My keynote speech at The Great Indoors’ recent focus group event discussed how modern business organisations can contribute towards building a sustainable future.
And following on from this, I’m keen to share key insights into how businesses can secure staff buy-in for their sustainability policies, ensuring a lasting change that benefits the firm, its employees and the environment.
Cementing a strategy: How businesses can introduce, or ramp up, sustainability policy
For any transition to a more sustainable business model, promoting a culture that cares about other stakeholders – including the environment – requires a major change management process. This should be built on strong leadership and commitment from the top, and will need to be embedded into the organisation through clear process, structure and incentives.
To this end, businesses must address, to what extent the leadership of the organisation is genuinely focused on committing, in this case, to the environment? And to what extent is this a true passion of the top leadership team, in terms of how they make decisions? And how they behave themselves? How they, for example, incentivise employees. It’s referred to as the ‘behavioural aspect’.
Behaviourally, it’s not just a matter of convincing the employees as to why we’re doing this [implementing an environmental policy], I think it’s a matter of motivating and incentivising and, in fact, inspiring people to do this.
Leading through example
This is where the soft skills of leadership come in. In other words, if the goal is to make a positive impact to the environment, for instance, or to ‘save’ the environment, then that’s an ambitious target. It’s the job of the chief executive through charisma, motivation, examples, storytelling – through all those means that leaders use to communicate effectively – to sell that vision, and to sell it credibly, with integrity. So, I think the whole point of leadership is, in fact, to be able to ‘sell the vision’.
And this is important, because think of it in the context of John F.Kennedy selling his vision to put a man on the moon by the end of the decade. Nobody became cynical about that objective. What people did is say ‘we want to do this’, ‘we are inspired to do this’. So what was the challenge, then? It was the way to get there.
Our current methods – the way we do things now – won’t get us there. We need to rethink the way we do things. When people are inspired to do that, that’s precisely when you get innovation, a change of process, and a change of culture in the organisation.
Sell, sell, sell
The challenge with getting employees onboard, I think, is the behavioural aspect. To be able to set this ambitious target, sell it and make the employees doubt, not the target itself, but question the way to get there.
Because if they do, they’ll rethink what they do in the business, they will rethink how they look at innovation and they will rethink the purpose of the organisation. And it’s precisely through that questioning that we start to look for alternative ways of thinking about the problem, and this is where innovation comes in, enabling us to become much more effective.
So that’s the behavioural part. Then there’s the structural part. In other words, it’s not enough to just inspire employees, you also need to appeal to the ‘what’s in it for me?’ response.
We know from several studies that employees increasingly care a lot about the values of the company they work for, and how that relates to the impact they want to have on the world in a personal sense.
In other words, when there is misalignment, then they might leave or they might look for another company whose values and purpose are more aligned with their own.
From that perspective, you need to decide, as a leader, what the vision is. Then you need to sell that vision. But you also need to make sure that the vision is true so that people are attracted to your company because it genuinely aligns with their personal beliefs.
The other component to consider is ‘structural’ change, because you don’t want this to just be person-specific, you want this to be integrated into the organisation. Therefore, providing incentives that are not only based on financial targets, but for a business that’s serious about the environment, KPIs clearly linked to sustainability should also be set.
In addition to profits or sales, this might include incentivising them on reducing carbon emissions or water usage for instance. In other words, you get the behaviours that you incentivise, so if a business is truly committed to these environmental causes then it better adjust the incentives accordingly. The extent to which environmental impact is a priority for the business should be considered during the budget allocation process.
The incentive is one of the greatest tools that we have in an organisation to generate desired behaviour.
As a business, we must also ask, ‘which projects am I going to push forward versus not?’ Do we prioritise projects, for example, that have a positive environmental impact?
So, it’s pretty much thinking about every aspect of the organisation’s mission, from project allocation to incentives and so on, and really, truly embedding, in this case, environmental considerations, if genuinely committed.
Endorsement versus enforcement: Will businesses become more sustainable, even if it’s not part of their ‘DNA’?
There are many ways that companies respond to enforced change. Some of them are going to say ‘ok, I’m going to be legally compliant, and that’s the best I can do’. So, what do they do? They sit and wait for the government or the regulator to come up with rules or regulations, and they simply follow them.
Other companies will say ‘oh look, there are off the shelf systems’ like environmental management, water management, energy management and waste management that typically generate cost advantages, because basically they are streamlining processes - they can make a company more efficient.
So, ultimately, they are saying this is not a political issue or an historic issue, but it’s operational. I.e. if we can cut 10% off our costs by implementing an environmental management system, then we will be helping the environment, but also making 10% cost savings. So, they will just do that, but they’re not going to stick their head out any further.
But, normally what happens in companies is that they start from there, they see that the systems have an impact on the bottom line and then they say, ‘oh, maybe I should do more’ – ‘maybe if I go beyond that, then it could be a growth opportunity’.
And typically, this is when they start a longer-term journey to becoming a more sustainable company.
There are other companies who are not so strategic about this, but they see what their competitor does, and they view what the industry does, and they maybe mindlessly, or not so strategically, start adopting initiatives because everyone else is doing it.
Therefore, there is no single answer about what companies do. Sometimes you get companies that don’t even comply, that pollute anyway and they suffer the fines or they claim to be clean but actually they’re not - this will always exist.
Viva la revolution: Sustainability and the younger generation
In my 10 years at the London Business School, I have seen year-in, year-out, more and more students interested in issues surrounding sustainability.
A strong example of this is that at LBS we have a social impact club, which is a student-led initiative for those that care about responsible business and impact investment.
This year, 57% of students joined the club – and that’s a massive number in my view. Ten years ago, when I joined the university, we were not getting those numbers.
So, we’re seeing more interest among the students. Also, sustainability-themed events are becoming more and more attended. Therefore, that interest is already reflected in the student population.
There are some companies looking to what students are seeking from their potential employer. And consistently, we’re seeing ‘values’ and ‘social impact’ come up.
I think the other thing to note here is that the younger generation is realising they’re going to feel this very acutely in their lifetime. I mean, climate change is already here. So the younger generation is going to feel the impact much more than we do now, and they are worried about that.
So, you see crisis mode reactions - the Extinction Rebellion, for example - or the young lady at the World Economic Forum who said ‘I don’t want you to be helpful, I want you to panic, and I want you to do something right now’. We have seen a lot, and will see even more activism on behalf of this generation, reflecting their genuine concerns.
And for them, I think it’s a much less political issue. I think it’s the older generation that has elevated it to a left versus right issue, to I suppose a scientific issue, which fundamentally it is.
The younger generations care much less about the politics, and much more about the science and impact of climate change. If you take the politics out of climate change then you radically change the conversation. And my view is that the conversation without politics is a much more effective one.
For more insight into selling sustainability policy, visit http://ioannou.us/media/.
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