Comment: David Grayson, co-author of the Sustainable Business Handbook, explains why he’s on a mission to turn capitalism into a force for good
I am frequently asked by my students whether I am an optimist or a pessimist about our future. Invariably, I paraphrase the distinguished environmentalist and author Paul Hawken: “If you look at the science about what is happening on Earth and aren’t pessimistic, you don’t understand the data. But if you meet the people who are looking to restore this Earth and the lives of the poor and you aren’t optimistic, you haven’t got a pulse.”
In my darker moments, though, I do worry that the numbers of businesses and entrepreneurs engaged on sustainability is still far short of what is needed to tackle the climate emergency and other sustainability challenges.
That’s why those of us who believe that companies can be forces for good should leave no stone unturned in doing what we can to help them affect the amount of change that is needed.
Every business is different. Each needs to identify its most material, social, environmental and economic impacts
It was also why Chris Coulter, Mark Lee and I were so enthusiastic about writing the Sustainable Business Handbook when we were approached by the UK’s largest independent book publisher, Kogan Page. We had co-operated on our earlier book All In – The Future of Business Leadership (2018), but understood that a handbook is something very different. It has to be intensely practical and provide step-by-step guidance.
Since the Sustainable Business Handbook was published in February 2022, we’ve been on a mission to try to persuade many more businesses to reduce their risks and increase the opportunities by embracing sustainability.
Every business is different. Each needs to identify its most material, social, environmental and economic impacts, and make a business case for action. Typically this will be a mix of reducing some costs and avoiding others, increasing returns at the same time as delivering social value, minimising risks and maximising opportunities, plus building trust and improving reputation.
This enables a business to develop a comprehensive sustainability strategy with some high-level ambitious goals and more detailed internal key performance indicators (KPIs). As a first step, the sustainability strategy needs to be consistent with the overall strategy of the business. Over time, they should become one and the same.
We know many businesses find it helpful to have defined a broader social purpose that is based, as Colin Mayer of the University of Oxford’s Saïd Business School and others have argued, on finding “profitable solutions to the problems of people and planet and not to profit from doing harm”.
PricewaterhouseCooper’s 2021 survey of corporate directors suggests that better board oversight of sustainability is a key area of improvement for many organisations, which is why programmes such as Earth on Board and Competent Boards are so important.
Boards have a crucial role in defining the desired culture of their organisation
Boards need to define their approach to governance and sustainability; and choose the most appropriate governance model for their particular business. They may choose to create a specialist sustainability committee of the board or extend the remit of an existing board committee.
In any event, the expertise around the board table needs to incorporate sustainability in the executives' skills matrix and ensure that the board is truly diverse and that the rest of its structures and processes reinforce a commitment to sustainability.
Boards also have a crucial role in defining the desired culture of their organisation and then satisfying themselves that the actual and desired cultures are aligned.
This aspect of the role of boards is only going to grow in importance, as more businesses understand that their organisational culture – “the way we do business around here, how we expect our employees to behave” – is fundamental to whether a business is able to embed sustainability successfully. In addition, a strong and positive culture requires leaders at all levels of organisations to “walk the talk” and be exemplars of the desired ethical and sustainable business behaviours.
From the earlier book, we know how important it is that businesses develop a mindset and skillset to make the most of, and contribute effectively to, a range of sustainability partnerships. Learning how to collaborate effectively is one of the most critical tools for extending the reach of individual businesses. Increasingly, this is all underpinned by effective communications and stakeholder engagement. Leading companies should be prepared to speak out and speak up, and encourage others to follow suit.
As more businesses make progress in these different elements of embedding sustainability, they should become more credible and effective advocates, too.
The most recent report from the Intergovernmnetal Panel on Climate Change (IPCC) starkly warns that global emissions must fall by 43% by the end of this decade. This is going to require the mass of businesses to embrace sustainability more systemically than has so far been the case, and to do so very quickly. We hope our handbook is one extra, practical tool to help them to do so – profitably and successfully.
David Grayson is emeritus professor of corporate responsibility at Cranfield School of Management and co-author of the Sustainable Business Handbook, with Chris Coulter and Mark Lee.