Leading for Impact

A new Korn Ferry paper explains how companies can solve the “profit vs. planet” dilemma by reinventing leadership.

This article was specially prepared as part of Korn Ferry's presentation at the UN Climate Change Conference, COP28: United Arab Emirates.

Not enough. Our collective response to climate change can be summed up in two words: not enough.

Climate change, increasingly the most urgent problem of our time, is a global issue that calls for more large-scale systemic actions to adapt to and mitigate its catastrophic effects. Yet, the pace and scale of these actions are not enough—despite the expansive awareness and efforts to combat climate change. Some industries have made significant strides towards sustainability, while success stories from “conscious” corporations and startups reinforce that sustainability makes the triple bottom line (i.e., profit, people, and planet) possible. But for most organizations, the transformation towards impactful sustainability has barely begun, and decades of research tell us that having the right leaders in place is essential to transformation and performance.

Why organizations experience a dilemma

Companies that are deploying sustainable strategies acknowledge their role in climate change and believe it is the right thing to do and that they can help prevent or address disruptions in their supply chains and resource shortages by acting now. They also anticipate increased pressure from customers, regulators, and stakeholders who are demanding more sustainable practices.

However, despite the urgency, growing stakeholder demand, and potential economic opportunity, many organizations remain hesitant. Progress is slow, with only 1 of 42 indicators in the WRI’s State of Climate Action 2023 roadmap on track: sales of electric cars. This exception to lack of progress is thanks, in part, to Tesla's revolutionary approach to sustainability before sustainability became a buzzword. Tesla's high-quality, desirable electric vehicles proved that sustainable products can be both luxurious and high-performance, creating a profitable market that continues to grow.

Too few business organizations see addressing climate change as an opportunity to develop a sustainability agenda to reduce costs, innovate, and expand market reach. Their leaders focus efforts on complying with regulatory demands or purchasing carbon credits but fall short of more transformative strategies for sustainability due to concerns around investment costs and profitability, potential disruptions to operations, and unclear immediate outcomes. “We need leadership from the board to ensure that success for the executive team is situated in the context of a longer-term sustainable future for businesses,” says James Cameron, special advisor to Korn Ferry on climate action. “Directors can help shape the instinctive response to compete with the need to create value through ecosystem collaborations.”

The short-term focus on what they know and control, as well as on delivering quarterly financial promises to shareholders, hinders the crafting of transformative action plans for sustainability or the allocation of the means to execute them. This results in the continued separation of a long-term sustainability agenda’s ability to translate into near-term benefits. This reluctance is further fueled by the perceived difficulty of addressing a systemic, large-scale climate problem as an individual or a single organization—as there are no perceived rewards for a collaborative, coalition-based approach with achievements and benefits that extend beyond organizational boundaries.

More specifically, we find organizations lack effective road maps for sustainability. A common obstacle to progress is a focus on tactical reporting and disclosure requirements, rather than on strategizing on how to redesign work to achieve and exceed the disclosed goals. There's a significant gap in clarifying behaviors, processes, roles, and interdependencies. The deeper transformation in attitude, mindsets, and governance is also often entirely missing from these roadmaps. “It’s not purely about a lack of a sustainability roadmap, as many believe they have one,” says Andrea Walsh, Korn Ferry’s global ESG & Sustainability leader. “The real issue is the absence of a roadmap that goes beyond high-level considerations of purpose, technology, and science to how goals will be operationalized in everyday work.” The underlying challenge is that sustainability is not seen as a core business driver that can drive profitable growth. It is often dealt with as an add-on activity, which distracts from the core business.

How reinventing leadership dismantles the dilemma

Addressing this problem begins with business leaders focusing their efforts on the highest and most realistic sphere of influence—themselves and their own organizations. It demands leaders who can guide their organizations to reconcile business performance and sustainability into one integrated pursuit: the pursuit of impact. This new breed of leaders—enterprise, broad leaders—inspires and delivers extraordinary short-term performance in the context of long-term sustainability. These leaders make difficult immediate trade-offs to meet shareholders’ demand for profit, and at the same time, deliver the sustainability agenda propelled by an unshakable commitment to the planet. They know that what they do today creates the tomorrow they want. They perform and transform!

Grounded in deep research and abundant practical experience, Korn Ferry has developed a holistic approach to understanding, assessing, and developing enterprise leaders. “We know it requires science-based leadership and change models to deliver science-based targets,” says Maggie Patrick, associate principal in Korn Ferry’s Organizational Strategy practice.

What we continue to find is that organizations need more Enterprise (top-level) and Change-Ready (mid-level) leaders to guide organizational sustainability. Rather than a narrow spotlight on financial metrics, these leaders look to impact their enterprise and its ecosystem across an extensive range of stakeholders. They think far and broad, with a performance and purpose-fueled vision that includes customers, competitors, and stakeholders in a systemic approach that drives collective, sustainable success—both now (based on current capabilities) and in the future (based on their capacity to develop). Focusing on impact enables leaders to harness the full potential of the organization to define and create value for all stakeholders, using a broad set of criteria, across multiple time horizons, enabling the triple bottom line.

The complexity of addressing sustainability's organizational problems presents new challenges for those in management and leadership roles. Balancing business leadership and sustainability involves maintaining a delicate equilibrium between leveraging existing organizational competencies and competitive advantages and venturing into unexplored areas. The former strategy centers around short-term goals and preserving your performance status quo, and it is more likely a closed or internally focused approach. The latter, although riskier, involves a long-term perspective, uncertain outcomes, and an openness to leveraging a broader ecosystem of supports. The key to balancing this equilibrium, says Jean-Marc Laouchez, president of the Korn Ferry Institute, “becomes a defining attribute of an Enterprise leader versus another type of leader.” “It is not just that they purposefully look at the long term,” he continues. “It is that they purposefully look at the short term to deliver financial results that integrate into long-term sustainable goals."

Learning to Move

Leaders capable of dismantling these historical dilemmas create organizational environments capable of ongoing learning to adapt and evolve, much like the circularity we seek to bring to sustainability (where waste is minimized because we recycle and continue to learn). This involves a shift from first-order change, which focuses on restoring the status quo, to second-order change, which involves holistic and disruptive efforts towards transformation. This type of learning requires organizations to continually deliver short-term results while they innovate and proactively influence their environment; we call this Movement Making, a sustained campaign led by a group of people with a shared purpose who create change together. By doing this, organizations can ensure they are not just reacting to changes but actively shaping and moving toward their desired future.

These organizational environments embed relevant talent and organizational structures, processes, and resources to enable a collective intelligence of critical mass toward transformation and responsiveness to our changing world. “The power of purpose is real. Leaders who can forge the emotional connection between meaningful work and the company’s impact in the world can unlock creativity, energy, and ingenuity,” says Mark Lancelott, Korn Ferry’s sustainability lead for EMEA. “This is particularly salient for the younger generation in the workforce, who have more of a vested interest in our collective future.”

Be More Than

The ongoing adaptation and resilience to climate change requires expanding the capabilities of leaders to guide organizations through transformation. Companies like Ørsted are shining examples of businesses that have either started with sustainability built into their DNA or are engaging in sustainability transformation. These leaders enact the power of purpose throughout the organization to attract and inspire talent by tackling impactful goals that are more than individual goals and profit targets. By selecting, identifying, and developing your leaders to become Enterprise and Change-Ready, organizations create the fundamental building blocks to meet the challenges of today and the future, where organizational sustainability is defined by profit, people, and the planet as equally important organizational outcomes. Ultimately, leveraging an opportunity for organizations to lead the way in reducing the world’s emissions, tipping the momentum from not enough to more than.

Want to learn more about our research-backed leadership and movement-making solutions for sustainable organizations? Check out Korn Ferry’s ESG & Sustainability capabilities.