Published 3 years ago.
About a 9 minute read.
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To buy into a new vision of business, CEOs need to connect to it as people and write it into their own personal narrative of how their work fits into the world. They need to ask: What’s my legacy?
To solve the world’s biggest challenges, such as climate change and inequality,
the business community will have to play a critical role. And we need CEOs who
understand the challenges and want to drive deep change in how business
operates. In August, nearly 200 CEOs
through the Business Roundtable (BRT), that the purpose of business is
no longer just maximizing shareholder profit. But are they ready to follow
In September, an important study on CEO attitudes came
and it sheds light on how chief executives think about sustainability and other
global challenges. Written by Accenture and the UN Global Compact, The
Decade to Deliver: A Call to Business Action collects insights from more than
1,000 global executives. Published every three years, this report provides a
deep dive on how CEOs view sustainability. I found reasons for both optimism and
concern in the data; but at the very least, it shows that the BRT’s call for
broader view of stakeholders was not a fluke.
It’s clear that CEOs are thinking about where their companies fit into society.
Alex Ricard, CEO of Pernod
is quoted in the report as saying: “I need to recognize where consumers want us
in ten years … I believe businesses that are only targeting profits will die”
(Note: all CEO quotes here are from the study).
To step back, the underlying context for this year’s report is that the world is
running out of time on climate change. Last year’s IPCC
study gave us all until 2030 to cut emissions in
half to avoid some of the worst outcomes.
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The new report revolves around a single idea: We’re not moving fast enough. As
one of the lead authors, Jessica Long, Accenture’s Managing Director of
Strategy and Sustainability, told me: “The study is meant to be a call to
action. Lots of good work is going on, and companies are making more
commitments. But current activity and statements without action just won’t get
us to 2030.”
The report is worth spending some time with to explore the three “calls to
action” they identified: (1) raising ambition and impact in CEOs’ own companies;
(2) “changing how we collaborate with more honesty about the challenges”; and
(3) “defining responsible leadership,” which I read as the CEOs committing
personally, as human beings, to change.
Based on my own years working with companies and execs on these issues, as I
read through it, I found myself bucketing some key insights and data into
categories: things that were not surprising/expected, surprising, promising and
Business leaders feel pressure to build more sustainable
enterprises from key stakeholders. Customers and employees were the top two vote
getters when the CEO’s were asked which stakeholders would be most influential
on how they manage sustainability. Within those stakeholder groups,
in particular, want the companies they work for and buy from to stand for
something. As Patrick Decker, President and Chief Executive of Xylem,
put it, “The younger generation is drawn to higher purpose and mission — ‘why
are we doing this?’ It’s not purely the profit motive.” And these demands
increasingly seem non-negotiable. Mark Hunter, President and CEO of Molson
says, “Our consumers and our customers are looking for assurances that we are
doing business the right way. It’s becoming table stakes.”
The other area that was no surprise to me was the tension CEOs feel about the
perceived tradeoffs between sustainability and traditional financial metrics.
While I feel that this tension has always been overstated — sustainability
creates business value in multiple ways — there is a real tension between
short-term profit and long-term value. And in fact, more than half of the CEOs
say “they face a key trade-off in the pressure to operate under extreme
cost-consciousness while seeking to invest in longer-term strategic objectives.”
An amazing 88 percent of the CEOs “believe our
global economic systems need to refocus on equitable growth.” Concerns about
inequality have moved from “Occupy” protests a decade ago to the mainstream, and
leaders see it as destabilizing. As one CEO said, “Unleashed capitalism has
created extreme poverty, terrible social conditions and a difficult situation
for our planet. If we cannot manage a better social transition of the wealth, we
will be in trouble.”
In addition, some of the results on how sustainability creates value were
somewhat odd to me. As the authors say, “CEOs recognize that sustainability can
drive competitive advantage,” but fairly low numbers of respondents cited
specific value creation: 40 percent see revenue growth and just 25 percent cost
reduction (which might just reflect that the easy wins are gone). That revenue
number doesn’t completely gibe with another statistic: When talking about
barriers to implementing sustainability, only 28 percent of CEOs cite the
“absence of market pull.” That’s a pleasant surprise after years of complaints
that the demand for sustainable products is weak.
Sustainability is firmly on the agenda
now, and that’s a victory many years in the making (trust me). All of the large
company CEOs (ok, 99 percent), agree that “sustainability issues are important
to the future success of their businesses.” (Funny side note: just 62 percent of
those CEOs would link their pay to sustainability outcomes). And fully 94
percent feel a personal responsibility for laying out their company’s core
purpose and role in
In another piece of good news, some barriers to action seem to be dropping: Only
a quarter of the CEOs cited “no clear link to business value” and merely 8
percent said “lack of knowledge” was a problem.
On the biggest challenge of our times — climate change — the denial level in the
c-suite has shrunk dramatically (in my anecdotal experience and in the data in
this report). Companies no longer see climate change as an issue for future
leaders to manage. BASF chairman
Martin Brudermüller says, “We are already experiencing the impact of climate
change today, and virtually every day.” The report also notes that CEOs are
understanding the need for system-level change to tackle issues as big as
One other clear theme emerged around trust and expectations from
Three-quarters of CEOs said citizen trust would be critical to competitiveness.
Natura CEO João Paulo Ferreira says, “If at any point, consumers learn
that a company or brand cannot be trusted, those brands will be heavily
damaged.” And De Beers CEO Bruce Cleaver painted an even clearer
picture: “The time will come when there will be a threshold question that
consumers will ask, which is ‘can I trust this brand?’; and if the answer is
‘no,’ they won’t buy anything. It will become a binary question.”
Four key findings concern me. First, for all the
silver linings, the report’s overall theme is that we’re not going enough fast
enough to achieve the Global Goals (aka the Sustainable Development Goals, or
SDGs), the UN’s guidelines
on the targets we need to hit to build a thriving world. The CEOs acknowledge
this gap. Only 21 percent think business is playing a critical role in
contributing to the Global Goals. Dr. Rolf Martin Schmitz, CEO of RWE
AG, said, “Sadly, too many people are only talking about it. What we really
need is more action.”
Second, business and the world are not doing enough on climate change. While 59
percent say they’re deploying low-carbon and renewable energy, only 44 percent
see a net-zero future for their company in the next decade. And just 41 percent
are decarbonizing their supply
In line with this lukewarm level of action (in comparison to the scale of the
crisis we’re in), I was particularly sad to see that just one-third of the CEOs
say they have or plan to set a science-based carbon
Third, the survey showed limited belief in investors. No matter what the BRT
statement says, most companies won’t act aggressively unless they believe
investors value their sustainability efforts. And while there is actual
movement in the investor
late, as EDF Energy CEO Simone Rossi says, “There is a great disparity
between the public statements put out by banks and investors, and their apathy
towards sustainability behind closed doors.” No wonder only 12 percent of the
CEOs cite pressure from shareholders as a motivation.
Finally, the CEOs cite political and economic uncertainty as big distractions.
Two-thirds said macro volatility is critical to their strategies and 42 percent
say it’s reducing their sustainability efforts. For me, this highlights the
long-standing disconnect on sustainability — the implicit assumption that it’s a
distraction from “real” business, rather than the path to profit and building
thriving businesses. And, to be blunt, if leaders are waiting for less volatile
times to act on climate change, they’ll wait forever.
In total, this study paints a mixed picture, much like the real world these
companies are operating in. We’ve seen progress, but we have serious gaps and
a *lot *remains to be done. I do take comfort in the fact that leaders now
recognize that we’re falling short, that these issues are incredibly complex,
and that we need more real action. These CEOs, according to UNGC Executive
Director Lise Kingo, “are not content with current progress and calling for
their sectors and peers to step-up and turn commitment into action.”
Perhaps the best finding in this whole report was the third action item that
Accenture and the UN highlighted — the personal responsibility angle. I’ve found
in my own CEO research that all the business case logic in the world only goes
so far. To buy into a new vision of business, CEOs need to connect to it as
people and write it into their own interior narrative of how their work fits
into the world. They need to ask: What’s my legacy? And that’s a good question
for all of us to answer.
This post first appeared in Harvard Business
on September 29, 2019.
Published Dec 17, 2019 7am EST / 4am PST / 12pm GMT / 1pm CET
Andrew Winston, founder of Winston Eco-Strategies, is a globally recognized expert on how companies can profit from solving the world’s biggest challenges.