The promise of sustainable growth is raising investor, customer and employee expectations. Research shows that companies in almost every sector are setting ambitious sustainability targets but are caught in an operational reality of business activities that continue to harm people and the environment.
* Walmart’s CEO Doug MacMillan announced his enterprise is becoming a regenerative company — that it will protect and restore massive amounts of farmland and oceans by 2030.
* IKEA publicly stated its commitment to becoming a positive impact retailer by 2030.
* ExxonMobil is promising to lead green energy solutions.
* Nestlé sees itself as a food industry leader providing solutions to water use and plastic waste.
* Fashion companies such as H&M are setting climate-positive goals by 2040, and aviation companies are announcing sustainable-fuel solutions for net zero by 2050.
But the reality is that many of these companies are struggling just to reduce harm. In fact, almost every company faces, or will face, a talk-do gap between sustainable growth goals and its capacity to deliver against those goals.
To maintain the credibility and legitimacy of corporate sustainability, companies need to clearly distinguish between three types of impacts.
1. The first is doing less harm, where the goal is to minimize negative social impacts and reduce ecological footprints.
2. The second is incremental positive impact.
3. The third is systemwide positive impact, where scalable business innovations have the capacity to move the needle on social and global challenges such as climate change, the ethical use of artificial intelligence, pollution affecting human health and reducing income inequality.
All three business-innovation types are needed. Doing less harm is important but by itself cannot be a solution to a problem. Companies that fail to distinguish between these types of impact could be viewed as lacking transparency, or worse, as misleading the public’s sense of progress on social and environmental problems.
Despite all aggregate corporate efforts, trends in climate change, income inequality, and health and mental wellbeing are getting worse, not better.
Here are immediate steps businesses can take to close the talk-do gap in sustainable growth.
* Increase transparency about the type of impact sustainable growth strategies will have from doing less harm, incremental positive impact, systemwide transformation, to a combination of them.
* Distinguish between reporting and disclosure requirements and business innovations that create value for shareholders and stakeholders.
* Increase collaboration with stakeholders along supply chains and at the industry level with a plurality of partners, including government and nonprofits, for example, through appreciative inquiry summits.
* Undertake corporate programs to transform executive mindsets. Increasingly, a variety of such programs are designed to change leaders at a deep level of self-concept, going beyond conceptual or moral reasons to pursue sustainable growth by embracing experiential learning that reconnects a person to their life purpose, to others and to nature.
* Finally, we need greater precision in sustainable-growth key performance indicators. Business analytics can help sharpen the focus, clarify the metrics and provide evidence-based insights into sustainable growth strategies.
Chris Laszlo is Professor of organizational behavior at Case Western Reserve University’s Weatherhead School of Management.
