Preventing the Looming Climate Crisis Through Sustainable Business Leadership

Research by management consulting firm Russell Reynolds Associates reveals that while CEOs say they are pursuing sustainability within their organizations, employees and next-generation leaders disagree. As the clock ticks down to the climate crisis, leadership advisor and former CEO of Russell Reynolds, Clarke Murphy, asserts that averting it will depend on leaders who are invested in a timely shift toward stakeholder capitalism. He spoke with TriplePundit about what makes this next generation of leaders different and how they are already affecting change in major corporations worldwide.

“Boards of directors have realized that this is a requirement of successful governance,” Clarke said of the movement he is witnessing toward sustainable leadership. “CEOs and boards see that it has to be a part of it.” He said almost all private equity firms have concluded that “a more sustainable footprint creates more value.”

So what attributes do these next-generation executives boast that make them more equipped to promote sustainable operations? Clarke described them as having multi-level systems thinking — able to understand the complexity of intersecting issues and fold them into their solutions. “The ability to do this differentiates them,” he said. And as a result, they’re more likely to involve stakeholders, including regulators and competitors. “When they interviewed and tested these people, they are much more socially oriented… They interact more deeply and broadly with others and tend to have deeper listening skills.”

“These execs tend to be able to challenge their own way of thinking,” he said — which results in novel solutions. “They set pretty audacious goals and drive actions and investment toward those goals.” He gave the example of Volvo’s biodiesel trucks and the lack of an adequate fuel supply. Instead of scrapping production, “they went back and took care of it.”

“It’s about action orientation. This is the issue of the next two generations,” he explained. “Their action orientation to speak up and act up is powerful.” He pointed to a proliferation of moonshotters in particular — leaders he described as taking action instead of waiting around for all of the answers.

But will it be enough to stave off climate disaster?  Clarke is hopeful. “The reason I wrote the book [Sustainable Leadership, released this month] is that we need to take it from tens of business leaders to tens of thousands. We hope we can accelerate the progress.” But while many people tend to focus on the climate alone, he pointed to the interconnection between the breadth of issues facing humankind on a planetwide basis — from water usage to poverty, equitable compensation, access to education, sustainable cities and more. As he wrote in Sustainable Leadership: “Corporations can’t thrive in a world of poverty, inequality, social unrest and environmental crisis. Markets will shrink, supply chains will break, consumers and employees will revolt and external regulators will slap you with punitive fines and operating restrictions.”

Clarke is also confident that sustainability can be achieved without sacrificing profit for purpose. “I think most businesses who are sincere about action see profit and purpose as aligning. I don’t think they’re putting purpose ahead of profit. The best companies have aligned them.” He explained that some businesses have even gone on to enhance profit as a part of purpose. “Not because they’re magical, but because they’re doing things like using less power and shipping across the ocean less.”

Clarke also pointed out that the best companies are recognizing their effect on communities and society as a whole, starting with the supply chain. He gave the example of Duke Energy's Blue Horizons program in North Carolina. The utility went from nearly causing a full-on ecological disaster when it leaked 40,000 tons of coal ash into the Dan River in 2014, to beginning to phase out coal and switch to renewables under CEO Lynn Good. “It took them a while to figure out,” he said, but eventually the energy provider realized that listening and investing in the community would pay off.

Clarke wrote: “The transition toward sustainable business is so much more than the right pledges, plans, programs or words on a page. It’s about leadership.” Which is why the next few years could be a time of reckoning for many businesses. While he expects to start seeing results from those that took action soon, “The ones that talked a big game but aren’t doing anything, we’re going to uncover them.” 

Image credit: Christina @ wocintechchat.com/Unsplash