Divides and Dividends: Leadership + Culture = Impact

Advancing sustainability in business is more than a matter of policy or process. It is a matter of leadership. There is now an urgent need for sustainable leaders—those who have the vision and skill to pivot their organizations to deliver lasting value for all stakeholders, not just stockholders.

A study carried out by Russell Reynolds Associates and the United Nations Global Compact, Leadership for the Decade of Action, identified a blueprint for sustainable leadership. It revealed that to deliver sustainability outcomes alongside financial success, leaders must combine a sustainable mindset with four differentiated competencies: multi-level systems thinking, stakeholder inclusion, disruptive innovation, and long-term activation. How equipped are leaders to rise to this challenge? Our research shows that across many organizations a lack of leadership is undermining progress and creating obstacles to change.

How equipped are leaders to rise to this challenge? Our research shows that across many organizations a lack of leadership is undermining progress and creating obstacles to change.

With my CEO role comes the responsibility to do the right thing.

Manon van Beek
CEO, TenneT Holding B.V.

Source: Russell Reynolds Associates and the United Nations Global Compact, Leadership for the Decade of Action

Culture and Complexity Hinder Progress

In our study, the greatest barriers to embedding sustainability across business strategy are slow-changing company culture and organizational complexity, followed by a lack of drive from senior leadership and a lack of organizational investment. As C-suite leaders have a broader view of the organization’s stakeholders, they are more likely to note external barriers than employees or next-generation leaders. Twenty-nine percent of C-suite leaders noted short-term pressure from investors as an obstacle to change. A further 25% hold the belief customers “won’t want this.”

Diversity, Equity, and Inclusion Challenges Remain Entrenched

Diversity, Equity, and Inclusion (DE&I) should be a critical focus for every business—both as a sustainability goal in its own right and as a bellwether for the health of the organization. Those that are failing on diversity are at a talent disadvantage. This not only blunts the skill capital they need to make advances on other sustainability goals, it also means that they are unlikely to have the engagement capital needed to power the change and initiatives that sustainability requires.

Our analysis shows that while organizations may have made good progress on DE&I at lower levels—72% of employees report that they don’t think that their race, religion, gender, or sexuality would affect their chances of getting a job at their organization—bias and favoritism still have a stronghold at the top of the organization. Interestingly, employees are less likely to see these issues than C-suite leaders. While 63% of C-suite leaders agree that senior leaders in their organization show a bias or favoritism towards those like them, fewer employees (47%) report this as an issue. The same dynamic occurs when asked about promotions. While 61% of C-suite leaders agree that it is easier for men to get promoted than women (regardless of their capability and performance), 42% of employees see this issue. Considering ethnic bias, 62% of C-suite leaders see an issue, compared to 40% of employees. It is encouraging that C-suite leaders are clear-eyed on DE&I challenges —acknowledging a problem is often the first step towards solving it. Many organizations are working hard to improve the diversity of their leadership teams and setting concrete goals. This data though should be taken as a clear signal that more must be done to root out and change patterns of behavior that undermine DE&I at every level.

Leaders will need to consider more perspectives in the future — you can only lose trust once. You need a feeling for public concerns, a kind of compassion. The thing that hinders progress the most is missing curiosity for other views. If you want to make a big change, it’s about cooperation and collaboration.”

Saori Dubourg
BASF, Member, Board of Executive Directors.

Source: Russell Reynolds Associates and the United Nations Global Compact, Leadership for the Decade of Action

Leaders Lacking Soft Skills
Soft skills are more in demand than ever before. Leaders need the mental dexterity, empathy, and courage to maintain confidence in an ever-more complex operating environment—and spur action on sustainability. Our survey asked respondents to indicate whether they believe the senior leaders at their organization display each of 10 important attributes: Humility; Self-awareness; Authenticity; Empathy; Leading by Example; Inclusiveness; Purpose; Hopefulness; Humanity; and Transparency. Only around a third of employees say the senior-most leaders at their organization exhibit transparency, humanity, and hopefulness. Even fewer say they display humility (23%) and self-awareness (24%), or that they are authentic (29%) and lead by example (29%).

Leading by example

Attributes in Action: Fostering Empathy

Stakeholder empathy is critical to understanding the ecosystem in which a company operates. Without it, leaders will be unable to identify their organization’s sustainability risks and opportunities. One CEO took the entire board to Brazil for such purposes. “I could not explain the issues and corruption we were facing. I had to take them there and show them what it means,” she said. Meanwhile, a chair at another company brought outside stakeholders into the boardroom to offer firsthand exposure to critical issues in other countries.

This is unlikely to simply be a problem of perception—even respondents who are part of senior leadership do not typically see these attributes in their senior executives. Taken alongside other findings (e.g. CEO commitment to sustainability), it indicates that employees lack confidence in the capability and drive of their senior-most leaders to progress sustainability actions. Leadership is always on display and executives are increasingly challenged to lead in a more authentic, transparent, and humble manner. How would you measure up—and would your employees agree?

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.