What Defines a Sustainable Leader and How Can It Future-Proof Your Business?

Why Are CEOs like João Paulo Gonçalves Ferreira Making Sustainability Their Top Priority?

Discover how visionary CEOs like Ilham Kadri and Søren Skou are redefining leadership through sustainability. Learn the key traits of sustainable leaders and how integrating environmental and social goals can drive innovation, profitability, and long-term resilience in Clarke Murphy’s Sustainable Leadership.

Ready to transform your leadership style and build a resilient future? Continue reading to uncover the actionable strategies used by top CEOs to integrate sustainability into their core business models.

Recommendation

Much of what prominent management thinker Clarke Murphy reports here about sustainability has been said before, but his emphatic repetition and his additional new information underscore its importance. Sustainability is today’s imperative, and the corporate world must take bold steps to ensure it. Climate change, inequality, poverty, and other threats constitute systemic risks. Some CEOs recognize the peril and are taking their organizations in new directions. Murphy provides stories about leaders in the vanguard of sustainability as well as sage counsel on how to join them.

Take-Aways

• Corporate sustainability derives from committed leaders who take charge.
• João Paulo Gonçalves Ferreira, CEO of the Latin American division of Natura & Co., regards sustainability as part of his job.
• Some leaders seem born believing in sustainability, while others grow into their convictions.
• Leaders who take bold action recognize the urgency of the climate crisis.
• Organizations that value sustainability take action.
• Broad Group chairman Zhang Yue exemplifies sustainability leadership with single-minded determination.
• Successful sustainability leaders are open to learning.
• The chief sustainability officer’s role has evolved.
• Leaders can’t delegate responsibility for sustainability action.

Summary

Corporate sustainability derives from committed leaders who take charge.

The leaders of more than 10,000 companies have signed the United Nations Global Compact (UNGC) with its 17 Sustainable Development Goals. However, progress hasn’t been fast or smooth. Although many company directors understand the dire consequences of climate change, most corporations have not urgently pursued sustainability goals.

“A progress report on the Global Compact, now more than 20 years old, found…‘a huge gap between what leaders…were saying and what they were accomplishing’.”

In the early 2000s, when a UNCG progress report was due, it became clear that most corporate leaders’ words of support for sustainability did not match their actions. To create the report, the Global Compact worked with the Russell Reynolds Associates (RRA) consultancy to identify the steps successful leaders took to “mesh sustainability goals with economic success” and to learn what traits distinguished their attitudes. RRA interviewed leaders with a personal “sustainable mindset” who were willing to risk disruption to achieve sustainability success.

Catastrophic climactic events worldwide have helped convince corporate and government leaders that sustainability is fundamental. For example, Duke Energy CEO Lynn Good had been on the job only a year when a leaking pipe spilled coal ash and wastewater into the scenic Dan River. The river flows through Virginia and North Carolina, and the spill spread 70 miles before the company could fix the leak.

“Business and global leaders finally understand that sustainability is a leadership imperative.”

The Duke workforce included many heirs to a family tradition of employment at the company. Since they pride themselves on being reliable and doing high-quality work, the leak devastated them. Good led an ambitious drive to repair both the physical and reputational damage and to fix the most significant problems associated with coal. She closed some fossil fuel plants, minimized the use of coal, and shifted to renewable energy where possible. The company provided retraining and relocation opportunities for workers who were displaced by this shift to enable them to continue their careers within the company. Under Good’s leadership, Duke stepped into the vanguard of firms adopting innovations to support sustainability.

João Paulo Gonçalves Ferreira, CEO of the Latin American division of Natura & Co., regards sustainability as part of his job.

Ever since Natura opened in 1970 as a single shop in São Paulo, the company has been committed to stewardship of the environment and to social responsibility – long before sustainability was fashionable. It created cruelty-free merchandise, bought from responsible suppliers, and offered free refills to save on excess packaging. The company did not cut its headcount when the COVID-19 pandemic shuttered nine out of 10 of its shops worldwide. Instead, it allowed remote work where possible. Its sales volume boomed.

The company has been actively acquiring other firms since 2016. Its targets included The Body Shop, Aesop, and Avon, internationally prominent firms that align with its philosophy. Natura’s expansion diluted its founders’ share of the company, and they are no longer involved in daily management. However, today’s leaders are continuing their embrace of sustainability as a deeply rooted part of the company’s culture.

“Natura & Co will showcase content such as documentaries on the Amazon through its own dedicated channel, promoting advocacy through storytelling. The beauty brand plans to educate the public at large through “inspiring content” about climate change, human rights, and embracing full circularity of its use of resources by 2030.”

The United Nations recognized Natura as a Champion of the Earth – the most prestigious environmental award it grants – and awarded it the 2019 UN Climate Global Action Award. Natura has not rested on these laurels. In its philosophy, sustainability encompasses human rights, biodiversity, and care for the environment. Natura involves its stakeholders in its sustainability efforts. To address complex issues, it works with a global consortium of health and wellness companies, including some of its major competitors. For instance, because traditional methods for harvesting palm oil make growing areas vulnerable to wildfires, Natura undertook a decade-long agroforestry campaign.

Some leaders seem born believing in sustainability, while others grow into their convictions.

Ilham Kadri is CEO of Solvay, a multimillion-dollar transnational chemical company with a base in Belgium. She grew up near Casablanca, relying on a nearby community faucet for scarce water. At 17, she almost died of typhoid, but she studied for her final exams while on her sickbed and won scholarships to attend university in France. Kadri became the first woman chairman of the World Business Council for Sustainable Development and served on other prestigious international councils. She has used her clout to set environmental goals with the Solvay One Planet initiative while also paying attention to social issues, including extending parental leave.

“Everything about [Kadri’s] early development – deprivation and scarcity combined with an abundance of creativity, love, and compassion – shaped her to become the global role model for sustainable leadership she is today.”

Playing on the beach as a child fostered Kate Brandt’s love of nature. Her career includes being the special adviser to the US Secretary of the Navy on energy matters and serving as the federal government’s chief sustainability officer (CSO). In that role, she supervised a national sustainability conversion project affecting 360,000 buildings and 650,000 vehicles. Brandt later became Google’s first sustainability officer.

Leaders who take bold action recognize the urgency of the climate crisis.

Svein Tore Holsether, CEO of the fertilizer maker Yara International, spent $15 million to develop the first autonomous all-electric ship, which is capable of replacing thousands of truck trips among Yara’s facilities. He seeks to reduce the environmental negatives of fertilizer manufacturing, especially the impact of using ammonia. He wants sustainable agriculture to scale up more quickly instead of being limited to “tiny test plots in the corner of a field” – the usual practice of many agribusinesses.

“Svein is…a moonshotter. He is among a growing number of top executives who are committing to bold action and disruptive innovation without even necessarily knowing what the exact solution is or how they will get there. They are such strong believers in their sustainability goals that they forge ahead anyway, leading with the faith or determination that whatever piece of the puzzle that is missing will somehow be found”

Maersk CEO Søren Skou committed $2 billion to a fleet of clean container ships despite the uncertain availability of green fuel. He sees his determination to develop carbon-neutral ships as a worthwhile risk, though they cost more than less sustainable alternatives. Decisions by other major shippers to aim for carbon-neutral logistics confirm the value of Skou’s wager on clean container ships. Other shippers also have addressed the green fuel problem.

Organizations that value sustainability take action.

Professional service firms characteristically respond to high risk by slashing head count. But in 2020, when Hywel Ball stepped in as the consulting firm EY’s top manager for the United Kingdom and Ireland, he recognized that business as usual would lead to setbacks in the company’s diversity, equity, and inclusion program. Despite the pandemic, Ball committed to protecting incumbent employees and adding new hires.

“Resist being a 100-percenter, when you lose the race because you are trying to get everything perfect before you launch.”

The Wall Street Journal recognized Mumbai-based Mahindra Group as one of the world’s most sustainably managed businesses. The company’s commitment to sustainable development goals began when an engineer nearing retirement told chairman Anand Mahindra that he wanted to create an emission-free vehicle as his legacy. With the chairman’s backing, the engineer designed an “electric auto rickshaw or…tuk tuk.” The idea won government support in New Delhi. Mahindra eventually backed away from this initiative, but it gave the company a reputation for valuing sustainability. Its further investments in sustainable projects generated hundreds of millions of dollars. Mahindra has repeatedly emphasized the importance of serendipity in his company’s sustainability progress. He emphasizes that good ideas may come from anyone at any level of the company.

Broad Group chairman Zhang Yue exemplifies sustainability leadership with single-minded determination.

Zhang Yue, the founding chairman of the Broad Group in Changsha, China, is a visionary. His corporation has pioneered a steel product significantly lighter than the norm. This product would lower emissions at construction projects and provide greater resilience during natural disasters.

“Do not think ahead by years. Think multiple generations from now.”

Zhang hopes to bolt steel blocks together to create a half-mile-high building, including everything a city could need – hospitals, schools, and even farms – as a model for similar sustainable communities. In Zhang’s vision, this energy-efficient project would be able to support a population of 30,000.

Successful sustainability leaders are open to learning.

Great strides toward sustainability usually come about through purposeful efforts, even if they don’t lead directly to a clear, deliberate resolution. Take Henrik Henriksson, who pushed the Swedish truck maker Scania to go beyond its occasional investment in energy efficiency and turn its business model green. The company introduced a line of biofuel-powered vehicles that cut carbon emissions almost entirely. However, the new vehicles cost more to buy and run, and customers weren’t opening their wallets. The market’s unresponsiveness sapped morale throughout the company. Henriksson had spent months trying to align the company around sustainability, and this disappointing launch threatened his efforts. Concluding that his goals hadn’t been ambitious enough to drive his message across the company, he sought new sales channels and created incentives to soften the risk of adopting sustainability initiatives.

“The ability to deal with ambiguity is a competency that is underrated. It’s perfectly okay to sit with something, explore, and discuss, as long as you don’t dwell in that space for too long.”

Sustainability leaders must adapt and learn through observation and communication. For example, Ramon Laguarta of PepsiCo saw customers becoming more health-conscious and environmentally responsible, turning away from unhealthy ingredients and wasteful packaging. He responded by intensifying Pepsi’s efforts to make healthier, more sustainable products, and he set stretch goals for emissions reduction.

The chief sustainability officer’s role has evolved.

The Edelman Trust Barometer showed that during the COVID pandemic, trust in business actually improved. Respondents said that firms and CEOs should lead efforts to tackle significant issues like sustainability. However, some leaders don’t see sustainability efforts in quite the same light as their staff or most of the public. Statistics show that, compared to their employees’ ratings, managers generally overrate their firms’ sustainability achievements and communications by about half. Employees can distinguish between genuine commitment and greenwashing. Executives who view sustainability only as a way to polish their brand exacerbate this problem. Only one in five believes it contributes positively to the bottom line.

“By regularly engaging with stakeholders, you can keep a pulse on the sustainability issues your customers care about so that you can deliver innovative products and solutions.”

In some instances, willing CEOs can develop and expand their ability to learn about and embrace sustainability with the help of their chief sustainability officer, coaches, and others who can provide frank feedback. The CSO role tends to welcome diverse hires more frequently than other high-management positions. Nearly half of CSOs are women. Three-quarters of CSOs reach that post through internal promotions; many are their firms’ first CSOs, which could bode well for future executive diversity.Successful CSOs have a variety of competencies. Some have led on profit and loss, while others have developed sustainable goods or services. Others are analysts, statisticians, or even “systems thinkers who thrive on solving complex problems.”

“As CEO, clearly define the metrics and value creation of sustainable solutions, so your CSO and ESG [environmental, social, and governance] leaders don’t feel like they are tilting at windmills.”

Consider Aurélia Nguyen, who saw herself as “collaborator-in-chief,” drawing the best from her colleagues when she led COVAX, a multilateral endeavor to deploy COVID vaccines globally. She formed partnerships with businesses, NGOs, and government agencies to achieve equitable vaccine distribution.

Leaders can’t delegate responsibility for sustainability action.

Sustainability isn’t an add-on. Leaders must infuse it throughout their operations. They can work both within their companies and externally – including trying to find common ground on which they can team up with their rivals. Leaders should integrate sustainable development goals into their strategies and operations. They can also help develop and empower younger staff members who can shepherd their sustainable development goals into the future.

“A business cannot be driven solely by profits. Profits must be a derivative of solutions that serve the greater good.”

Staff members should not be passive. They should understand that sustainability is everyone’s job. They can learn to demonstrate how it enhances the firm’s finances, speak up about meaningful change, and develop competencies across cultures and functions. Leaders who see sustainability as a long-term growth opportunity and a boost for profitability and morale are already blazing paths to a sustainable future.

About the Author

Clarke Murphy, the former CEO of Russell Reynolds Associates, co-hosts the award-winning podcast series Redefiners.