Senior Manager, Organizational Research, Korn Ferry Institute
Change: the key to sustainability
As urgency around addressing climate change increases, companies understand the need to align their purpose with societal and environmental goals. By embracing sustainability, businesses can do well and do good, becoming powerful agents of transformative change.
Yet, a new Korn Ferry Institute report found that the voluntary nature of incorporating ESG and sustainability into corporate strategy leaves the door open for companies to choose how much effort they want to invest. While some organizations prioritize and embed sustainability into the business, others may take a more symbolic approach, misleading the public about their overall sustainability performance by overemphasizing positive behaviors and downplaying negative ones, according to the report. "This can result in unsubstantiated positive effects relating to their brand reputation, like increased stakeholder trust, a desire to work for the company, and overall value estimates by investors,” says Bryn Chighizola, Senior Manager of Organizational Research at the Korn Ferry Institute, Korn Ferry’s research arm.
Companies are facing rising demand to address sustainability concerns—and at an unprecedented rate. But navigating changes and communicating progress can be even more challenging without systemic frameworks, shared expectations, and standards for reporting. And this, Chighizola says, opens the doors for companies to selectively report or postpone their sustainability efforts or engage in surface-level actions.
To be fair, Korn Ferry’s own research shows that taking a substantive approach to sustainability would require a significant amount of time, money, and talent to implement changes. But, experts say, the upfront costs of prioritizing sustainability and implementing organizational changes can be mitigated by the long-term positive impact of those changes. “If an organization takes the time upfront to commit to creating and managing change effectively, the long-term effects are much more positive—and a lot easier to maintain," says Maggie Patrick, Associate Principal in Korn Ferry’s Organization Strategy Practice.
Ultimately, for a company to become sustainable, they need the ability to make and embed real, meaningful change—and at scale. In fact, organizational sustainability depends on it. As a recent Korn Ferry survey shows, even today's Chief Sustainability Officers (CSOs) see driving and managing change to support sustainability as a primary function of their role, now and for the future. “Sustainability leaders are moving from intent to action,” says Andrea Walsh, Korn Ferry’s Global ESG & Sustainability Leader.
But as the demand for sustainability initiatives continues to grow, organizations face a choice between symbolic gestures or implementing a substantive approach. While some companies may still opt for superficial actions, Korn Ferry Institute’s report suggests that integrating sustainability across the ecosystem—from strategy to leadership, talent, and culture—will lead to long-term viability, helping organizations achieve their goals and create meaningful impact.
To implement an impactful ESG strategy, companies can follow these two key enablers:
Studies show that companies that integrate ESG into their purpose report stronger connections between financial performance and overall effectiveness. By prioritizing substantive ESG actions that align with the organizational purpose, companies lay the foundation for ongoing and impactful sustainability initiatives, with sustainability becoming a part of their identity. Indeed, results from a recent Korn Ferry study found that 93% of the World's Most Admired Companies connect sustainability to their organization's purpose.
Growing evidence shows that change readiness is an important precursor or change-enabler. Organizations should assess their systems, strategies, practices, and people to determine whether they're prepared for change, then create the alignment and momentum necessary to drive changes quickly and effectively. This readiness is particularly relevant given the comprehensive change efforts at many organizations in response to new ESG requirements. These include new operating models and org structures, upskilling or reskilling of leaders and broader employees, and new incentives and reward structures required to evolve the way things are done. As leaders navigate their sustainability journeys and strive to meet higher expectations, understanding and prioritizing their organization's change readiness will bolster the effectiveness of their change efforts.
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