The change our planet and society require occurs when executives recognise the commercial advantages of sustainability.
Sustainability is evolving from a compliance focus to a core element of global business strategies. These changes are driven by a combination of factors including technological advancements, shifting consumer preferences, investor demands, talent driven by purpose, regulatory pressures and an urgent need to address climate change. The required changes are vast, especially as we aim to limit global warming to 1.5°C to protect our planet. This goal alone will significantly reshape the global economic landscape over the coming decades.
Opportunities for innovation and growth
Forerunner businesses are finding that sustainability is no longer an optional add-on but a crucial part of their core operations, a significant opportunity for innovation, growth and competitive advantage. For executives, understanding and leveraging these opportunities are vital for steering their organisations towards a more resilient and regenerative future.
One of the most compelling reasons why executives should engage deeply with sustainability is the vast array of opportunities it presents, besides being the right thing to do. Here are some examples:
- Innovation in products and services: There is a growing demand for products that are designed with circular economy principles in mind—designed to be reused, repaired, resold, recycled, or decomposed. Companies can capitalise on this by innovating new products, services and business models or modifying existing ones to meet these criteria. Often circular business models also offer better margins.
- Operational efficiency: Sustainability often drives companies to rethink their operations, leading to increased efficiency. This can be achieved through energy-efficient practices, waste reduction, smarter resource management and decreased supply chain liabilities, all of which can significantly reduce costs.
- Brand differentiation: As consumers become more environmentally conscious, they are more likely to choose brands that demonstrate genuine commitment to sustainability. As B2B customers have their sustainability agendas, companies that offer solutions to those agendas, have a genuine differentiator. These offer a powerful tool for brand differentiation and customer loyalty.
- Access to talent: There is a talent war across all industries. Employees are looking for companies with purpose, companies that don’t just talk about sustainability but also act with concrete actions. Companies that put their money where their mouth is, will simply have a larger talent pool to choose, lower recruitment costs and higher retention rates.
- Risk management: With the increase in sustainability regulations, such as the European Union's Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), companies are required to provide data and carry out due diligence to prevent and monitor social and environmental impacts across their value chains. This helps businesses manage operational, brand, supply chain, and regulatory risks, protecting them from potential disruptions, fines, and reputational damage while positioning them for long-term success.
The benefits of sustainability vary significantly between businesses and are highly dependent on factors such as industry, location, size, and existing business practices. While some companies may see the most value in operational efficiencies, others may find greater opportunities in innovation or brand differentiation.
To maximize the benefits of sustainability, it is essential for businesses to first identify their specific impacts, risks, and opportunities. This involves understanding where their operations intersect with environmental, social, and governance issues, and how addressing these areas can create value. For some, this may mean focusing on reducing carbon emissions in manufacturing, while for others, it could involve improving labour conditions in their supply chain or rethinking the product design from an efficient resource-use perspective.
The executive role in sustainability leadership
The role of executives is critical in navigating the sustainability disruption. As leaders, they can set the vision, direct resources and investments, and cultivate a culture that prioritises long-term resilience over short-term gains. But they will realistically only do so when these goals can be aligned with financial goals. Here’s how executives can lead effectively:
- Educate and Empower: Executives need to be well-informed about the latest developments in sustainability to make educated decisions. The same applies to companywide talent.
- Set Ambition: Leadership needs to define sustainability in their context, set the ambition level for change and empower the organization to act.
- Integrate Sustainability into Core Strategy: Sustainability should be integrated into the business’s core strategic planning, rather than being siloed as a separate initiative. This integration ensures that every business decision is made with sustainability in mind.
- Engage Stakeholders: Collaboration across all levels of the company, as well as with external stakeholders including suppliers, consumers, customers, investors and regulatory bodies, is essential.
- Measure and Report: Transparently measuring and reporting on sustainability goals is crucial but so is tracking and measuring how these goals translate to commercial value!
For true impact, it is imperative that executives are on board and fully comprehend that sustainability is about making businesses resilient and regenerative. A resilient business is adaptable to environmental, economic, and social changes. A regenerative approach goes further, aiming to rejuvenate resources and ecosystems, ultimately giving back more to the environment than it takes.
The disruption caused by sustainability is a clear call for businesses to innovate and transform. For executives, the mandate is clear: lead with foresight and responsibility. By embracing sustainability, companies not only thrive commercially but also contribute positively to the planet and society. The future belongs to leaders who recognise this and act accordingly.
Hanken & SSE Executive Education's and Impaktly's new Decoding Sustainability programme is a good place to start!
Contact for more information