2degrees' Martin Chilcott deliberates on the state of sustainability leadership today and asks "what do we mean by ‘leadership’?"
I don't want to depress members of 2degrees, but ever since the Copenhagen COP 15 talks, I have been 'gutted' by the failure of governments to provide the leadership required to drive the sustainable revolution. (There is, in my view, one exception to the cast of perennial under-performers and that is China. Read here as to why I think this.)
I didn’t participate in the Globescan/SustainAbility 2012 Sustainability Leadership survey (worth taking a view of the webinar slides), but it is clear my views are shared by those polled, who put government right at the bottom of the list and tumbling into oblivion.
According to the survey, it falls to business, the third sector and scientists to fill the void and provide the leadership we so badly need. Putting scientists and the third sector to one side (ignorance is a powerful tool that keeps me focused) I have been asking myself whether there is any evidence of real leadership on sustainability from business.
Firstly, let’s ask the question: what do we mean by ‘leadership’? Perhaps it’s easiest to understand by contrasting it with management. Managers manage existing processes and organisations, and good managers improve them incrementally. Leaders by contrast, radically change existing processes and organisations, or create entirely new ones. Leaders set a new direction and take risks in doing so. If they set a good direction and persuade people to come with them, then they are a good leader. Note to self: would-be leaders often make poor managers!
Do we have evidence of such leadership in sustainable business? Are there individuals or organisations striving out in new, radically more sustainable directions and successfully bringing others with them? Certainly there are plenty of entrepreneurs showing this kind of leadership across all sectors of the global economy such as the founders of Recyclebank, Zipcar, etc. These people are creating entirely new organisations, processes and business models.
However, whilst their leadership is necessary, it is not sufficient. What we really need to deliver the economic revolution at the scale and speed required, is leadership from within large corporations; intrapreneurs as CEOs. I believe there are some true sustainable business leaders at the top of large corporations and I think they can be identified by the way they are driving change at the heart of their businesses, and by embedding sustainability within their core competences. To illustrate my point, let’s consider an example company:
- Unilever is a brand marketing organisation. What it does excellently is market (create demand) for its brands. The CEO, Paul Polman, is on a mission to change the company's fundamental heart by changing the way the brand marketers work. At the recent annual update of their business strategy, the Sustainable Living Plan (that’s right, “business strategy”) he readily admitted that his marketing teams were not all on-board, and as he put it, some new people will need to be recruited “and some un-recruited.”
- Unilever is also an old and established public company. Over the last 5 years, he has challenged and changed its relationships with its shareholders. It no longer reports quarterly, which means share ownership by hedge funds has fallen from 15% to less than 5%. As he put it in his interview with the Guardian, “Historically, too many CEOs have just responded to shareholders instead of actively seeking out the right shareholders. Most CEOs go to visit their existing shareholders; we go to visit the ones we don't yet have."
- Unilever’s Sustainable Living Plan runs as an ever-strengthening thread: from its brand marketing teams to its supply-chain to its shareholder relations. If successful, over time it will change everything it touches.
I could cite others such as Lee Scott and now Mike Duke from Walmart (changing how and what they buy) or the late Ray Anderson at Interface (changing how they manufactured). My point being, these leaders were/are driving change at the very heart of what makes their organisations excellent, not playing at the periphery.
However, for all my admiration of Paul Polman at Unilever and the others, I don’t think they are doing what they are doing because they are morally superior than most, nor commercially more savvy. Mr Polman is a leader in the true sense of the word, driving change, because Unilever’s board recognised that it needed a leader and not a manager. It has to change or face disaster over the medium term as both supply and demand in the markets of the emerging economies upon which it is dependent come under enormous pressure. The need for change in certain industries creates the need for leadership.
By contrast, there are industries where there is no need for change (at least from the industries internal and market perspective) and so we see little or no sustainable leadership. Big oil and big energy is a great example. The value of their assets will not be under threat for decades. In fact they are only likely to increase in value for some time.
What this industry feels it needs is good management, and when true leaders do get to the top, like Lord John Browne at BP trying to find a new course “Beyond Petroleum”, they are replaced with more cautious managers, such as Tony Hayward and now Robert Dudley. Their response to sustainability is risk mitigation, remediation and compliance management; and whilst there is no imperative for change in their industry, their response cannot be about radical sustainable transformation.
Leaders may or may not be good managers, but I contend that within large corporations they only get to lead when those around them recognise the need for change. That need is ever more present in many industries and companies. Markets are demanding change and so I believe more leaders will arise. In these industries and markets companies will run ahead of regulation and legislation and so governments should tread lightly.
However, the corollary is that where there is no market driver for change, there will be no sustainable business leadership! Here, there is a need for governments to show…. oh dear! Now “there’s the rub!”
For more on leadership, read In Praise of Leadership.