Even as the US and EU roll back on green policy, organisations remain committed to delivering against existing sustainability strategies and targets. Increased exposure to climate risk, supply chain disruption, and growing pressure from stakeholders is driving leaders to consider how they can better manage social and environmental impacts in line with profit ambitions. A recent Gartner survey revealed that 69% of CEOs view sustainability as a growth opportunity. For many such organisations, becoming sustainable will require a serious reevaluation of their current operating model. Whether it be reporting on emissions, identifying waste reduction opportunities, or re-designing products for circularity, some level of transformation is required if businesses want to deliver against ambition.
Leaders are increasingly clear on the methods, tools and expertise they need to transform their organisation. However, one key consideration remains overlooked: organisational culture. No matter how well formed a transformation strategy is, without the right culture, issues like under-investment, siloed thinking, incrementalism and excessive caution will slow transformation efforts. Running a sustainable business is a process of constant improvement. It requires a culture of collaboration, innovation and openness to change, where teams are encouraged to seek out and capitalise on opportunities to drive sustainable practices.
In this article, we will explore how organisations can create a culture of sustainability and the critical role of business leaders in ensuring culture supports, rather than hinders, the transition.
How does organisational culture drive transformation?
Delivery roadmaps, commitments and KPIs are a solid foundation for transformation, but ultimately, it is your people who will be carrying forward a transformation. If employees aren’t ready to embrace change, transformation will be slow, or worse, won’t happen at all. Understanding your organisation’s culture, and the unspoken rules which define how teams work - their values, motivations and typical behaviours - is the first step in gaining their support.
Understanding culture helps define both the size of transformation - how much it deviates from current organisational values and beliefs, and the response to that transformation - whether staff will embrace or resist new ways of working. There are many frameworks for assessing culture, but it often boils down to understanding a combination of the immediately visible (surface culture) and the more fundamental (deep culture).
Examples of surface culture may include policies and guidelines, standard processes, dress code or brand image. Deep culture, however, reflects a more accurate picture of how an organisation functions, including responsiveness to transformation, social or political values, cultural biases, manner of speech, levels of autonomy, and a host of other ‘unwritten rules’.
Surface culture can be much more easily manipulated and shaped by leadership; however, its impact on how an organisation functions is limited. How many of us can remember a time when a colleague showed us a ‘better way’ of carrying out a task, even if it differed from the standard process? Deep culture accounts for 90% of how an organisation functions, and cannot be changed overnight. It is a culmination of years of learned behaviours and ideas.
That’s why, when designing a transformation strategy, leaders must always keep culture front of mind. Do your teams feel comfortable taking on more responsibility? Do they often follow market and industry trends, or prefer to carve out their own path? Do they seek out structure and process, or feel constrained by it? These are the kinds of questions leaders should be asking if they want to design an effective transformation strategy.
Why building a culture of sustainability is key for business transformation?
Cross-functional cooperation is essential for sustainable success. Today’s Chief Sustainability Officers (CSOs) rely on other teams to gather the information, resources and investment they need to act on opportunities and drive improvement. To ensure CSOs get sufficient engagement, these teams must view sustainability as a priority on par with traditional metrics like financial success and operational efficiency. Without this, sustainability teams face an uphill battle in trying to engage teams while also delivering on their core responsibilities. This is an all too common problem which leads to overcapacitated CSOs, hampered by constraints over which they have limited influence.
One example of how poor engagement limits sustainability initiatives is in ESG data management and reporting. Teams may be aware of their reporting duties without recognising the importance of good reporting as a function of a strong sustainability strategy. This can result in limited engagement and deprioritisation of data-gathering activities, which leads to poorer quality data. Downstream, this causes missed targets, inaccurate reporting and limited change, which can reaffirm existing scepticism towards sustainability initiatives, creating a cycle of stagnation.
In a truly sustainable business, sustainability is embedded into the fabric of the organisation. It sits at the centre of all key decision-making processes, supported by clear data that is accessible and understood by all impacted stakeholders. Employees share a baseline understanding of core sustainability principles and use this knowledge to inform how they deliver work. They are empowered to identify areas for improvement without feeling pressured to present an immediate solution. Instead, cross-functional working groups and operational teams collaborate to achieve specific, measurable sustainability goals, with sufficient expertise provided by members of the sustainability or ESG team. Delivery is encouraged further with performance metrics that align with sustainability targets, treated as equal priority to traditional financial metrics.
One example of an organisation that has begun to create a sustainability culture is Brazilian pulp and paper manufacturer Suzano. To fully embed sustainability into the product development lifecycle, Suzano integrated its innovation and sustainability teams under a single Chief Sustainability, Research and Innovation Officer. Both the Sustainability Director and Innovation Director report directly to him, ensuring that product innovation needs are weighed up alongside sustainability targets and obligations. This approach ensures that, when developing new products, the starting point is sustainability, done through the careful selection of trees that are environmentally and socially sustainable. Rather than viewing sustainability as an add-on, product teams now treat it as the starting point of new work, and proactively seek out ways to innovate through and with sustainability initiatives.
Achieving a sustainability culture
How can leaders change their organisation to be more sustainability-centric? Our experience shows that, although driven and directed from the top, new strategies must be supported and understood from the bottom up. Co-creation with employees should occur from the outset by engaging stakeholders across the organisation to define a clear organisational vision, with accompanying values, mindsets and desired behaviours. At Clarasys, we use the Strategy House framework to help leaders define exactly how their culture will align with their organisation’s vision and purpose.
Once values, mindsets and behaviours are defined, they can then be shared through clear communications from leadership, supported by policy and solidified in new performance metrics, so that staff and functions can see exactly how their work supports the larger strategic vision. Desired behaviours should then be further encouraged through positive reinforcement. Create opportunities for employees to demonstrate, and be rewarded for, their commitment to sustainability. This means staff will feel like they are playing an active role in change, rather than being forced into a transition they neither understand nor support. Organisations that can identify and leverage their change champions - employees who feel strongly about sustainable business practices and can role-model the new organisational culture - will win out here. This is because such employees will need less encouragement to drive cultural change, and will provide leadership with on-the-ground support, so that the transition feels natural.
Transforming your organisation to be more sustainable is no small undertaking, and will likely require a significant mindset change across staff and leadership. For this reason, organisational culture holds particular importance in this type of transformation. Do your teams understand what it means to be a sustainable organisation? What do you need from your people to make that change? And are they ready to embrace this new way of doing business? These are questions that can only be answered by thinking about culture.
Ready to drive sustainability from within your organisation? We can help you co-create strategies that put sustainability at the centre of your operating model. To explore how we can help your teams collaborate, innovate, and drive measurable progress towards your sustainability goals, get in touch.
