The Economist’s Sustainability Week: Operationalizing Sustainability Strategies

Transcript

This transcript was automatically generated with artificial intelligence. It’s in the queue to go through a review with human eyes!

00:00:00:00 – 00:00:31:21
Unknown

With many interesting sessions this afternoon, an engaging mix of panels, case studies and presentations. All of which I hope you find informative. I’d now like to invite Cheryl and Andy from debuting, who’ll be sharing their insights on what’s standing in the way of companies as they operationalize their ESG strategies. Thank you. Hi, everyone. Thanks. Thanks, everyone. So thank you for making the choice to join us.

00:00:31:22 – 00:00:51:21
Unknown

I know you had some decisions to make about which session. We’re going to make it the best 20 minutes of your day. That’s a promise. So I’m going to hand over to charity, is going to kick us off and talk about what we’re going to talk about. Excellent. We’re here today because just because a company has a strategy, goals and a deadline does it.

00:00:51:22 – 00:01:16:20
Unknown

People are waking up like that doesn’t mean it’s going to magically happen. And the idea that there’s a sustainability office and that things have maybe happened in a silo. We’re starting to see companies that are almost panicking because the the the breadth of, you know, of change that’s required. And maybe sustainability isn’t like other corporate strategies in terms of implementing them.

00:01:17:01 – 00:01:44:11
Unknown

So we’re going to lean into what does it take to operationalize a sustainability strategy through the whole company to make progress. And first, just quickly, who’s growing? We’re a global change consulting firm. You’re probably all aware that most transformations, they have a two thirds failure rate. A lot of times that’s just because of people and companies get in that cycle of like they try and transform and then they fail and everybody’s tired and they try and transform and they fail and they’re tired.

00:01:44:11 – 00:02:05:20
Unknown

So we lean into that. Hardest part of change was about people from leaders to that front line, so that we’re trying to help companies do change. Right. And one of those is in the area of sustainability. So we’re going to give you today you’ve made this choice. We have actually been sponsoring on our study a global study on operationalizing sustainability.

00:02:06:00 – 00:02:27:19
Unknown

It was just fielded in February. It’s not being released until May. But HPR has given us permission to reveal some of the data today. So you’re the first people to see it. And then we’re going to talk about the implications and five things companies can do to be leaders in operationalizing sustainability. So there is a global report on sustainability coming out from HPR in May.

00:02:27:24 – 00:02:50:13
Unknown

At the end, there’s a QR code or you can, you know, track this or ask us afterwards how you get on the list to make sure that you receive this. So this is a company with over 500 people globally that all different size of business. The majority of people that responded are in the executive and senior management and board level and good global representation.

00:02:50:15 – 00:03:24:01
Unknown

And what did we find? So we so HPR has identified that one in four companies is what they’re calling a leader because they’re widely implementing and operationalizing sustainability. And so it’s like that, you know, and of those 82% believe that they’ve made significant or extensive progress against their goals. So what about the other ones that three out of four companies that are not classified as leaders, so that includes companies that might be implementing sustainability in silos.

00:03:24:01 – 00:03:51:03
Unknown

Maybe they’re doing pilots. 21% of companies have a sustainability strategy and have done nothing. So you know that there are a lot of companies in that boat as well. So what’s the what’s different about these companies that are leaders? Right. So leaders are more likely than the other companies to have set a goal date for their sustainability. And most of them are very aggressive and they’re more likely to have said it’s 20, 25 versus 2030.

00:03:51:05 – 00:04:12:22
Unknown

They’re more likely to be confident in hitting that date 96%. I do find it a bit challenging to think of how many companies have done nothing or, you know, they’re only partially there yet 77% of them feel like they’re still going to hit that date. So I think they’re still in that, you know, haven’t quite figured out that just having a date doesn’t magically make it happen.

00:04:12:24 – 00:04:35:19
Unknown

Leaders are more likely to acknowledge that their challenge of over this long period of time balancing financial goals and sustainability goals is hard. So they’re much more likely to say that’s a challenge. And simultaneously, they’re actually doing a better job at it. So 90% said that they are figuring out that balance, which is significantly more than the other companies.

00:04:35:21 – 00:05:15:08
Unknown

So, you know, what else are leaders doing differently? So they’re more likely to be thinking about sustainability much more holistically. They’re not dividing it up. It is an enterprise organization. They’re also almost everybody has got like the leaders are involved in the boards involved, but these leaders are cascading it, doing education and changing mindsets and behaviors through the organization faster to department heads, you know, to that middle manager, to people managers and to frontline employees and the ones that are doing that, because they’re doing that cascading, they’re finding that the speed of making progress and achieving goals is being accelerated.

00:05:15:11 – 00:05:40:20
Unknown

Right? That’s pretty intuitive. You would assume that that would happen, but it’s great to see some data that’s proving that pushing it through the organization is speeding up progress. Something that was interesting for all companies leaders and everyone is two thirds are really acknowledging that this is different. Sustainability is different. It needs a different approach. Of course, they’re having challenges with the technology side.

00:05:41:00 – 00:06:08:17
Unknown

They’re also acknowledging that there’s challenges with measurement. It’s quite a few people here are they’d be happy to help them do that. They’re really having a hard time, and we’re hearing this a lot, understanding how does it impact each function, each market, each division. Everybody needs their own plan. What’s happening with the different roles is is a challenge and that they feel like they underestimated how big a change this is and how hard that is going to be.

00:06:08:19 – 00:06:38:03
Unknown

So with that in mind, how can we take that data? Probably validated what a lot of you were already felt to be true. And how do we translate that into some tips and some ideas on how we can how you make progress and act like these leaders? Andy Thanks, Cheryl. So what we want to talk about now is is really sort of five ways to become like those leaders that were identified in the data.

00:06:38:05 – 00:06:59:12
Unknown

How can you become sort of ahead of the pack in terms of operationalizing your sustainability strategies? And we’ve got five kind of areas or ways that we’d like you to consider to do that. It’s not exhaustive. It’s based on our experience of working with our clients, and it’s also based on some of those things that we were seeing within the data.

00:06:59:14 – 00:07:26:21
Unknown

Our first tip is around dispelling sustainability confusion and committing from the top. I think in the first panel session they talked a little bit around how everyone has a different opinion on what did the different things mean and it’s causing paralysis or it’s causing a mismatch in expected sessions for different people. And that’s happening within organizations as well as in society and in government and public and private partnerships as well.

00:07:26:23 – 00:07:50:00
Unknown

And if we refer back to the data, we had 63% of all respondents agreeing that implementing sustainability strategies needs a different approach to other changes. And one of the key things behind that is the complexity of the topics, the complexity of the theory that’s behind it and the and the knowledge gap. This is a new thing for people.

00:07:50:02 – 00:08:09:06
Unknown

Some people are very experienced, have a lot of knowledge about it. Others they’re just, you know, coming on board and don’t really understand how they can be meaningfully involved. So what have we learned? I think that one of the first tip we’ve got there is really defining what your sustainability strategy means for your business and connecting it to your purpose and other things.

00:08:09:06 – 00:08:40:00
Unknown

It can’t be in a silo and it can’t be the cso’s focus alone. It really needs commitment from the top, from the board. There’s going to be a lot of cross-functional efforts in operationalizing sustainability. You need someone that’s able to cut through all of that and enable you to make progress. And then finally, is there a way to to kind of humanize the theory and translate what potentially is complex into something that people can understand, maybe illustrating with stories?

00:08:40:02 – 00:09:03:16
Unknown

So that’s our first step. Our second is around prioritization. I’m trying to think of the name of that film. You can’t do everything everywhere all at once. I think I’ve got that right. But really, this is massive. How are you going to enable the organization to get a hold of what your sustainability strategy is and to deliver and make progress on it?

00:09:03:18 – 00:09:30:05
Unknown

So some tips or things that we’re noticing around that that really it makes sense to to be clear on what you’re prioritizing versus not. You may have ten commitments or impact commitments in your business. Are you going to take on all of those at once at the same time? Is that going to be able to give you the progress that you’d like to show to your employees or investors, your shareholders, your stakeholders?

00:09:30:07 – 00:09:56:08
Unknown

Do you have a holistic roadmap that shows what impact you’re going to deliver at different staging points or waypoints on the way so that you can keep everyone engaged with progress rather than them seeing this staggering amount of change that you’re going after. And really, can you marshal your resources with the change plan that looks at maybe certain functions going before others or certain parts of the business to experiment with things?

00:09:56:10 – 00:10:19:00
Unknown

All of that should hopefully sort of deal with some of the some of the issues that we’re seeing. The third party ask the question about this in the in the first session was about how do we support leaders to help with this this change journey. And I tip here’s about rebalancing leader incentives and supporting their actions every day.

00:10:19:02 – 00:10:52:18
Unknown

83% of leaders in the study said balancing not long term versus short term aims was something that was really tricky to handle. So I think what we’ve what we’ve seen is that the companies that are that are putting in place a mix of incentivization between traditional and more sustainability related performance measures and making that into incentives for their leaders is actually helping really supporting and asking leaders to talk about how they’re making the changes happen in their area of the business.

00:10:52:20 – 00:11:19:21
Unknown

And then also I’ll be allowed to grant leaders some permission to make trade offs in certain situations. Are we allowed to give them the flexibility to try and balance their short term aims versus their long term rather than always having to default every time to a certain way? And our next tip is really around. No, no one size fits all.

00:11:19:23 – 00:12:01:21
Unknown

You know, different areas of the business are going to need to know different, different things at different times. And really it’s about understanding what people need to know when and activating a tiered learning and engagement model for them. So how can we, one, ensure that they’re getting that tailored approach, but also at the same time ensure that they’re taken along on the journey, that you’re communicating a narrative and you’re communicating the winds as you go along this journey and then finally, how can we equip managers to be able to engage their teams on what their teams can do day to day around this?

00:12:01:23 – 00:12:22:06
Unknown

And then our final tip is, of course, about culture. So the organizations that are successful realize this is a long term culture change. They’ve got to create a movement across their whole business to be able to to keep people involved and to deliver them towards these goals that are sometimes decades in the future. And how can you do that?

00:12:22:06 – 00:12:48:19
Unknown

I think one of the key points is breaking down these big objectives into small doable habits and actions for individuals. What they don’t necessarily need to be, you know, coming up with the biggest idea that’s going to revolutionize the business on day one. But what can they do within their job? How can they get involved and contribute to it for some of the bigger ideas?

00:12:48:21 – 00:13:15:23
Unknown

Not all of them are going to work. Everyone’s trying something new to advance towards these these sustainability goals. How can you make experimentation? Okay, how can you? It’s a little bit like the tech industry with people being able, when they’re creating minimum viable products in. Can you show your working can you be brave enough to say, I’m not sure whether this is going to work, and is the organization going to be supportive enough and maybe having programs that can can help with that?

00:13:16:00 – 00:13:45:04
Unknown

And then finally, the bottom one is, are there are there enough opportunities for employees to take ownership of ideas or initiatives or be involved? All of these things are going to help on that long term culture change journey that the leaders are going on. So those are five tips and I think that they apply sort of wherever you are within your your journey to become a sustainability leader.

00:13:45:06 – 00:14:25:09
Unknown

Some people start from being very purpose driven, yet haven’t got everything in place. Others are. They’re looking at very much a compliance approach. But all of these tips, I think we’ve tried to make them as as applicable to wherever you are within that journey. And I think that the key element is that at its heart this is also a human centered change and the hope that organizations are going on and really some of the techniques around really putting ourselves in the different employees, leaders, managers and all the different stakeholders shoes and applying that kind of human centric change approach is really going to help us to get towards that goal of long term sustainability.

00:14:25:11 – 00:14:41:21
Unknown

So Sheryl mentioned it at the start. That was a very small snapshot of some of the report. We have a have a booth over there. You’ve got a QR code here and yeah, come and talk to us. We’d love to to talk about this, this topic. We don’t have all the answers, but we’re we’re trying to get there.

00:14:41:23 – 00:15:14:12
Unknown

Thank you very much. Thank you. Got some questions, that question. Yeah, I think we’ve got time for some questions. If you have any questions, please just do three square. Have. Oh, thank you very much. My name is Zuckerman. I’m from Central Bank of Nigeria. I think I like what you said concerning your idea of a corporate governance. You know, you have to be from top to bottom.

00:15:14:14 – 00:15:49:14
Unknown

So if you can just sort of elaborate on that as well, because, you know, if the corporate governance is fine, then the other parts of the ESG will be good. That’s my contribution. Thank. So did you what do you want to said again, that’s a good comment. Did you want us to comment on that or. Sure. I mean, I do think I mean, one of the challenges is, is that a lot of companies aren’t good at pulling corporate strategies through all the way through their organization anyways, not something that’s as complicated as this.

00:15:49:14 – 00:16:13:14
Unknown

And for people, you know, this might feel very risky. And most cultures are risk averse and people worry about things. So that’s why some of this human centricity, we all have to acknowledge that all change, even when change is amazing. Change is hard. We’re all hardwired as humans to resist change and so this will be scary for some people in ways that you wouldn’t senior people wouldn’t realize that it is, you know, some of the drama behind it.

00:16:13:14 – 00:16:47:01
Unknown

So I think that that’s really important. All the clarity of communications being really clear about the behaviors that are expected of people and a lot of modeling, I think if I could add to that point, there’s something that I’ve seen sort of put into place across a few businesses is a a sustainability focused board almost to mirror the main board that’s task is because, you know, some of the board members, by their nature of their job, they probably been in business for a very long time and are used to working in the I’m just going to call it the traditional method.

00:16:47:03 – 00:17:09:08
Unknown

Can we supplement them and provide advice by setting up a mirror board that is able to to challenge and also work with them so that they’re able to be, you know, educated in a safe way that isn’t risky for them. And also they have people to rely on. So that’s one tactic that I’ve seen that have been employed to ensure that they’re able to that governance angle is covered.

00:17:09:14 – 00:17:53:24
Unknown

Thank you anymore. Thanks. You spoke about rebalancing leader incentives, short term, long term classic and more sustainability focused. Have you seen any good examples of sustainability focused leader incentives? So I know I’ve got to say, not totally yet. We’ve seen examples of where that’s well, I’ll give that is one publicly known one, which is that the CEO of Starbucks had an incentive within his with that he was compensated on, which was about the removal of plastic straws and other items from Starbucks stores.

00:17:53:24 – 00:18:26:16
Unknown

And that that happened pretty pretty quickly. How can you mix the two together is sort of, I suppose, the answer. And I think a lot of people who are kind of far more focused on actually that that kind of element of it with dividend people functions are focusing on. So I’d love to see it. I think it’s a really key bit that helps behavior, a mindset change exactly what those are I think is probably someone with slightly different expertise to me, but a good example of how H.R. needs to jump in because operationalizing I think there’s one there’s one over there’s a lady over her.

00:18:26:21 – 00:18:57:04
Unknown

The thank you very much. And one question on timeline, and is this kind of a one off process or would you say it’s kind of it’s innovative? Can you just maybe elaborate on how long does it take and how often to do it, what to repeat? I don’t I don’t think anyone’s got to got to the end the end yet.

00:18:57:04 – 00:19:19:24
Unknown

But I’ll give it I’ll give it a I’ll give it a go. It’s definitely iterative and it’s about creating. I mean sometimes you talk about creating a change engine or a change muscle behind this, this, these plans, creating that staggered plan that’s going to have to be periodically sort of updated and figuring out exactly what the the markers are on that plan.

00:19:20:01 – 00:19:42:03
Unknown

Because, I mean, as you can see, the world is changing sort of rapidly whilst these plans are being made. I think if we, you know, plans that were made sort of a year ago, big things have happened in the world that are impacting the ability to deliver on those plans. You know, the the oil price, you’ve got the war, different things like that, depending on what industry you are would mean.

00:19:42:03 – 00:20:04:09
Unknown

You need to have a system set up to be able to pivot against these. And I think having the systems and the focus in place is really important because, yes, it’s going to have to be iterative, but then can you have clear commitments or a focus that it gives the the solid core to what you’re doing and then the priorities perhaps can can flex?

00:20:04:11 – 00:20:21:11
Unknown

And I’ll jump on with just one more point where a lot of companies that we’ve worked with and seen that they have had to make the adjustment, that this can’t just be a top down plan. There’s an enterprise plan and then every division and every region, it comes like this is because of the nature of sustainability. It’s very bottom up.

00:20:21:11 – 00:20:41:13
Unknown

We’re going to do this thing in this market and this thing in this thing. So there’s all these different approaches and these different plans and they’re coming from everywhere. So somehow that top down and that bottom up need to meet and companies aren’t used to that. And so that’s part of why there’s so much uncertainty, why is this small pocket of the company over here and they’re charged with making progress this year.

00:20:41:13 – 00:21:04:24
Unknown

But this part doesn’t have to do anything for two more years. And that’s just kind of messing with companies and that psyche of. So that’s why there’s so much acknowledgment this takes a different way. And with that, that’s our this screen is going to really read. Thank thank you very much. Thank you very much because you later write.