The difficult evolution towards a sustainable business strategy
"How do you persuade our world to think in the long term? That is the big question that many people are asking. And unfortunately, pain that can be felt directly, such as the effects of climate change, is still the best driver for change."
Boer & Croon in conversation with Jan van der Kolk, a true pioneer in the field of sustainable strategy and impact.
If you look at the developments in the thinking about sustainability in business over the decades - what are the most significant changes and what still needs to be done?
Addressing climate change and making the business community more sustainable can no longer be overlooked in the public and political debate in recent years nor in the business community. Although all this attention is relatively new after having waned in the late 1990s, the subject is definitely not. For decades, pioneers have been discussing and thinking about how the business community can do its bit to solve these global problems. A number of companies have also acted on this.
Until around 1990, it was difficult to get sustainability on the agenda. How did you manage that?
As one of the first students of environmental studies in the Netherlands - we are talking about the early 1970s - I was involved at an early stage in themes that are now impossible to imagine life without them. It was a polarised period back then, during which politicians, scientists and environmentalists had a very strong anti-industry attitude, and as a result, so did the Ministry of Public Health and Environmental Health at the time. Anyone from an NGO talking to companies or umbrella organisations of companies was an absolute outcast within those ranks; civil servants from this ministry were extremely reluctant to talk to these organisations. These were very exciting and difficult times, which taught me: "if you don't talk to each other, you have a recipe for disaster".
I drew on this lesson in my first career steps: as a business consultant with a large consultancy, I tried to build a bridge between environmental science and the operational side of business, by devising environmental audits and environmental management systems in companies, among other things. The government was prepared to finance pilot projects as a first step, followed by a subsidy scheme for the development of environmental management systems for business sectors. This was truly pioneering work: analysing and interpreting the limited data that was available in the beginning needed assumptions that had yet to be validated. As well as convincing governments and NGOs of the need for taking such steps.
The subject was still seen in this period as a legal and technical matter, not as a management or strategic issue that should be dealt with in the boardroom. However, those at the forefront knew, by approaching the environmental issue from the social/political angle (think back to the reports of the Brundtland Commission in 1987 and the Dutch National Environmental Outlook "Caring for Tomorrow" from 1988), that the subject was here to stay and that the senior management of companies would ultimately have to take responsibility. The problem, however, was that these senior executives had no affinity with the subject. It was seen as unfathomable, a hindrance, something that only led to extra rules, costs and bureaucracy. Ideally, they would outsource everything to the environmental coordinator, then they would be rid of it. It was a generation of managers who did not feel comfortable with the subject, because the group lacked know-how and nobody wanted to admit it.
What made the subject of sustainability gain more attention after that?
A first step in the right direction was taken by organising a few stakeholder dialogues between companies and NGOs and a single financial institution for the development of investment funds on the basis of sustainability criteria and credit policy for sensitive sectors (including weapons, oil & gas and forestry). Initially, the companies concerned were reluctant to take the plunge. "Aren't we a bit foolish to be the first ones to raise this issue around the table?" They were afraid of nothing but critical reactions from the NGOs, yet the exact opposite happened. Yes, there were heated discussions, but mainly there was a sense of relief that the subject was brought up for discussion. We are finally talking about it! There was plenty of room to set things up and the NGOs were actually happy to finally have a place at the table and to the outside world were positive about the dialogue that was emerging, a huge difference with the seventies and eighties.
In the 1990s, sustainability gained more attention, partly as a result of the aforementioned report from the 1987 Brundlandt Committee (in which the term sustainability was also introduced, ed.). In the mid-1990s, however, there were also a number of progressive companies that did understand the issue and put it on the map as a B2B topic. During the 1990s, companies started to discuss in-house what data they wanted to communicate and how they could make consistent choices: the first Environmental Reports were published. Accordingly, the financial sector began to consider questions such as: "If I don't want to invest in nuclear power plants, do I also not want to invest in the party that provides non-production-related equipment for a nuclear power plant?" At that time, the idea that organisations had influence on and were partly accountable for their suppliers and other chain partners was still considered far removed from common practice. This discussion and the search for solutions is still in full swing even now.
But it is meanwhile firmly on the agenda.
Yes, but at the end of the nineties, attention for environmental issues subsided, partly as a result of the idea that we, as humankind, could handle anything. But a revival took place around 2005, which managed to stick reasonably well. Then the EU, for example, introduced CO2 emission trading and the UN introduced the Principles for Responsible Investment. From 2005 onwards, the discussion about the chain responsibility of companies was also well under way. Some companies became forerunners with a clear sustainability strategy.
The financial sector gained awareness of its role, even though it was slow to take decisive action.
The lessons are that attention for issues goes with ups and downs, that views, attitudes and behaviours in companies are crucial for bringing about action and technical solutions in companies.
What needs to be concretely done now?
Whenever I look at the future and a sustainable transition, I see a strong link with change management and the décor. You are always operating against a background of other issues within the company. At a time when a company is under financial pressure, for instance, it is very difficult to put this subject on the map and gain support for it. Besides the décor, it is all about the legitimate basis for a sustainable strategy: where does this stem from? What is the motivation? How broad is the approach (think about the chain of suppliers and buyers)? And is there enough awareness of the impact of an actual sustainable course for the organisation?
It is positive that this is no longer an unknown issue among Boards of Directors. Nevertheless, there is still too much talk about sustainability in terms of risk and reputation. And not because it might be profitable in the long run, or, even a step further: a prerequisite in order to keep the economy going at all. If the earth does become one big mess, there will be nothing left to live for either. In other words, intrinsic conviction does not always seem to be the case, although it is often used in company publications and statements.
That is why it is important that not only the strategy or sustainability department, but also other sections (e.g.. HR, procurement and innovation) are involved in the formulation of ambitions and their implementation. And if they are not that far yet, they should also be involved in order to better understand the subject of sustainability and be able to translate it to their own situation.
What can we, as consultants, do to help our clients become more sustainable as well as more successful?
In many cases, an internal change process, a transformation of the organisational culture and strategy is necessary. Companies are taking steps, but the overall focus is on the short term. How do you mobilise our world to think in the long term? That is the big question that many people are asking. And unfortunately, pain that can be felt directly is still the best driver for change. We are now seeing more and more concrete threats from climate change. Potentially, these will accelerate the transition.
Topics that really remain on the management agenda in the coming years are CO2 emissions, risks from climate change, damage to ecosystems ( biodiversity loss in particular) and the loss of raw materials through wastage and lack of recycling. Consultants definitely have a role to play in this transition. By engaging in wide-ranging discussions with clients and also pointing out blind spots to their clients, so that they are encouraged to start thinking about it. In addition, it helps to publish a lot and to give presentations on the subject. Convince everyone you talk to that this is a really important subject, even more importantly, a condition for survival. There is a subversive side to every transformation and the people who oversee it: you have to keep going, despite the fact that some people around you will resist or not understand. Keep working on it anyway, not only in-house but also in the dialogue with your clients. You know the saying: making strategy accounts for 2% of the time, executing and maintaining the strategy accounts for 98% of the time.
Listening to you, we can't help but think that the future is bleak. As urgent as the subject of sustainability is, it really seems as if we can only change after something starts to hurt, and the pain of climate change seems to be increasing before we are really willing to take action, with the risk that by then it will be too late.
Yes, as long as that sense of urgency is lacking, it will be difficult to take the steps needed in time. But still, I have faith in human resilience and creativity: these can push us along the right path over the coming years. All it takes is a good dose of courage and a willingness to take action. Whereby pressure stemming from civil society and from politics is crucial.