Sustainability Transformation Leadership

By Flemming Kehr

A corporate sustainability transformation requires that we rethink the leadership role and choose science-based over chance in leader selection and development.

In a corporate sustainability transformation, the task for boards and CEOs is clear: To lead organisations that will outperform now and in the future. As the success of organisations in a sustainability transformation relies on effective leadership, and change happens with ever increasing speed and complexity, it stands to reason that assigning and developing leaders is a necessity. After all, in a fast-changing context like the green transition of industries and society, organisations need leader capabilities that develop continuously, embed strong corporate cultures and create predictable long-term results.

From merely being a piecemeal approach, more and more companies integrate sustainability fully in their corporate and brand strategies. But merging sustainability with strategy is a huge task characterised by great uncertainty and complexity when it comes to external factors like technological development, financing, politics, customer demands, and market characteristics.

In order to be able to navigate these factors and maximise innovation capacity, which is key in a sustainability transformation, companies will have to focus their attention on how the organisation can outperform when it matters the most. This means that the following must be closely investigated, rethought, and developed: Diversity, skills, cross-sector partnerships, organisational structures, corporate culture, motivation, behavior, and values.

By the end of the day, in the execution of a sustainability transformation strategy, it’s all about people but it starts with a redefinition of the leadership role. Boards and leaders must possess the right capabilities in combination with a deep commitment and a transformational mindset in order to facilitate and innovate the new context. Those organisations that attract, motivate, and develop the most effective leaders outperform those that do not.

New leadership capabilities are needed

In these years, we see a new generation of leaders not only in start-ups, but also in both emerging and well-established companies. They introduce a new era of “CEO activism” based on the philosophy that business must be a force for good, embracing purpose, and transcending mere shareholder value creation.

Based on Mercuri Urval’s comprehensive experience from leadership selection, advisory, and talent development projects from all around the world, we have identified five key capability characteristics modern leaders need to possess in order to be able to lead and facilitate a successful, and green transformation of their company and organisation.

Visionary

Leaders need to be able to work across boundaries and cross-sectors to build a shared vision for change. Open innovation based on data sharing, knowledge sharing, new collaboration platforms and partnerships will be the new normal, and leaders need to be able to balance a huge variety of opinions, intentions, and agendas.

Long-term

Leaders need to adopt a worldview characterised by being eco-centric, systemic, and long-term. Sustainability must be driven top-down and bottom-up and the realisation must be, that company and business must have a positive effect on ecosystems.

Value-driven

Leaders need to be driven by a sincere set of values which can be understood, accepted and adopted by the entire organisation, throughout the value chain, and across boundaries. To be credible and trustworthy, leaders must recognize the importance of leading and developing themselves from a new basis and with a different purpose and mindset than before.

Innovative

Leaders must provide space for exploration and put innovation high on the agenda – often in a new context. But that is only possible if the right combination of an agile and diverse organisation with the right skill set, and a strong and accepted corporate culture, mindset, and behaviour is present. Because these parameters are key to utilising new technologies, understanding new financial instruments and financing options, navigating the framework conditions as well as fulfilling customer demands and taking advantage of market characteristics, they are also key to the all-important innovation capacity.

Complexity navigation:

The business universe is not one or two-dimensional anymore but multidimensional in terms of stakeholder characteristics. To navigate climate and sustainability agendas, leaders must be able to exercise influence in a world of complexity without being an authority but a facilitator, door-opener, and mediator who are able to position and navigate the company, their interests, and employees strategically in the right context.

Select and developing the right leaders is crucial to sustainability transformation success

Since the leadership role is the first barrier to sustainability transformation success, it is crucial for companies and organisations to be able to find, attract, assess, assign, onboard and develop leaders who can deliver predictable results in years to come.

Based on our experience, three principles can ease the way to predictable sustainability transformation leadership success:

  • Firstly, initiate a global approach to identifying and selecting the right leader for you. A global approach combined with local presence and in-depth sector expertise will most likely provide relevant candidates from the widest pool possible.
  • Secondly, use a scientific approach to overcome the two most common problems in leader selection and development; the performance problem and the diversity problem. According to science, shortcutting, stereotyping and subjectivity cause these two problems. This can be overcome by a precisely tailored, factful and systematic method, which is even more important taking complexity and unpredictability of the overall green transition into account. Furthermore, science have also shown that 33% is “the tipping point” when diversity will start functioning and shape the conversation and decisions made in a leader team.
  • Thirdly, do not ignore onboarding and talent development. A structured onboarding process and a tailored talent development solution will increase the likelihood of success because it will dress the leader for the task and at the same time detect any deviation between capabilities, behavior and results that will affect performance.

By following the above mentioned three principles, it is possible to effectively close the gap between corporate strategy and required capabilities and thus ensure that company and organisation can outperform in the sustainability transformation.

At Mercuri Urval, we have based our leader development, selection, assessment and advisory services on a science-based method developed from comprehensive research, collaboration with partners like Mercer and Cranfield University, and we are ISO certified by DNV. The result is, that more than 90% of all leader assignments based on our method succeed in their position. Recent studies have discovered, that industry average failure rate is approx. 40-50% which more or less is like flipping a coin. So our recommendation is that companies always should choose science-based over chance. By doing so, the likelihood of sustainability transformation leadership success increase dramatically.