Shareholders and stakeholders alike are demanding exponentially more from businesses on sustainability. Not just on disclosure and reporting, but tangible actions and clarity on their environmental, social and governance issues (ESG) strategies and quantifiable results. It’s no longer just at the margins — it’s now in the mainstream.
Our research and experience at Accenture with thousands of clients on sustainability over the last decade shows that the "whether" and even "what" are becoming much easier questions to answer for CEOs and top executives. But the pressure mounts on the "how" of reconciling business and sustainability goals in a way that reinforces competitiveness.
Many organizations seem to be stuck in the planning and promising phases of initiatives. They are falling short of the impactful and measurable results that they are being called on to deliver at speed and scale right across their businesses and value chains as a whole. This disconnect between plans and action has significant implications for the fight against the climate crisis and the delivery of the business contribution to the United Nation’s Sustainable Development Goals, which requires action at all levels — as well as for companies’ longevity and financial success in a world where the very nature of competitiveness and success are being redefined right in front of our eyes.
With regard to the question on the "how" of sustainability in business, in partnership with the World Economic Forum, we recently set out to systematically explore how companies can begin to match their goals in our new report, Shaping the Sustainable Organization. Sustainable organizations are almost without exception purpose-led businesses whose actions inspire their people and partners to deliver lasting financial performance, equitable impact and societal value to earn and retain stakeholder trust and support. The report analyzes the barriers that keep organizations from achieving this and provides a pathway for executives to imbed the principles of sustainability into their organizations.
73% of more than 4,000 C-suite executives identified 'becoming a truly sustainable and responsible business' as a top priority for their organization over the next 3 years.
Leveraging your people to ensure success
On top of longer-term trends listed above, COVID-19 has also in many ways changed the way people view companies. A business is no longer a provider of goods and services, but now must be a steward of social and environmental impact, too and they must act — and be seen to act — in a responsible way. Our research shows 73 percent of more than 4,000 C-suite executives identified "becoming a truly sustainable and responsible business" as a top priority for their organization over the next three years. While awareness of the integral role companies play in addressing social and environmental issues is paramount, it can be easy for executives to take an idea and shape it, often outpacing their organization’s ability to actually deliver on these goals.
This disconnect is shown clearly in another Accenture study where 68 percent believe they create empowering workplace environments, compared to 36 percent of employees who were asked the same question. Leaders need to slow down and examine their relationships with all stakeholders, including their own talent. Engaging in organization-wide accountability and "collective intelligence" is central to making responsible choices and unlocking a company’s full potential on sustainability issues.
Our research at Accenture debunks the outdated belief that purpose and profit are at odds, finding that when leadership teams build sustainability into the DNA of their organizations, they are able to deliver financial value and wider stakeholder impact, outperforming peers by 21 percent on both profitability and positive environmental and societal outcomes.
Can we start to decode the new DNA of organizations succeeding in reconciling shareholder and stakeholder value and the "how" of sustainability?
While a herculean effort, our research points to some organizational and individual capabilities that will comprise that new genetic make up for winning companies. Sustainability should not be understood as an exclusively environmental commitment anymore, but rather environmental commitments alongside practices of inclusion and diversity, ethical operations and economic justice. That said, figuring out how to operationalize this new meaning is not a simple undertaking. To break down this process and convert sustainability goals from promises into action, Accenture decodes "Sustainability DNA" into 21 management practices, systems and processes that form the foundation of stakeholder-centricity for the betterment of the planet and the business.
This new set of capabilities also includes taking bolder action and public positions on sustainability issues such as climate change — being prepared to stand up and aligning with values and purpose.
One of the clearest findings from our discussions and responses from executives was that the old days of keeping your head down and allowing governments to take the lead on themes relating to the public good are over. Purpose-driven and value-based organizations need to take a visible stand to be truly authentic with stakeholders and avoid being accused of greenwashing by investors and shareholders demanding more transparency.
Ahead of COP26, in partnership with the United Nations Global Compact, we recently conducted our largest CEO study on their corporate contribution to climate action. We found that business leaders are sounding the alarm on the early onset of climate-induced disruption and are looking for regulatory support to boost resilience, meet the 1.5 degree Celsius target and achieve the SDGs in time.
With most CEOs (81 percent) believing policymakers have not given them the clarity needed to meet their sustainability targets, they are highlighting five critical asks for negotiators to help them take bolder action and deliver on the goals of the Paris Agreement:
- Aligning Nationally Determined Contributions (NDCs) to a 1.5C warming trajectory
- Enhancing global cooperation on carbon pricing mechanisms aligned with the Paris Agreement
- Meeting and exceeding the $100 billion commitment in climate financing for the Global South
- Establishing common standards for biodiversity protection and pathways for nature-based solutions
- Increasing business engagement in climate policy formation for collaborative climate action
Aspirational principles and lofty commitments from business will no longer suffice in today’s environment.
However, these same CEOs told us that everything we need to achieve the 1.5-degree net-zero world is available to us such as the capital, the technology, the innovation, the new business models. They told us that they want clarity and they too need to step up — as companies, as industries, in clusters of companies and value chains and to team with governments to achieve tangible results. Even that mindset and the set of capabilities required for this kind of collaboration points to a new era of "how" companies go about succeeding.
Organizing for success in a new era of value, impact and sustainability
Aspirational principles and lofty commitments from business will no longer suffice in today’s environment. We are seeing continual changing context for competitiveness and success, not just anecdotally, but increasingly driven by science, economics and data and not just on financial performance but on ESG and 360-degree value. Rebuilding the cultural foundation and rethinking organizational capabilities — even using the metaphor of a companies’ core DNA and how it adapts to a new era is daunting, particularly with how fast moving, complicated and truly complex the modern business environment is. But it also provides a window of opportunity for businesses to lead the planet toward a better future and ensure their own longevity as sustainability becomes the new status quo.