We recently interviewed 50 corporate responsibility leaders – as well as 20 stakeholders, including partners, investors and board members – to identify trends that will have an impact on these professionals in 2021. Our findings are published in the new report: “Can Capitalism Lead a More Sustainable and Equitable Recovery?”
In yesterday’s article, we shared five insights that are shaping the corporate responsibility profession. Now, we highlight the seven most impactful strategies leaders are making in 2021 to make businesses more responsible.
According to Tensie Whelan, Director of NYU Stern’s Center for Sustainable Business, “Boards are obstructing ESG – at their own peril. PWC’s 2020 Annual Corporate Directors Survey found only 38 percent of board members think ESG [environmental, social and governance] issues have a financial impact on a company. A main part of the problem is boards lack ESG expertise, according to a new study.”
Corporate responsibility leaders say they are working hard to build the business case to executives. Through their efforts, board members, can understand the importance of positioning corporate responsibility as essential for new markets, building goodwill with regulators, generating consumer trust, and boosting employee recruitment efforts. These same leaders say they are are also pushing for more ESG training such as Competent Board certification.
As one corporate responsibility leader of an international company shared, “We must start by asking... ‘what will [corporate responsibility] look like in 5 years?’ Our new CEO has a vision for a ‘purpose-driven organization,’ and corporate responsibility is essential to showing our company contributes to the greater good.”
Less than 1 percent of publicly traded companies have a “chief sustainability officer” or equivalent. While corporate responsibility leaders say they are busier than ever, they also reminded us that it is time to evangelize for the SDGs [Sustainable Development Goals], setting audacious targets, and showing that this movement is, according to former Unilever CEO Paul Polman, “the biggest business opportunity of all time.”
Some corporate responsibility leaders reported senior managers from HR, operations, innovation and other departments are approaching to help solve business problems. As a result, they are also gaining more human and financial resources to sustainability and corporate responsibility teams.
One leader said, “the typical [corporate responsibility] role used to be to go around and pester people to volunteer and donate during particular days of services of specifically themed months. This is outdated. Days of service and giving campaigns are undemocratic and they entrench power dynamics, while releasing companies of their real responsibilities to all stakeholders.” Leaders said growing their functions and aligning more resources were not seen as pests, but actually as levers company wide.
Successful professionals in this space have executive support: financial, cultural and promotional. Some are discreet: Leaders with an active stance who fail to achieve earnings are more likely to be fired. Nevertheless, CEOs, including Tim Cook from Apple, Pamela Maynard from Avanade, and Kevin Johnson from Starbucks are tying growth goals and compensation to targets.
Most successful corporate responsibility leaders describe themselves as lobbying executives, convincing them to increase investments, rewarding them with more press and brand opportunities. As a recent McKinsey report revealed, this trend is evident in the fact that 181 U.S. CEOs have signed a statement committing themselves to a new understanding of companies’ role within society.
The bottom line is that investing in employees, supporting communities and dealing ethically with suppliers are all crucial, in addition to securing shareholder value. Looking at the triple bottom line – people, planet and profit - is now mainstream, as well as socially responsible investment or ESG funds.
Times are uncertain, and many corporate responsibility budgets are at risk: Expectations have never been higher. Leaders with whom we spoke felt tired and isolated, yet understood it was their time to inspire change and were working harder than ever. Sustaining pressure is only possible with self-care, with investments made professionally and personally.
The takeaway here is to create communities of support with fellow leaders while making time to reinvigorate and protect yourself from burnout.
MovingWorlds Institute defines a social enterprise as “An organization that utilizes business principles and highly ethical internal and equitable operations to solve social and environmental challenges through creation of sustainable revenue streams – while managing their own externalities and also influencing larger systems around it.”
Corporate leaders indicate that they are increasingly looking to partner with social enterprises to achieve sustainability and equity targets.
For example, SAP says it is committing 5 percent of its spending with social enterprises by 2025. The rapid rise of “Buy Social” and “Benefit Corporations” – organizations that certify social enterprises – are further proof of this sector’s growth.
As one strategy executive shared with us, “Companies are making bigger commitments on sustainability, equity, justice, and other social factors... Most don’t know how to achieve this… they will need to partner with a new type of enterprise, the social enterprise, which prioritizes and measures – sustainability, equity, and justice factors alongside profit. When these businesses with a social focus are integrated into supply and distribution chains, only then can corporations reach their increasingly audacious sustainability and equity commitments.”
Regarding success, nearly 100 percent of interviewees shared that if they did their job well, corporate responsibility and sustainability would be integrated into all aspects of the business: Not just programmatically, but also with measurement, shared resources, strategic partnerships, and most importantly, an educated and active employee base.
As we have seen in our platform focused on sustainable growth of revenues for international development (S-GRID) with partners like SAP, when employees are educated on social responsibility, they in turn make many small decisions that can create more sustainable companies, including shifting spending to responsible suppliers, building more inclusive technologies, coding inequality and discrimination out of artificial intelligence and designing carbon-neutral products.
According to Bill Gates, “As awful as this pandemic is, climate change could be worse.” Further, the World Economic Forum’s recent global risks report has suggested that the top five economic threats were environmental, as climate-change risks have become more real as they took a backseat to the more visible COVID pandemic.
Yet companies, like BlackRock, Microsoft and Amazon, have pledged to address climate change risks. These actions confirm that growth in corporate responsibility investments that started during the pandemic and ongoing calls for social justice during 2020, must continue and expand to do more. Corporate responsibility leaders will continue to be elevated to guide and lead these discussions – and by staying focused on these approaches, they will be able to increase their role’s prominence and potency across all companies.
This is part two of a two-part feature. In case you missed it, you can find part one here.
Image credit: Philipp Birmes/Pexels
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