The article, “Sustainable Leadership," featured in the 36th issue of Developing Leaders Quarterly, was written by Russell Reynolds Consultants Sarah Galloway, Kurt Harrison and Hans Reus, based on our research on sustainable leadership created in partnership with the United Nations Global Compact. The article is excerpted below.
Russell Reynolds Associates recently partnered with the United Nations Global Compact to study the characteristics and behaviours that differentiate sustainable business leaders from other top-tier executives. Their research was published in the whitepaper Leadership for the Decade of Action, the findings of which have been condensed and summarized below. Please refer to the whitepaper for full details on methodology and findings.
The dynamic forces of ecological, social and technological transformation are fundamentally changing the way businesses operate and succeed. Widening inequalities are destabilizing the communities and markets in which companies operate, and the consequences of environmental and social degradation are creating real operational challenges for businesses and affecting supply and demand patterns. The COVID-19 pandemic has only served to sharpen the urgent need to address these challenges.
The good news is that commercial leaders have never been more united in their belief that change is necessary, and that progress will only be achieved through the active participation of the private sector. With ninety-two per cent of CEOs believing that integration of sustainability into their business strategies will be important to the future success of their business (according to Accenture Strategy's 2019 CEO Study on Sustainability), it appears that the case for change has been resoundingly made. The bad news is that significant barriers to change remain, with fewer than half of CEOs reporting that they have actually integrated a sustainability-lens into their operations.
Every year we help place thousands of leaders into C-suite and board positions, and we know that what organizations value or require when they select new leaders has big consequences for organizational strategy and culture – including what role the companies play in the world around them. We believe that the gap between what business leaders say they want to achieve when it comes to their sustainability agendas and what is actually being achieved is caused by the fact that sustainable leadership is rarely a selection requirement for senior leadership positions.
The rhetoric reality gap
Commitment to sustainability is at an all-time high and pressure to meaningfully integrate sustainability into strategy and operations is coming from all sides – investors, employees, customers, regulators and suppliers are all increasingly focused on the ethical practices of the companies with which they engage, and are all willing to take their business, labour or even license to operate elsewhere if needed. After years of being relegated to the margins as a niche area of interest, sustainable business practices and 'stakeholder capitalism' have emerged fully into the mainstream.
But a gap between the rhetoric of company commitments and the reality of company practices remains – only forty-eight per cent of CEOs say they are implementing sustainability in their operations, and only twenty-one per cent of CEOs actually feel that business is playing a critical role in achieving the Sustainable Development Goals (SDGs).
The most senior leaders of the organization — the CEO, their executive team and the board — are ultimately responsible for the success or failure of the organization. They alone are uniquely positioned to drive the transformation needed by integrating sustainability into business strategy and operations in a manner that supports the long-term viability of the business. This requires full ownership by the top leadership team.
The model of the sustainable leader
To better understand what defines and differentiates sustainable leaders from other top-tier executives, we partnered with the United Nations Global Compact to study more than 50 CEOs and board directors with a track record of driving change by integrating sustainability into business strategy. The leaders we studied are without exception at the top of their organizations and industries – the bar for entry to these CEOs and board-level positions is a very high one. They share many of the attributes that define the most successful commercial leaders, but we found that these sustainable leaders were further distinguished by four key attributes, each of which are activated by a sustainable mindset that business needs to be both profitable and sustainable , and that commercial activity is not divorced from the wider societal and environmental context in which it operates.
- Multi-level systems thinking: Sustainable leaders go beyond a deep understanding of their own organizational system and incorporate the interplay with the larger economic, societal and environmental systems around them. They drive targeted decisions and actions that turn sustainability into a competitive advantage.
- Stakeholder inclusion: Sustainable leaders do not manage stakeholders, they include them. They proactively seek to understand and incorporate the points of view of all key stakeholders in order to drive decision-making and share the benefits.
- Disruptive innovation: Transformation may be easy to talk about, but it is tough to deliver. Sustainable leaders are willing to disrupt their business and industry – they ask why it cannot be done differently. They make bold investments that test the limits of what is possible and drive the innovation required to find novel solutions aimed at both profitability and sustainability.
Long-term activation: Sustainable leaders do not simply have a long-term orientation; they set audacious goals and rigorously drive concerted action and investments in their pursuit of those goals. They stay the course in the face of setbacks, and make decisions that may be unpopular with short-term oriented stakeholders.
To read the full article, click here.