What motivates sustainability in the boardroom?
There are two things that generally motivate an organisation to take action: a carrot or a stick. When it comes to sustainability, the carrot up for grabs is improved brand reputation, green premiums, and the overall satisfaction of doing something that positively benefits the planet and its people. The stick, is the regulatory and reporting requirements that force an organisation to meet new standards and regulations. The path a board chooses to take will depend on multiple factors, all of which ultimately come down to whether they see sustainability as an obstacle or an opportunity.
Anyone familiar with the diffusion of innovation graph will know that the innovators, early adopters, and early majority reap the rewards of whatever is new to the table. They make the most of a product, service, or concept before it becomes mainstream and is adopted by the general population as the norm. Leveraging this early, before it becomes the norm, offers a financial and reputational advantage. Boards that recognise the functional benefit of prioritising sustainability reap the rewards. By understanding your environmental and social impact, you can identify what you are doing well and strategise what you need to improve on. Once these areas are identified, you can market your commitment and start benefitting financially and reputationally from your actions. Without the foresight to identify these rewards however, boards won’t be motivated to get started on sustainability.
For those not captured by the temptation of reward or the emotional desire to do better for the planet and its people, regulation becomes the means to motivate the late majority and laggards to elicit change. No one generally likes being told that they have to change the way they do something or that they have to do something new, but the regulatory sticks are a necessary evil when the outcome of change is the betterment of the planet and its people. These sticks have been employed minimally up until now in the sustainability space but are rapidly changing. Boards that put sustainability aside in the too-hard basket are quickly realising that they must now have these conversations out of necessity rather than choice. Mandatory climate-related disclosures, free trade agreements, and greenwashing bans are fast becoming standard practice and are influencing what is required both on and off-shore. These regulations raise the bar of what is considered the norm and push organisations to improve their systems. Those who don’t keep up will be left behind by the changing tide or face legal action for non-compliance with the rules.
Sustainability, therefore, offers an interesting discussion in the boardroom. The field of sustainability is relatively new and can be daunting to many boards. However, the daunt should be outweighed by the benefits sustainability can bring to an organisation, let alone the world we live in. Sustainability planning can help identify strategic risks and opportunities for future-proofing an organisation once it is embraced as an opportunity rather than an obstacle. Boards should view sustainability from a functional, social, and emotional viewpoint, helping an organisation to increase or protect revenue, keep up with changing legislation, meet customer and employee expectations and build brand loyalty. This also allows an organisation to uphold a sense of care for the planet and its people. It’s not too late to get a hold of the carrot before encountering the stick.
Millie Taylor for Sustainability Marketing Group