainability successes.

Research has identified the lack of a sustainability culture as one of the biggest impediments to progress.

Collaborating with traditional competitors — which is increasingly necessary to address those complex “tragedy of the commons” problems — signals to employees that the company is serious about transformational change and reinforces the culture to employees.5 With only 25% of survey respondents strongly agreeing with the statement “My company collaborates with other organizations to address complex sustainability issues,” it is evident that much work is required to open corporate leaders’ eyes to the potential of progress via collaboration.

Conduct business through a sustainability lens. Imagine the progress we would make if every employee in every company — from the mailroom to the boardroom — integrated environmental and social issues into every business decision they made. This, in our view, is conducting business through the lens of sustainability — an aspirational but necessary goal to reach if we are to surmount our existential crises. As previous research has shown, employees taking individual ownership of sustainability is a key driver for engaging in sustainability behaviors. In our survey, 28% of respondents strongly agreed with the statement “Employees at my company take ownership of improving sustainability performance,” while 45% identified a belief among employees that “sustainability is someone else’s responsibility” as a challenge. This lack of personal ownership of sustainability performance is reflected in our survey results: Only 27% of respondents strongly agreed that they “invested ideas and creativity” to help their company be more sustainable, and just 24% strongly agreed that every business decision they make is viewed through the lens of sustainability.

Imagine the progress we would make if every employee integrated environmental and social issues into every business decision they made.

Bridge the last mile. We noted a significant difference between how corporate and front-line employees responded to our questions. Compared with front-line nonmanagers working in roles such as customer support, managers working in corporate roles were, on average, about 15% more likely to see sustainability as embedded.

To ensure that their commitment to sustainability is real and provides tangible benefits to their organizations, leaders must address this last-mile gap between corporate and front-line employees. Broadly communicated messaging about the corporate purpose and environmental, social, and governance targets might not suffice in this instance; there is a real need to drive sustainability through practical initiatives and actions that can be integrated into daily tasks and routines that employees perform across the entire organization.

Interestingly, perceiving sustainability as more embedded in the organization also opens employees’ eyes to the roadblocks and challenges that impede progress. Our data shows that employees who are more engaged and perceive sustainability to be more embedded also perceive more roadblocks, on average, than those who are less engaged.

The implication here is that as companies bridge the last-mile gap in embedding sustainability, they should be prepared to field more questions and listen to more opinions as employee engagement on the issue increases. Companies should use one-on-one coaching, action playbooks, and tailored communication to make sustainability everyone’s job. Companies need to be prepared to invest more resources into embedding sustainability — and get the entire organization to conduct business through the sustainability lens.

References

1. CB Bhattacharya, “How to Make Sustainability Every Employee’s Responsibility,” Harvard Business Review, Feb. 23, 2018, https://hbr.org.

2. CB Bhattacharya, “Small Actions, Big Difference: Leveraging Corporate Sustainability to Drive Firm and Societal Value” (New York: Routledge, 2019), 65-66.

3. P. Polman and CB Bhattacharya, “Engaging Employees to Create a Sustainable Business,” Stanford Social Innovation Review 14, no. 4 (fall 2016): 34-39.

4. A. von Buchwaldt, G. Mitchell, S. Reynolds, et al., “3 Steps to Ensure Your Corporate Strategy Delivers Both Growth and Sustainability,” Harvard Business Review, Feb. 6, 2023, https://hbr.org.

5. T. Galpin, J.L. Whittington, and G. Bell, “Is Your Sustainability Strategy Sustainable? Creating a Culture of Sustainability,” Corporate Governance 15, no. 1 (2015): 1-17.

6. Polman and Bhattacharya, “Engaging Employees.”

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The post "Sustainability Progress Is Stalled at Most Companies" appeared first on MIT Sloan Management Review

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