With our traditional economic model undergoing profound change, business as usual belongs to the past. The need for prominent inclusion of environmental and social sustainability is taking off sharply. Companies need to respond to this new state if they want to survive. They need to excel in integrating the three pillars of sustainability into their strategy: financial, environmental, social. Boards need to serve as a sensor in this new reality of business.
Because we cannot continue to maximise profits solely for shareholders, ignoring the collateral damages to people and planet. Today we urgently need to define new norms for value creation based on human, social and environmental capital. Not only because of increased regulation or pressure from the entire society as per, for instance, the UN 17 SDGs; but also because a financially successful organisation is just not viable anymore without considering the interests of all stakeholders.
Such new approach does not need to be “either-or”: companies who have embraced ESG tend to demonstrate that they do preserve people and planet, while increasing their long-term profitability.
So where to begin?
By starting from the purpose: why are you in business? What solutions do you want to create for the world’s problems, serving your customers and stakeholders and at what level of profit? Is this balance right? The board should ensure it is. Strategic choices flow from there. Appropriate metrics will need to be put in place, measuring both financial as well as non-financial dimensions.
Far from being a mere matter of survival, integrating sustainability in your business strategy can constitute an enormous opportunity to innovate! It opens the door to new technological solutions that new, motivated employees are keen to identify, design and develop. As the time pressure keeps increasing, innovation must be accelerated to address today’s challenges as pandemics, climate change, energy transition, and circular economy.
There are many ways to boost innovation, but it all starts with the right mindset: become eager to relearn and to explore new paths. This learning culture should be embedded at every level and lived by every employee.
The tone is set from the top. Boards have a huge role to play and they should ensure composition, skills, refreshment-rate and team-culture are in place to be able to lead by example. Only then, will directors be able to effectively steer the corporation by translating purpose into strategies that are connected to innovation and supported by agility and resilience; all these ingredients are indispensable in today’s turbulent times.