By Faith Goodman, CEO, Goodman Sustainability Group
Founder & Board Director, VeriStell Institute, VeristellInstitute.com
Investors, employees and customers want to be aligned with brands that are taking bold and transparent action on Net Zero, and Sustainability/ESG & Purpose, which equally represent the new business essentials.
Business as usual is no longer an option – just ask your stakeholders!
A few weeks’ ago, the Harvard Law School Forum released a research study entitled “A Test of Stakeholder Governance” highlighting that in the face of great uncertainty during the early days of COVID-19, corporate decision making was enhanced when leaders authentically consulted with their stakeholders. Remarkably, this provided leaders with information to ‘consider previously unknown perspectives, adjust choices and adopt novel, unanticipated solutions.’1 This is important because these findings are consistent with what is already a growing phenomenon: customers, employees, and investors increasingly want to align themselves with brands that are sustainable. They want to have confidence that their preferred brands are delivering on both shareholder value and addressing social issues. This means going beyond compliance and consider that pressing societal issues are now boardroom issues. This demands sobering leadership attention.
Transparent action on Net Zero, Sustainability/ESG and Purpose is becoming table stakes.
Many leaders have expressed the view that society has unleashed an unrelenting avalanche of expectations on businesses of late and there is no turning back. It is incumbent on business to respond with haste. While COP 26 again illuminated the urgency of climate change, we need to be clear that this generally focuses on one element – the ‘E’ of ESG (Environment, Social, Governance). Stakeholders and activists want to see action on all three elements given that they are inextricably intertwined. While the road-map regarding Net Zero, Sustainability/ESG & Purpose may not always be clear, what is unassailable is that stakeholder attitudes have changed. This means that corporate survivability is contingent on understanding and addressing these attitudinal shifts in real time. Given the evolving frameworks for Sustainability/ESG & Purpose, and the opaque markers lining the way, the court of public opinion carries even more risk. In the past year, we’ve witnessed the rise in employee activist groups, grassroot campaigns on social media designed to call-out brands Boards of Directors and CEO’s who are not moving fast enough on sustainability and the publishing of internal corporate documents and private conversations. This is a daunting reality.
While the imperative for Net Zero is front and center – so is the “S” in ESG. This has taken a front seat equal to “E” and “G”. The COVID-19 pandemic shone a further light on the magnitude of the corporate challenge with the “S”; delivering on diversity, equity and inclusion commitments remains vital. Step change actions areneeded to address employee wellbeing and fair compensation. Active management of supply chains, and their respective sustainability actions, human rights and data privacy-cyber challenges also are now some of the issues that are equally front and center.
Stakeholders will continue to alienate brands if they appear to be dismissive or don’t comply.
Nonetheless, at the heart of the matter is another significant opportunity: consider tethering your Net Zero and Sustainability/ESG strategies to your Corporate Purpose. This will provide the best chance of success in a world filled with uncertainty. Corporate Purpose delineates ‘why’ your brand exists beyond a profit-only model. If done right, this is a powerful underpinning for long-term strategy development and a sustainability north star for your internal and external stakeholders.
We can be certain that the world will remain unpredictable, and that stakeholder expectations will continue to evolve. Recalibrating corporate strategies and organizational culture to manage this new reality will require a courageous leadership mindset anchored on sustainability innovation, active engagement with stakeholders and considering real social impact. Defining and owning your Corporate Purpose is the leadership challenge of our time, and crucial to long-term competitive success in the 21st century.
Of worthy note for Canadians, the announcement at COP26 that Montreal will be an operational hub for the newly created International Sustainability Standards Board (“ISSB”) is significant to all Canadian business leaders. The ISSB will be separate from the International Accounting Standards Board (“IASB”), but will carry the same global authority and weight. Canada will be under the worlds spotlight, and this represents an opportunity for Canadian businesses to be a visible part of the global solution.
Moving forward on these matters has never been more important. As a proud supporter of our Business-led Recovery Initiative, Goodman Sustainability is leading a series of panel discussions to highlight the evolving sustainability imperative. Join us and hear from the leading experts from Canada and across the world as they discuss how they have made the leap.
1 A Test of Stakeholder Governance, Harvard Law School Forum on Corporate Governance, Amelia Miazad, Stavros Gadinis, https://corpgov.law.harvard.edu/2021/10/28/a-test-of-stakeholder-governance/?utm_content=bufferba5ec&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer