WEF14: Why is Sustainability So Hard?

This post first appeared on The Guardian Sustainable Business Blog (Jan. 24, 2014)

SunriseDavos14

Sunrise over the Swiss Alps, Davos 2014. Photo by Good Guide co-founder, Dara O’Rourke.

One thing that has surprised me in my time in Davos is how often I’ve heard CEOs complain about how hard it is to promote sustainability and social responsibility inside their companies.

In session after session, it has been clear that even the most powerful CEOs feel that transforming their organizations is hard.

Very hard.

In one of the few “public” sessions where CEOs talked about this, the panelists presented a long list of impediments to changing business for the good, including: a few bad apple companies (which have sunk public trust in corporations to record lows); investors (which think too short-term); the media (which only runs negative stories and beats up on them even when they try CSR); corporate boards (that are too share price focused); government regulation (which causes more problems than it solves); and consumers (who think green products perform worse and won’t pay more).

My first thought is that these sound like a bunch of scapegoats. (Interestingly, I haven’t heard the same litany in sessions about technological disruptions and supply chain innovations.) Further, what about the role of the CEOs themselves? And of the ways that some corporations undermine the institutions needed to address global sustainability issues?

But my second thought is that these are believable stoppers to sustainability. Short-term investors? Check. Conflicted boards? Probably. Selfish consumers? Sure. Although no single one of these is the root cause of sustainability failures, together they create enough barriers to block most sustainability initiatives inside corporations.

That brings me to my third thought, if each of these barriers can block sustainability initiatives, then how do we align systems and incentives to move sustainability forward? And can strong leaders push past these blockages? For instance, it was fantastic to hear that Richard Goyders, the CEO of Wesfarmers, no longer meets with short-term investors. And to hear Marks & Spencer and Unilever talk about engaging consumers in new ways.

But clearly, unique CEOs and individual corporate actions are not enough. We need partnerships – including NGO and government action – to address these blockages, and to create incentives for firms to push through them. We need ways to align supply chains to solve problems, instead of allowing any one barrier to block everything.

As one CEO quipped: Average CEOs do what average investors demand.

It’s time for exceptional leaders to create partnerships to push past these limits.

About Dara O'Rourke

Associate Professor at UC Berkeley and Co-Founder of GoodGuide.
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