Creating sustainable leaders

2019 Global 100

In an era of diminishing resources where ecosystems are under intense pressure and human systems are increasingly challenged by social and economic issues, the question arises time and again: how best to address these problems and who will lead the way forward?

Wicked problems of sustainability are complex and require the collaborative efforts of economic, environmental and social actors. Traditionally, coordination of such activities has come from political leaders, often at the national level, where policy levers can direct attention and behaviour for individuals and industry toward commonly held social and environmental goals.

Countries such as Sweden and Denmark have been recognized for their foregrounding of sustainability as part of their national agenda, where creating a sustainable society is a key country goal and well-being is defined in economic, social and environmental terms.

Canada has slipped significantly in recent years from its position on the world stage as a leader in environmental policy innovations. The creation of a Federal Sustainable Development Strategy, where all federal departments and agencies are required to set goals and targets and report on these in a three-year cycle, seemed to move in a promising direction, but has not resulted in any discernible progress to date. Political pundits routinely point to the unwillingness of the Canadian government to take a leadership role on key sustainability issues such as climate change, which has further eroded its international reputation in this domain.

This is not, in fact, an exclusively Canadian problem. The Rio+20 talks were heavily criticized for their inability to build clear momentum toward change, hampered by the hesitancy of most countries to stake out a leadership position on global issues of sustainability. In an era of austerity cuts and financial belt tightening it seems that national interests prevail over biosphere concerns, and economic priorities trump environmental and social value creation. Beyond the rhetoric of sustainability as a “feel good” story, a substantive approach with real implications for policymakers appears to be a decidedly unpopular vision for national leaders. This comes at a time when strong government support appears most critical.

Despite the seemingly grim implication of this inaction, or perhaps because of it, alternatives to government leadership are increasingly pursued by those seeking opportunities to positively impact pressing global issues.

More frequently the focus is turning to the corporate world to lead the way, for the flexibility, resources and potential for innovation that sits in contrast with the cumbersome structures and lagging processes of government bureaucracy. What would have been heresy even 20 years ago has now become our last best hope. But how might corporations fulfil this promise?

David Wheeler, president of Cape Breton University in Nova Scotia, has long advocated for the development of a uniquely Canadian vision of sustainability with the potential to set the country apart and give rise to more robust business models, catalyzing innovation and entrepreneurship across every sector of the economy. Over a decade ago, he initiated Sustainable Canada, a multi-sector study bringing together academics across a range of disciplines with government, civil society and private sector partners, to explore the potential of Canada to brand itself as a leader in sustainability.

Numerous opportunities were identified through this research for organizations in diverse sectors such as finance, forestry, energy and tourism to engage in sector-specific activities to advance sustainability and strategically position their companies internationally. What was lacking in most of these companies, however, was a mindset to connect the idea of sustainability with their core business operations and to use this vision to frame their strategic thinking.

A comprehensive review of the academic literature on the “business case” for sustainability, undertaken in 2008 by Wheeler and colleagues Elizabeth Kurucz and Barry Colbert, identified four distinct modes of value creation used by organizations as the rationale for building such a business case: cost and risk reduction, competitive advantage, reputation and legitimacy, and synergistic value creation. These approaches move along a spectrum from a primarily trade-offs approach focused on sustaining the organization itself, toward a more fulsome integration of stakeholder interests to manage for sustainability.

The findings from that meta-analysis and a related three-year project on Leadership for Sustainability suggested that rather than driving toward one definition or identifying the steps to building a more sustainable organization, no one approach will fit all. However tempting, reducing sustainability to a simple prescription appears to decrease effectiveness by increasing the risk of fragmented, rather than integrative thinking.

The implications of these findings for leaders are described by Kurucz and her colleagues in the book Reconstructing Value: Leadership Skills for a Sustainable World, which synthesizes the struggles of hundreds of practising managers across private, public and not-for-profit sectors. Leaders in organizations that have adopted a sustainability vision are trying to make sense of this societal ideal by translating it to their own day-to-day experience. Despite often strong personal motivations and beliefs that sustainability is a worthwhile pursuit, without a context-specific rationale for why their organization should engage in sustainability-focused business practices, the ideas did not gain significant traction or transform their business operations, products or services.

This meta-analysis, along with the insights from practising managers in sustainability-minded organizations, point toward the critical importance of engaging in sustainability conversations that give leaders the opportunity to connect their own business imperatives with a vision of sustainability to motivate participation and enhance the potential to drive value creation for multiple stakeholders.

A question raised through this work is whether some business cases are more prominent in one sector than another and, if so, could this inform policymakers’ decision making about how to motivate organizations to engage in a sustainability journey.

A study by Andree Gosselin O’Meara in 2013 explored this question by comprehensively examining the signals that companies across various sectors send to indicate their display of leadership in sustainability. The study focused on 180 companies from the largest six sectors of the Canadian economy (as per the number of companies represented in each sector of the Toronto Stock Exchange). A review of 10 metrics and 14 activities used by each company to signal its leadership in sustainability, supported by interviews with industry experts, identified striking differences among the sectors in what motivates companies to participate in sustainability.

Cost and risk reduction appeared as the main motivation for companies in Consumer Discretionary and Consumer Staples categories, while competitive advantage was the focus for those in Energy, Financials and Industrials. Reputation and legitimacy was the main concern for Materials companies, and while very few were motivated by synergistic value creation, there was moderate interest from the Financials, Industrials and Consumer Discretionary sectors.

The research results suggest there is good potential to identify leverage points to engage organizations in sector-specific conversations about sustainability that can help build momentum across the economy. They also reveal that very few organizations have yet to think about the full potential of sustainability by moving beyond trade-offs toward integrating stakeholder interests to resolve complex problems.

So the question then is: With the leadership challenges at the national level, and such diverse corporate interests, how best to advance these conversations?

A significant surge in new approaches to environmental governance led by the private sector and civil society reveals a range of experiments taking place. Efforts focused on the potential for multi-sector and trans-disciplinary initiatives to yield transformational outcomes acknowledge that addressing sustainability issues requires recognizing and understanding the different priorities of various stakeholder groups, but then refocusing attention on issue resolution, rather than foregrounding individual, sector or national interests.

One such experiment at the regional level is an approach initiated by collaborative civil society organization Sustainable Waterloo Region in Ontario. Since 2008, its flagship Regional Carbon Initiative has attracted over 60 member companies who have made or are working on specific public commitments toward carbon-emission reduction, supported by the region’s measurement framework, education forums and public recognition of achievements. This model is currently being replicated in other Ontario regions through a new scaled-up initiative, Sustainability CoLab, launching January 2014.

Multi-sector governance innovations such as this hold potential for us to collectively make progress in addressing issues facing our commonly held resources. Understanding the different motivations for sector partners to engage in sustainability initiatives can help foster these multi-sector collaborations; bringing them together in meaningful conversations can help identify creative ways forward that organizations have difficulty envisioning on their own.

To start these conversations, leaders need to develop the skills to engage all stakeholder groups to challenge their assumptions about business as usual, and to unleash an entrepreneurial approach to governance that generates context-specific solutions to complex global issues. Fostering this form of leadership in our own communities and organizations and focusing on solutions within our own sphere of influence will counteract the cynicism that the fairy tale of heroic leadership in government or industry inevitably produces. In this way, we might craft a new narrative together that will help build a more sustainable world.

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