Sustainability
21.11.2019

Winning with a sustainable vision

 

 

There are many reasons for putting sustainability at the heart of your business. Among them, perhaps surprisingly, is improving business performance. In this regular column, we examine a different company’s approach to implementing sustainable practices—and how it paid off.

Expect to learn:

 How to win in business by being sustainable.

 Why there’s room to differentiate from competition by placing sustainable practices into your core strategy.

 How a sustainable vision can supercharge business results.

Sustainability is now top of the agenda for businesses—from global corporate giants to small local operations, and publicly governed institutions.

But there are more reasons than you might think for businesses to advocate for sustainable initiatives and practices. And some of them might be surprising.

Sustainability is a marker for long-term goal setting

For one thing, sustainability represents a way for companies to brand themselves, and their leaders, as beacons of good strategic leadership, and to reap the rewards, even in highly commodified fields. 

This is because sustainable thinking is increasingly—and rightly—seen by investors and stakeholders as a marker for good strategic leadership across the board.

The reason for this is two-fold.

The first is a shift in the way sustainability itself has come to be defined in corporate terms.

The rise of ESG (that is, “environmental, social, and governance” as the Holy Trinity of sustainable business thinking) means that companies whose leaders are thinking sustainably also think deeply and critically about their operations, root and branch.

 

Sustainable practices offer the opportunity to lead and differentiate.

Organizations that lead in environmental sustainability are actively setting ambitious long-term goals for their efforts in environmental and social development. From executive remuneration to supply chain management and safety, these are increasingly seen as core elements of a robust business strategy.

The second factor is about the opportunity to lead and differentiate.

Sustainability is a marker for corporate leadership

When asked how they define corporate leadership, stakeholders say that integrating sustainability values and making sustainability part of the core business model were key characteristics.

That’s the finding of a recent GlobeScan–SustainAbility 2019 Leaders Survey, which asked more than 800 stakeholders in 78 countries, from private companies to public sector, universities, and NGOs, for their views on which businesses they consider to be “leaders” and why.

However, there’s a disjunction. Because even though 90% of leadership executives think sustainability is important, only 60% of companies incorporate sustainability in their strategy; and only 25% currently have sustainability incorporated into their core business model.

This disjunction represents an opportunity for forward-looking businesses to make sustainability an essential part of their organizational DNA, from values and strategy to business model and culture.

The openness of the field provides plenty of scope to differentiate, lead by example, and show that your business is committed to do the right thing for the planet, climate, and people.

But sustainability is not about one-off projects. It requires long-term solutions and constant evaluation and development—it should change how leaders plan, operate, and measure their work.

It’s vital to align that organizational strategy with real sustainability efforts on the ground. Lack of commitment and prioritization dooms any sustainability efforts that do take place to meager awareness, outcomes, and impact.  

Businesses that embrace the opportunity to bake sustainable practices into their strategies stand to reap rewards. But doing so means carrying those sustainability practices through operationally as well.

How you can win by putting sustainability at the heart of your business:

​ Sustainability offers your company an opportunity to lead and diffrentiate. According to studies, integrating sustainability values and making sustainability part of the core business model were key characteristics behind recognized leadership.

​ Companies whose leaders are thinking sustainably also think deeply and critically about their operations. They are also actively setting ambitious long-term goals for their efforts in environmental and social development.

​ Sustainability should change how you plan, operate, and measure the work in your company. It requires long-term solutions and constant evaluation and development. It’s vital to align that organizational strategy with real sustainability efforts on the ground. Read more from our case study below.

Case study: How a sustainable vision can supercharge results

By the late 2000s, Neste was facing setbacks—a sharp fall in oil prices, market overcapacity, falling margins, and new carbon-emission legislation across the EU.

But Neste had a radical vision and began to implement a strategic shift.

The vision was to focus on renewable fuels. But to get there meant redefining the company culture.

To implement the strategy and to start the organization’s development process Neste had to examine where it had come from, where it was at each stage of its transformative path and its ambition as a future sustainability champion. To enable this transformation, Neste collaborated with Swiss business school IMD.

The company deployed its new strategy in a range of ways:

 value creation programs to operationalize action plans

 changing culture through new behaviors and ways of working

 customer focus projects.

Crucially, the board was thinking in a joined-up way. They made efforts to convince and motivate all employees to get behind the shift.

 

Neste managers were encouraged to explore new ideas without fear of failure.

For example, to ensure total commitment to the new strategy and culture, some 270 Neste managers enrolled in leadership courses. There, they were encouraged to explore new ideas without fear of failure—a mindset learned from other successful innovators.

Neste then carefully observed the impact this new culture delivered; it reflected on the changes and addressed issues that needed to be tackled differently.

By 2016, Neste’s change to a renewables strategy was vindicated. With a change in the culture came a change in the business’ figures.

 

With a change in the culture came a change in the business’ figures.

Neste’s renewable products business went from a €163 million loss in 2011 to a €56 million loss in 2012, before shooting up to a €273 million profit in 2013. By 2017, profits were €561 million and today, renewables accounts for more than 70% of group profits.

Over the coming months we’ll be looking at the implications of sustainability in management and operations, suppliers and networks, employees and community and presenting case studies from companies like Adidas, Natura, and Accenture.

 

Read how to translate sustainable
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