Things may look bleak but – as Dr Annie Snelson-Powell and Dominic King (EMEA Lead at Accenture Research) ask – could a fresh and more directly impactful kind of corporate sustainability begin to emerge?
Corporate sustainability appears to be in retreat. Companies are cancelling diversity targets. The Net Zero Banking Alliance is haemorrhaging members. Europe is streamlining sustainability regulations in response to business complaints that compliance weighs on growth.
Disappointment, even despair, is a natural reaction for those of us working in the field. However, in the spirit of moving forward, we put forward three reasons why this could provide the foundations for reset rather than a retreat.
It's worth reflecting on how we got here. In 2017-18, the #MeToo movement against sexual harassment in the workplace gained momentum. In 2019, 181 CEOs of the Business Roundtable committed to leading their companies “for the benefit of all stakeholders”.
In 2020, corporate diversity programmes were turbocharged after the murder of George Floyd; the largest 50 companies in America alone pledged an estimated US $50 billion. And during the Covid-19 pandemic, organisations became noisily people-centric, highlighting the virtuous cycle of employee health and wellbeing and productivity.
However, the pandemic also played a major role in shifting public opinion. Loose monetary and fiscal policy, pent-up demand, supply chain disruption and rising energy costs all pushed inflation up as lockdown restrictions eased. Unmatched by a commensurate rise in wages, rising prices cut into disposable incomes. And when our living standards decline, the natural reaction is to retreat into our tribes; we deem looking after ‘others’, including future generations, as relatively less important. After all, if someone else is catching up, it can feel like you’re going backwards.
Right-wing politicians have assiduously tapped into this sense of grievance, courting those feeling left behind from a more traditional platform: anti-immigrant, anti-woke, anti-green, anti-work-from-home.
The fear that companies will use the backlash against progressive values as cover to backslide on related commitments is both palpable and understandable. But there are reasons to hope that the rhetorical bark may be worse than its bite.
Cold commercial logic
The business case for sustainability remains robust. Take inclusion: as fertility rates continue to slide, many countries will likely need an influx of workers to support an ageing population. Talent scarcity is already a problem in Europe: the proportion of employers who say they cannot find workers with the right skills increased from 42% in 2018 to 75% in 2023.
On climate change, whether you believe it to be a human-made phenomenon or not, the threat posed by extreme heat, flooding and other weather extremes is undeniably growing. By 2035, climate hazards are expected to drive property, plant and equipment losses equivalent to 7.3% of corporate earnings – rising to over 20% in some industries. These costs, to businesses and to economies worldwide, are set to climb rapidly.
There’s more: Generation Z – who claim to care more about their predecessors about both environmental and social issues – are becoming increasingly important to companies, both as employees and as customers.
Realising the potential of AI requires more than technology. Robust governance frameworks to ensure systems are explainable and fair will be needed to build trust. What’s more, clean, reliable and secure power generation will be required to alleviate energy concerns. And we should not forget that innovation is driven by diverse thinking.
Put simply, business sustainability is synonymous with long-term financial viability.
Deep roots of culture
A robust corporate culture can be neither created nor destroyed at the stroke of a pen. Much energy, time and money have been sunk into a wide variety of sustainability initiatives – from sourcing renewable energy to boosting parental leave.
Yes, rhetoric is an important signal – and the current, rapid switch in tone is terrifying for employees who are further from socially prescribed norms. However, actions matter more – and where policies and practices have become embodied, it’s unlikely that they will (or can) be quickly ‘unbolted’.
Companies have also hired and promoted an increasingly diverse range of people over recent years. Many will be irked by the insinuation that they owe their success to tokenism; together with supportive colleagues, they will be resolute in standing up for the value of inclusion. More broadly, the outpouring of emotion we have seen over recent weeks suggests that many employees care deeply about how their employer shows up. Some may leave, but many will stay – and fight.
From rhetoric to action
Sustainability has always been a troubling concept in business because it implies unattainable perfection. Tellingly, genuine pioneers such as Patagonia no longer use the term. There will always be trade-offs in business; at some point, social or environmental resources will be exploited. But a reckoning with our prevailing growth model could pull these outcomes out of the shadows. A more realistic notion of the ‘sustainable business’ should emerge.
This will elevate genuine action and provide opportunities for new leadership as the era of pursuing sustainability for rhetorical advantage fades. The companies that stay the course, that go against the grain, will need to show grit and determination. Those that have employed sustainability rhetoric to strategically evade the real costs of deep, meaningful change will simply turn off the mic.
This is a good thing: the persistent scourge of greenwashing weighs on consumer trust, undermining efforts to enact genuine change. Bad actors dilute the benefits for good actors. It could also help investors by better aligning sustainability value with market value.
Don’t take us wrong: the cloud hanging over corporate sustainability is huge – and the silver lining remains slim and indistinct. But the combination of commercial logic, internal pressure, and greater sincerity could yet prove potent. After all, sustainability is all about playing the long game.
The opinions expressed in this article are our own and not necessarily those of our respective employers.
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