Transforming Business Culture

Forming a culture that enables an employee to understand what sustainability means for both the organization and his or her role within it is necessary in order to deeply embed sustainability. Yet culture is difficult to define and often described simply as “how we do things around here.”

To fully integrate sustainability issues into the company’s decision-making, employees need a clear set of values and shared understanding. And the company’s leadership is critical when it comes to enhancing or diminishing a shared understanding of sustainability.

As many of us have experienced, even with the best strategy and leadership in place, culture can be resistant to change. As oft attributed to Peter Drucker, “culture eats strategy for lunch.” But whilst culture can be deep-rooted and slow to evolve, our research indicates that it is possible for corporate cultures to adapt. Moreover, given the
 right conditions, progress can be made even within corporate cultures that do not have a deeply shared understanding of sustainability.

An important aspect of culture in the context of integrating sustainability is an openness to change and innovation. We explored the relationship between culture and innovation in our report Model Behavior II: Strategies to Rewire Business, highlighting four aspects of culture that enable innovation: supportive senior leadership; non-hierarchical structures; freedom to fail; and an ethos that encourages collaboration.

While the cultural characteristics we describe are ideal when pursuing integration, many sustainability practitioners within multinational companies can be risk-averse or lack these characteristics. And yet there are still examples where corporate cultures, risk-averse or not, have transformed to further embrace sustainability.

Barclays is an example of an organization that has worked to change its corporate culture by using a decision making tool, the Barclays Lens (PDF), developed in 2013 to incorporate social and environmental considerations into decisions. The Lens consists of five questions designed to help employees consider the broader impacts of their decisions on customers, clients and communities in the short- and long-term. By the end of 2015, Barclays had exceeded its initial target and trained over 10,000 of its employees globally to use the Lens, thus shifting the corporate culture to embrace sustainability at the core of its daily decision-making.

According to Kate Millar, “The Barclays Lens is creating an opportunity for our senior leaders and decision makers to open up a new conversation about how we should be thinking about and factoring in the broader implications of our business into our decisions every day. It has also been enabling a conversation about the role of a bank in society, how do those responsibilities play out, and what are our responsibilities to move beyond regulatory requirements.”

Italian electricity and gas company Enel went through a similar cultural transition that enabled the business to deeply embed sustainability issues and values and better focus on innovation.

The company began by identifying the long-term risks of dependence on a fossil fuel-based portfolio and made a strategic decision to shift its business to focus on renewables, the modernization of grids, operational efficiency and thermoelectric capacity.

To support this shift in business focus, a cultural shift was also necessary. Enel replaced many of its board members, appointed new sustainability leadership and mixed personnel from diverse parts of the business in a new sustainability team. This structural change helped move the company’s “business as usual” culture and approach to one that incorporated innovation and sustainability as core tenets of its strategy.

These two examples illustrate that it is possible to leverage company culture towards sustainability. And where dramatic change is not possible, practitioners can still work within existing cultures to drive integration.

Sustainability practitioners in change-resistant organizations can identify aspects of business culture that align with sustainability issues as a means to start embedding sustainability into their corporate culture.

For example, in a conservative engineering firm, a practitioner might leverage the high regard for quantitative assessments and apply tools such as life cycle assessments as a way to illustrate environmental risks or opportunities. Or in a company that values robust systems and processes, a practitioner could embed steps within existing methodologies to ensure sustainability issues are considered.

Other companies are able to accelerate sustainability as a result of acquisition or through small internal “skunkworks” teams that operate outside the mainstream.

For example, some of Campbell Soup Company’s recent efforts on nutrition were inspired by the acquisitions of other companies such as Plum Organics, an organic baby food company. This has helped inform Campbell’s efforts to take bolder, more innovative actions to foster a culture of sustainability and innovation and to pursue ambitious goals. The acquisition also has improved visibility into Campbell’s efforts in sustainability.

As a B Corp and public benefit corporation, Plum Organics integrated sustainability into its core by prioritizing societal wellbeing along with financial wellbeing. The company was founded with the idea that business can be a source for positive change in the world and as a result, it has taken innovative approaches to its strategy and product offerings. Holding companies can leverage their most innovative brands to further embed sustainability into their own strategy and into their other brands.

As an example of a “skunkworks” approach, Hong Kong-based CLP Group nurtures sustainable innovation through a three-part “Innovate, Incubate, Integrate” model which enables the company to nurture and develop new initiatives and then successfully integrate the new capabilities and functions needed across the group for a sustainable business over the long term. The model ensures new, more sustainable models of working are protected before being mainstreamed into the business.

Culture shouldn’t be perceived only as an obstacle to sustainability. A number of social enterprises, B Corps and large businesses, are demonstrating how culture can drive sustainability success for organizations and the employees within them. Practitioners are finding successful ways to work with existing corporate cultures as well as pave the way for new ones.

Written by: Zoe Arden

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