Instilling Sustainability into CEO Succession

Board and CEO AdvisoryCEO Succession
Article Icon Article
Clarke Murphy
January 05, 2024
4 min read
Board and CEO AdvisoryCEO Succession
Sustainability is a leading issue of our time. We set out how to embed sustainable competencies within your succession plans—including a key skill to prioritize.
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This article originally appeared on Directors and Boards.

Choosing a new CEO is one of the most important responsibilities that a board faces. Arguably, no other decision will have such a profound effect on an organization’s long-term performance.

But what it takes to succeed as a CEO is changing—and succession plans will likely need to change, too. The skills that may have been prioritized in the past are unlikely to be enough to help organizations navigate a fast-changing world.

The industry has seen demand increase for a new type of business leader—one who doesn’t just deliver financial performance, but who also makes the long-term sustainability and resilience of our world a top priority.

We need leaders who can address the full gamut of sustainability challenges, including environmental, community, labor and regulatory issues.

The payoff of finding, developing and elevating these types of leaders within an organization’s ranks is significant. Not only is there growing evidence that sustainable practices enhance reputation and create value, but there’s also mounting pressure from investors, employees and customers for organizations to play a role in addressing environmental and societal challenges.

In other words, it’s never been more important to get sustainability right. And with that, it’s never been more important for organizations to ensure they have the right leaders at the helm who can activate sustainability, at scale.

 

The Sustainability Skills Gap

Real change happens fastest when it is led from the top. It is the CEO’s role to infuse sustainability throughout an entire organization—from strategy and operations to mobilizing the C-suite and frontline employees into action. The CEO is the engine, the only person with the power to accelerate wholesale organizational transformation.

In recent research with 3,800 leaders from around the world, 76% of senior executives said their CEO is personally committed to supporting and advancing sustainability, up from 51% two years ago.

This is heartening progress. But it’s also true that commitment alone isn’t enough. It is bold leadership that ultimately fosters a culture of sustainability and translates vision into action.

Recent work with the United Nations Global Compact identified a set of differentiating leadership attributes that fuel sustainable leaders’ success. It starts with a sustainable mindset—the purpose-driven belief that a business is intricately linked to its wider social and environmental context—alongside four critical capabilities: multilevel systems thinking, stakeholder inclusion, long-term activation and disruptive innovation.

When leaders were asked whether their CEO demonstrated these skills, they scored relatively well on multilevel systems thinking, stakeholder inclusion and long-term activation, but they often lacked disruptive innovation skills. In fact, only 50% of leaders felt their CEO possessed this capability.

 

Why Disruptive Innovation Is Key

To move the dial on sustainability progress, CEOs must go beyond small, incremental changes. It’s important for organizations to have leaders at the helm who are disruptive innovators, who feel confident setting bold and ambitious targets and who are daring in their approach to advancing sustainability progress.

Being a disruptive innovator will inevitably have a positive knock-on effect, too. If CEOs can create a culture of experimentation, where ingenuity and innovation are applauded, leaders are more likely to feel empowered to find creative solutions to problems and feel confident challenging the status quo.

This isn’t just theory. Data shows that senior leaders who felt their CEO was a disruptive innovator were three times more likely to report that sustainability progress has been made and will continue to be made at their organization.

 

How to Identify a Disruptive Innovator

As a CEO succession strategy progresses, it’s critical to ensure sustainable leadership competencies are hard-baked into future CEO profiles. This includes zeroing in on leaders who are strong on disruptive innovation competencies. As a starting point, it’s good practice to consider the following factors:

  • Are they confident asking tough questions? Look for leaders who are unafraid to ask, ‘Why can’t this be done differently?’ The best sustainable leaders will be comfortable disrupting their organization and industry, steadied by the belief that it will unlock a better future for all.  

  • Are they able to learn from failure? Look for leaders who feel confident trying something new — and, most importantly, are able to learn from failures. A CEO who can get their leadership team to think differently, disrupt the status quo and be open-minded to innovative ideas is key.

  • Are they comfortable in the unknown? Look for leaders who are comfortable forging ahead, even when they don’t have all the answers. The best CEOs will have the faith, determination and long-term view that whatever piece of the puzzle they’re missing will be found through creative problem-solving with internal or external partners.

Prioritizing these capabilities when looking for your next CEO will pay dividends: Research (and experience) shows these leaders are more likely not only to accelerate sustainability progress today but also to develop the next generation of leaders who can carry the mantle forward for the long haul. The opportunity to accelerate progress, at scale, then becomes exponential.