Why We Need Sustainable Leadership Now

Why We Need Sustainable Leadership Now

Traditionally we recognise business leaders as an owner or executive who is results-driven, managing the overall operations and resources of a company, making corporate decisions, and steering it to profitability. In today’s world, as we try to address the challenges of climate change, we need much more from our business leaders – we need leaders who make long-term sustainability a top priority, we need sustainable leadership.

What is Sustainable Leadership

According to Jenny Davidson, Executive MBA Degree Program Director at Newcastle University Business School, Sustainable leadership is all about adopting a responsible approach to the way that we lead, stopping to think about the wider impact of our actions on society and the environment. This might mean considering our wider stakeholder group, the natural systems within which we are operating, and their limits.

Sustainable leadership requires a change in mindset, balancing short-term and long-term priorities while creating value for the stakeholders and ensuring a sustainable future. Tomorrow’s leaders need to embrace sustainability making it a strategic and integral part of the business. But it is not enough for that person alone to be accountable, the sign of a successful sustainable leader is one who is able to engage all stakeholders from employees to the supply chain, so they all share the responsibility for a company to operate sustainably.

Perhaps one of the best-known examples of Sustainable Leadership is Dutch Businessman Paul Polman. CEO of Unilever 2009-19 and Chairman of the World Business Council for Sustainable Development (WBCSD). During his time at Unilever, he turned the company around, doubling its revenues and halving its negative effects on the environment. Under his leadership, he redefined the company’s purpose and culture. He believes the way forward is to create a long-term relationship between companies and society by aligning business goals with societal issues saying: “We cannot choose between [economic] growth and sustainability – we must have both.”

What Makes a Sustainable Leader?

According to D’Amato et al., (2009) the leadership behaviours which are key to sustainable corporate development are:

1. promoting the company’s vision
2. operationalising corporate social responsibility (CSR)
3. obtaining top management support
4. engaging diverse stakeholders
5. empowering and developing stakeholders
6. communicating with stakeholders
7. measuring performance
8. setting ethical standards

One of the main characteristics of a sustainable leader is the ability to look beyond the immediate short-term goals, looking up and out beyond their position, organisation, and sector. They can see the bigger picture and how their organisation can play a part in delivering the triple bottom line of social, environmental, and financial performance. Sustainable leaders have a passion to create a better society and follow the right business practices within the organisation to build a business that is good for everyone and includes tackling issues such as climate change and gender inequality.

How do companies benefit from sustainable leadership?

Sustainable leadership brings opportunities to organisations in the shape of innovation, continuous improvement, sustained competitive advantage, and long-term success (McCann & Holt, 2010). Rather than see sustainability as a compliance issue, companies can find competitive advantages by identifying innovation and growth opportunities in a sustainability‑focused world.

A great example of how this can be achieved is DSM, the Dutch life and material science multinational is a frontrunner in sustainability. Under the leadership of former CEO Feike Sijbesma’s DSM transformed its product portfolio from petrochemicals, plastics, and base chemicals and materials by identifying new opportunities in climate and energy, resources and circularity, and nutrition and health. It paid off, with DSM generating a Total Shareholder Return of 378 percent, climbing to the top of the Dow Jones Sustainability Index chemicals category.

Sijbesma, believes it is vital that sustainable leaders “lead from the front, challenge the status quo, and inspire sustainable business transformation from the top”.

 Characteristics that make good sustainable leaders.

Sustainable leaders practice multi-level thinking and can make targeted decisions that turn sustainability into a competitive advantage. They include all stakeholders rather than trying to manage them and are able to consider multiple viewpoints. They have the courage to make transformative decisions, challenge traditional approaches, and find alternative solutions and they are brave enough to set and achieve long-term goals which may not be popular.

 Typically, sustainability challenges are complex and “wicked” - extraordinarily difficult to define and even more difficult to solve – therefore sustainability leaders need a broad general knowledge and intellectual flexibility to be able to understand and act on these challenges. They are leaders with a worldview that is ecological, systemic, and long-term and they can exercise influence without authority.

Why is sustainable leadership the way forward?

Embracing sustainable leadership is proving to be beneficial for all stakeholders. From an operations perspective, the development of sustainable business practices leads to more efficient operating practices, improving productivity and reducing costs, resulting in increased profit.

With consumers becoming more educated about sustainability, they now consider a company’s impact on the environment when deciding where to purchase their goods and services. “Today’s consumers increasingly expect companies to contribute to social welfare and the common good,” - Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF). To attract and retain customers, businesses must demonstrate their commitment to sustainability.

Companies shown to be respectful of the environment and employees will attract and retain higher calibre people. Employees now look for companies that actively improve the future for them and future generations.

Sustainable leadership comprises of those behaviors and practices that create lasting value for all stakeholders such as the society, environment, and future generations at large (Avery & Bergsteiner, 2011). Gone are the days when a company’s profitability was the only consideration when choosing a business’ direction. Consideration of the triple bottom line of people, planet, and profit under a sustainable leader is the only way forward to secure a future for the generations that follow.