Fires, droughts, floods and Greta Thunberg – sustainability has never been so much at the forefront for global business. What are the trends to look out for? CJBS faculty, MBA alumni and a current MBA candidate give us their thoughts.
As the profound challenges of sustainability become ever more urgent, Jennifer Howard-Grenville, CJBS Diageo Professor in Organisation Studies, who teaches the MBA elective on Managing for Sustainability points to three main trends:
Shaping the core strategies for sustainability
“Over the last year or so, with the prominence of Greta Thunberg and events like the fires in Australia, the hottest summer on record, flooding in the UK and elsewhere, there has been a significant uptick in the expectation that businesses must act to bring their activities in line with what the planet can bear. Beyond this, businesses are increasingly being asked to deliver on social sustainability, taking care of employee wellbeing, equity, and social foundations that underpin global supply chains. These pressures are coming from everywhere now – investors, employees and potential employees, consumers, advocacy groups, and communities. So, the first trend is that it’s eminently clear that abiding by regulation is no longer enough, and businesses who are in it for the long run, must now be fully engaged and proactive about how these issues shape their core strategies.
“A second trend is that sustainability issues are being tackled at the level of the value chain, rather than within the footprint of an individual business. This is because significant impacts are felt both upstream, for example when extracting lithium to make electric car batteries, and downstream, when considering how consumers use a product and what happens to it at the end of its life. Leading businesses know that the entire life-cycle sustainability impacts of their products or services need to be comprehended in order to know where actions will have the greatest influence.”
A focus on the UN Sustainable Development Goals holistically
“Third, we are seeing more recognition that attention must be paid to systems, rather than discrete environmental or social issues. Often even a very well-meaning effort to mitigate one problem can create or exacerbate another problem that might appear unrelated. For instance, efforts to offer single use sachets of soap or washing powder that are affordable to the poorest of the world’s poor, and that improve hygiene, have created significant plastics pollution problems. Now that so many businesses are paying attention to the UN Sustainable Development Goals (SDGs), which capture 17 social, environmental, and economic indicators, they need to be attentive to how their activities influence these outcomes holistically, rather than just tackle issues one by one.”
For alumni already working in the field, the future is complex but fascinating.
Cambridge MBA alumnus David Elliott (MBA 2008) is CE of Trees for Cities, a London-based charity working with businesses to re-green urban spaces and advising the Mayor of London on sustainability and embedding The UN SDGs in the city. David reports that sustainability has largely transitioned from a niche CSR bolt-on funding charitable and community projects to a fundamental of core business. He works at the top table with leaderships teams who are fully aware of the competitive advantage brought by real engagement. The big question is how businesses will rise to the challenge of redefining models that have driven capitalism since the Industrial Revolution.
Readdressing business models
“Businesses are going to have to drastically reassess their models. They are set up to produce commodities and serve growth in a world where consumption is driving a lot of our sustainability challenges. They will have to find ways to make products that can be recycled or that last longer. That’s what the ‘developed’ world is increasingly demanding as people become aware of their impact. At the same time, businesses will have to satisfy demand from customers in the developing economies where burgeoning middle classes with money to spend are massively driving consumption. It will be a difficult balance.
“The financial structure of companies is to satisfy shareholders and pay dividends and pensions. This is built on the ‘create products’ model and mitigates against the shift to the long-lasting or recyclable. So there are huge strategic questions ahead for business and MBAs will be helping companies wrestle with those. How to create a genuine circular economy will be one of the big challenges of the future.
“The good news is there are lots of business opportunities coming out of things like the UN SDGs. MBAs will have a major role in helping their organisations understand and embed the SDGs, and to grasp the opportunities.”
The new perspective of a pandemic
Cambridge MBA alumna Jacqueline Lim (MBA 2008) views root and branch soul searching as vital for businesses now. An independent advisor, consultant and coach focused on sustainability, innovation and leadership, Jacqueline sees the current moment, as businesses globally wrestle with a pandemic, as an existential cross-roads:
“Businesses should be using this crisis as a pivotal moment to re-evaluate what their purpose is. Employees, customers and society find it no longer acceptable to exist simply to serve shareholders. In the context of the current pandemic, the word ‘sustainable’ – to maintain the status quo – is beginning to lose relevance. It means ‘keep going’, which is not enough anymore. Instead, businesses need to aim towards being ‘regenerative’, where their existence enables all stakeholders – including employees, customers, suppliers, communities – to thrive, whilst operating within the means of our wider ecological and planetary systems.
“One starting point is for businesses to create intentional spaces for employees to bring their whole selves to work, allowing them to take agency to explore, experiment and put into practice what meaningful, systemic and collaborative change in the organisation might look like.”
Jacqueline put this philosophy into practice by initiating The Creating Collective Impact programme at She Leads Change, a social enterprise aimed at nurturing individuals to lead positive change. She adds:
“There are already positive shifts demonstrated by business – be it the growing B Corp movement or the 2019 statement issued by the Business Roundtable, which redefined the purpose of a corporation. There is also now ‘a race to the top’, as more and more companies are doing ‘impact evaluation’ to assess and disclose the positive and negative impacts of their business in the world. Industry-wide initiatives like The World Benchmarking Alliance, the We Mean Business Coalition and the Future-Fit Business Benchmark are all examples of this. Businesses need to draw a clear line in the sand around this question: ‘Are we operating in a way that in no way undermines the ability for people and planet to thrive?'”
Carbon taxing and greenwashing
Current MBA candidate and scholarship student Julian Payne (MBA 2019) worked for the Carbon Trust for five years before embarking on the MBA programme. He has organised an MBA candidate ‘trek’ to London to witness sustainability and the energy industry in action, including in companies such as Bloomberg New Energy Finance and Wood McKenzie. Julian is clear about what is needed to boost sustainability across the board, not just across the board room:
“The number one thing we need is a tax on carbon across industry and other sectors of the economy – or some form of carbon trading mechanism to mitigate climate change. Putting a price on carbon will incentivise organisations and individuals to make different investment decisions and the positive spillover effects of making green investments, for example in infrastructure, can be huge. However, there are many complexities involved in transitioning to a more sustainable future. One complexity that is unfolding in Cambridge and elsewhere is the issue of divestment. If an investor decides to liquidate their position in a business or project that is unsustainable, such as in the oil and gas sector, then another could simply take up that position effectively cancelling out any impact. Another complexity that is widespread is ‘greenwashing’ where an organisation provides a false impression or an unjustified assertion about the green credentials of a product. With customers increasingly on the lookout for more sustainable alternatives, there is an incentive for organisations to misrepresent their impact to increase sales. So, there is a temptation to make a show of being green with no real substance.”
In a fast-evolving field perhaps the one constant is that, for businesses and their people, there will be no shortage of interesting complex challenges ahead.