The importance of businesses becoming sustainable in their operations, across their wider supply chains, is becoming increasingly imperative as the reality of inefficient business practices become apparent on both the environment and society. Sustainability transformations are however, hard to achieve, even with the best of CEO intentions. A new study considers key challenges as well as moves companies can make to transform their practices towards sustained sustainability.
Human consumption behaviour has tended to become increasingly demanding, both in terms of products as well as in services. Businesses, seeking to create, and meet, demand, seek to do so in the most cost effective manner – in their slipstream often trampling environmental and social realities to meet their profit imperatives.
The past decades it has however become increasingly clear that a tragedy of the commons is unfolding, with scientists agreeing that there is a limit to the long-term sustainability of current practices. As a result, consumers, businesses and governments are finding ways to make the necessary sustainability transformations – from pricing externalities into products and services and improving education, to cleaning up supply chains and creating more sustainable products and services.
Transformations are however, often difficult to achieve. From overcoming simple habits and expectations to ideological commitments and implicit laziness, even the most rational strategy may be difficult to implement. In a new report from Bain & Company, titled ‘Achieving Breakthrough Results in Sustainability’, the consulting firm explores the challenges faced by companies seeking to make sustainability a core of business practices more widely. The study involved more than 300 companies engaged in such transformations.
The study finds that even while CEOs and other executives are often keen to make a difference, through among others green-lighting sustainability transformations, hiring a chief sustainability officer and supporting the implementation, transformation programmes often run into difficulties. The analysis shows that 2% of the companies surveyed have sustainability transformation programmes that achieve or exceed expectations, while 81% of respondents report that they settle for dilution of value and mediocre performance. This compares to 12% of all transformation that achieve or exceed the expectations that were set, and 50% that settle for dilution of value and mediocre performance.
The research notes that even with enthusiastic executive level support, and strategy, implementation tends to run awry due to resistance from frontline employees, confronted, in their perception, by a choice between business objectives and sustainability objectives.
The research highlights that the largest barriers to change are a lack of resources, as cited by 25% of respondents, followed by competing priorities, cited by 15% of respondents. Other conditions creating barriers for sustainability programmes include cultural change challenges (10%), organisational obstacles (10%) and lack of compelling case for changes (6%).
Bain’s study identifies a number of ways in which leadership, cited by 25% as key for sustainability programme success, can influence, among others, employee engagement with programmes, cited as key for programme success by 11% of respondents.
CEOs have considerable potential to bring about company-wide changes, by themselves directing the implementation of a sustainability strategy, from critically selecting suppliers to setting internal sustainability targets for lower level managers. In addition, companies need to better communicate the business case for transformation of key areas towards more sustainable practices, in part to overcome ideological barriers from lower level staff that equate sustainability with 'inherently bad for business'. Funding for the initiatives too need to be made readily available, as well as a sense of urgency and essential for long-term business success. For the long-term, the firm notes, sustainability needs to become hardwired into the core of the business as a whole through change incentives and processes.
A public commitment to sustainability standards, too, the firm finds, creates the right conditions to motivate staff towards implementation of key business strategy. By making it clear that the company is moving towards a range of achievable goals, supported by wider NGOs, staff are more likely to own the goals themselves as key to the businesses wider identity.