Sustainability In Business: What We’re Looking For In Today’s Enterprise Climate

Building sustainable brands takes work, but most experts would agree it’s fundamentally important.

I’m hearing from people that we’re at sort of an inflection point when it comes to making sustainability a centerpiece of corporate branding.

On the one hand, there are these established ESG practices and trends in place, but that still may not give sustainability the focus and attention that it deserves.

In a panel at the beginning of this year, various experts attending Davos this January talked about how to enhance sustainability for company practices, with the tagline ‘sustainability first, marketing second.’

The group talked about how this is implemented in sectors like commercial air, travel, and healthcare.

Consumers (and) employees want the transparency,” said Sarah Chapman, Global Chief Sustainability Officer at Manulife. “They really want to understand what’s behind some of what’s being said at the brand level.”

“How do you take the organization along with you on the sustainability vision and journey?” asked MIT associate professor Abhinav Kumar. “It’s no different from: ‘how do you take the organization along with you on your values,’ or … on a business strategy or anything else. It’s the same formula, it’s living and walking what you’re talking about as a leadership team.”

And then there’s the people side.

“How do you use that sustainability message as a sword instead of a shield, to get better talent?” asked Forbes Magazine editor Randall Lane.

“There are people who want to engage,” Chapman said in response. “We’ve got to figure out a way to meaningfully engage them. You know, we’re seeing certainly a decentralization of sustainability. Sustainability is not the responsibility anymore of a sustainability function. It’s being embedded in marketing and risk and finance, and so giving people those opportunities to embed elements of environmental social impact through their jobs is the most meaningful way to do that.”

David Haigh, founder and CEO of Brand Finance, talked about efforts to evaluate CEOs as brand guardians and reputation guardians.

“There are a variety of things that people care about, particularly the CEO having vision, but one of the things which has grown, year by year by year, is their reliance and backing (of) sustainability in all three of its key areas, and we’ve just announced the results today, actually, of our latest study, and it demonstrates very clearly that the most successful CEOs are the ones that do adopt sustainability practices, and one of the key audiences for that is the internal one, obviously external as well, but (also) internal.”

Some of the conversation moved to regulation, which is a major issue for so many firms and leadership teams.

One of the things that I’m watching and I’m conscious of is, as it becomes more of a regulatory requirement, that we lose the emotional, you know, brand play, that sustainability will go live in finance and risk,” Chapman said. “And … the pendulum, as it does, swings, and it was probably too far on the marketing side, and that’s where you got, particularly in the financial services industry, issues of greenwashing. And I think we’re going to see it swing, and we’ve just got to keep it somewhere in the middle, where we’re still … embedding it in our brand story, and we are able to tell … the story of what sustainability is, without sterilizing it into the regulatory environment.”

“The regulatory pressure is there, and it’s only been ratcheted up,” Kumar added. “And I think if you break it down, there are two aspects where the regulatory pressure really starts with companies. The first is in raising standards, and the second, largely, is in reporting. On the standard side, I think the smart strategy for any business should be that, if you’re smart, you’re ahead of the standards. You’ve already implemented the change before you’re required to do so. The reporting side is a different thing, and it can become very cumbersome. Large companies have the resources, you know, they can create an entire new compliance department and work on it (that way). I think for smaller companies, it becomes a huge burden.”

Panelists also spoke about the catch-22 of sustainability in business, and the knife edge that company leaders have to walk.

“The analysts believe that if you are not following sustainability practices, particularly in terms of sourcing, you will lose market share,” Haigh said. “So… the financial guys are following the market, and that’s why it is a major problem for brand managers. You’ve got to get it sorted out, or you screw up your market share, and you screw up your financials.”

“But it’s counterintuitive in some ways,” Lane said, “because to gain market share, that probably means that sometimes you have to walk away from opportunities if they don’t fit sustainability. But you know, it’s very hard to get people in other areas of the company to say, ‘no, we’re going to leave that business, or we’re going to leave that client, or we’re going to leave that initiative. How do you do that? You coach people in your organization that the long term means transparency, you know, but … sometimes that means you’re going to have to take a short term hit. How do you get people to do that?”

“I think that’s the biggest challenge for CEOs today,” Kumar responded. “How do you balance short-term pressure with the long term interests of the company? And you know, different CEOs do it differently, some bow entirely to short term pressure, move up the stock price, all of that, and leave the company in a state where in the longer term, somebody has to come in and fix it, and others think of the 100 year vision and focus on it, but don’t take enough short term actions to give them the space to drive their long term vision.”

You can see the rest in the video of the panel, where the participants talk about the relative carbon burden of the tech sector (around 3%) and how that’s comparable to aviation, noting that AI, web3 and crypto each have their own carbon footprint. Touting the success of companies like Patagonia and Tata in India, panelists spoke about the importance of setting targets, and anticipating challenges on the sustainability front. It was a good reminder about how companies have to practice sustainability standards in a rapidly changing world.