Divides and Dividends: Brand Management Versus Value Creation

Today’s business leaders have a once-in-a generation opportunity to help solve the most pressing challenges of our time. With around 3,000 days to hit the targets set out in the United Nations Sustainable Development Goals, business leaders must take concerted action to make sustainability central to business strategy.

However, our research shows that just 43% of C-suite executives say their organization has a sustainability strategy that has been acted on and clearly communicated. And only 51% say their CEO is personally committed to advancing sustainability and that organizational progress has been made. Employees are even more skeptical (26%).

We realized very early on that in order to create long-term shareholder value, building a sustainable company is key.

Board Director
Source: Russell Reynolds Associates, The Board’s Role in Sustainable Leadership

Leading by example

XAG Pivots to Sustainable Agriculture
After witnessing elderly cotton farmers in China laboring with heavy pesticide tanks strapped to their backs, XAG CEO Peng Bin decided to reorient the company’s focus, transitioning from a consumer drone maker to an AgTech innovator. Rebranding from Xaircraft to XAG, the company’s technology products have led to a reduction in pesticide use and carbon emissions, lessened the physical strain on workers, and unlocked previously inaccessible or unprofitable land for farming.

Source: Russell Reynolds Associates “The 5Ps of Sustainability: Identifying risks & opportunities for social and financial value creation,” People Matters Globally

Surface-level actions will not deliver real gains in sustainability. If leaders are to make tangible progress towards the Sustainable Development Goals, they must commit to making deep changes to business strategy and operations. Yet when asked about the driving force behind their company’s approach to sustainability, 45% of C-suite executives say they are motivated by brand management concerns—they want to be viewed as socially responsible and reputable or use sustainability for competitive differentiation. By comparison, 21% say that value creation sets the agenda. 

The fact that so many C-suite leaders—those who arguably have the inside-track on what is really happening—do not see value creation as the driving force of sustainability action should be a concern. This is not to diminish the role or value of brand management. It is undoubtedly vital. But organizations that are motivated first and foremost by brand management concerns are unlikely to put in place the lasting changes that deliver value for people, planet and profit. Moreover, stakeholders are astute. A brand-first strategy is a risky proposition that could lead to accusations of greenwashing.

Ultimately, when leaders look at sustainability through the lens of value creation and impact reduction, they are better placed to identify the actions needed to integrate sustainability across business strategy. Our research demonstrates what is at stake: 54% of C-suite leaders who say value creation is the driving force of sustainability strategy expect their company to make good progress in the next five years, compared to just 36% of those who say brand management is the driving force behind their sustainability efforts.

About the Study

The business case for sustainability is undeniable. Leaders who bridge the divides that threaten our global societies will yield significant triple-line dividends.

In a major global survey of C-suite executives, next-gen leaders, and employees, we reveal how leaders can grasp this opportunity:

• What are the environmental, social, and economic divides that leaders should solve?
• How ready are leaders to advance the sustainability agenda?
• What actions should leaders take to deliver lasting value for people, planet, and profit.

The study was conducted with 9,500 employees and next-generation leaders in 11 growth and mature markets from April 16 to May 12, 2021.