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‘Next-gen leaders’ asked to identify headwinds preventing organisations from embedding sustainability  

A new study by Accenture in partnership with the World Economic Forum (WEF) has explored possible headwinds preventing organisations from embedding sustainability. The research asked more than 140 members of the WEF’s Young Global Leader and Global Shaper communities to identify five headwinds they believe are stalling the embedding of sustainability within companies. These so-termed ‘next-gen leaders’ identified the following barriers to progress:

·         complexity

·         cost

·         practicality

·         reliability

·         speed

Accenture and the WEF then sought to test these findings with 280 senior executives from large companies; in doing so, they discovered that some of the supposed headwinds are actually “strong but largely unacknowledged tailwinds.”[i] For example, it was found that senior executives associate pursuing sustainability with being relatively slow and unreliable, yet they see sticking to ‘business as usual’ as more complex and more costly; thus, the researchers argue that this creates tailwinds which strengthen the case for sustainable transformation.

Accenture then gave the 140 next-gen leaders a series of profitability/sustainability trade-off scenarios and asked them how to reconcile the situation. This yielded three updates to the traditional business case, essentially embedding purpose through tackling societal challenges, considering long-term viability, and broadening the definition of success to move away from short-term financial gain.  

Next-gen leaders proposed changes to the traditional business case

1.       Pervasive Purpose: make sustainability more human by focusing on solving specific societal challenges – then determine how to do so profitably.

2.       Extended Horizons: consider the viability of the business over the long term and allow new sustainability initiatives time to scale.

3.       360° Value: broaden the definition of business success beyond short-term financials and collaborate across your ecosystem and industry to drive change[ii].

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Tom Szaky, CEO and founder of TerraCycle and a Young Global Leader, was quoted in the report as saying: “Companies are often stuck in a groove of comfort and convenience. They talk about future sustainability commitments, multistakeholder partnerships and pilots – but remain focused on profits. Getting out of this groove requires external forces – pressure from disruptors, consumers and NGOs, and regulation. It also requires serious upfront investment. Yes, you typically add costs at the start – but get it right, and you can win big too.”[iii]

Senior executives agree with next-gen leaders: business cases should be amended

Asking senior executives for their opinion on the proposed changes by next-gen leaders, the majority (70%) said they agreed with the recommendations, and almost all (98%) agreed that it was their responsibility to make their business more sustainable.  This shows, the researchers suggest, that business leaders recognise that sustainability is no longer a ‘nice to have’; rather, it is imperative[iv].

It follows previous research, where late last year, Accenture explored the relationship between leaders and stakeholders in terms of how these groups feel sustainability is progressing. The research included a survey of 1,500 executives, as well as 2,500 employees, customers, and local community citizens[v]. It found a disconnect between executives and employees, where 68% of executives said they had developed a “robust” sustainability plan, only 21% of employees said their employer’s commitment goes beyond the “superficial”. Further, Accenture’s study revealed that of the 1,496 executives surveyed, 58% saw sustainability as locked in conflict with growth. These fears were largely discredited, with accompanying case studies showing benefits such as improved efficiencies and increased resistance to supply and price shocks.

Despite the overarching argument of a trade-off between sustainability practices vs business growth, Accenture found that many companies are buying into sustainability. Almost two-thirds of CEOs (63%) are launching new sustainable products and services, with 43% transitioning to circular business models. Concerningly, however, sustainable business models are not scaling at the speed required, with the NYU Stern Sustainable Market Share Index finding that products marketed as sustainable grew by 7.3% from 2015 to 2021. Yet, these still account for just 17% of the total market.

References

[i] Accelerating Sustainable Transformation | Accenture

[ii] Ibid

[iii] Ibid

[iv] Ibid

[v] Sustainability Consensus Gap | Accenture

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