- Financial performance remains a more important and better measured priority for executives than sustainability, leaving many struggling to create value for all stakeholders.
- A new report from the World Economic Forum and Accenture identifies the “Sustainability DNA” that can transform organizational behaviours.
- Companies with deeply embedded stakeholder management practices generate higher financial returns than their peers.
Business leaders are under increasing pressure to deliver both financial value and sustainable and equitable impact. The COVID-19 pandemic has intensified their challenge, setting back progress against the UN’s Sustainable Development Goals (SDGs). It has also increased scrutiny – from consumers, employees and investors alike – on the role of business in addressing the world’s most pressing problems:
- 65% of employees expect their employer to make them “net better off” through work.
- 66% of consumers plan to make more sustainable / ethical purchases over the next six months.
- 28% increase in investor signatories in 2020 to the UN’s Principles for Responsible Investment.
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Fulfilling this ambition requires significant organizational transformation, including new business models, operating models and talent strategies. But it also requires actions to turn stakeholder centricity a reality.
In “Seeking New Leadership,” our first report in this series, we identified the qualities critical to leadership teams seeking to deliver on the promise of stakeholder capitalism. In “Shaping the Sustainable Organization,” published this week, Accenture and the World Economic Forum explore how to build more sustainable and equitable organizations – specifically, how leaders can convert their responsible goals and values into stakeholder-centric behavioural change at all levels.
The report decodes what we call “Sustainability DNA” – a set of 21 management practices, systems and processes that form the foundations of stakeholder-centricity, transforming behaviours and decision-making capabilities throughout their organizations.
Our analysis categorises the practices of Sustainability DNA into 10 enablers, shown on the chart above. These help overcome three barriers that have traditionally hindered the creation of stakeholder-centric organizations. First, Sustainability DNA fosters “human connections” by improving the way organizations sense and champion the values and needs of diverse stakeholders. Second, it boosts “collective intelligence” by developing decision-making processes focused on these stakeholders. And finally, it helps to build “accountability at all levels.”
We have found that those organizations with the strongest Sustainability DNA not only achieve higher environmental, social and governance (ESG) performance, but financial performance as well. In fact, those organizations with the most deeply embedded sustainability management practices outperform peers by 21% on both profitability (as measured by EBITDA), and 21% higher environmental and societal outcomes.
To assess the strength of Sustainability DNA in companies around the world, we created the Sustainable Organization Index (SOI), which scores nearly 4,000 companies based on market-facing evidence of ESG-supporting practices in 146 areas. It shows that most companies have a lot of ground to make up. The average score, globally, is 52 out of 100, highlighting the opportunity for leadership teams looking to drive value and impact.
So, what practical actions can leadership teams take to strengthen their Sustainability DNA and drive change?
Leaders can leverage this report to strengthen and embed Sustainability DNA through a three-step process of rigorous behavioural change to generate value for all stakeholders:
- Diagnose: Understand how strong the Sustainability DNA of your organization is today by taking the Sustainable Organization Diagnostic.
- Define: Identify what needs to change to meet your organization's sustainability goals and who is critical to making that happen.
- Develop: Build a roadmap for change with a clear set of KPIs to measure your success in strengthening your Sustainability DNA
Operating sustainably and equitably is a business imperative. It’s time to act now. The data-driven diagnostic tool provides a starting point to embed stakeholder-centricity at the heart of organizational transformation.
The report “Shaping the Sustainable Organization” marks the next stage of the collaboration between Accenture and the World Economic Forum’s Young Global Leaders and Global Shapers communities, which aims to create a new and lasting framework for leaders to build sustainable organizations. Our collective mission is to facilitate dialogue and partnerships that lay the groundwork for a new norm: leadership teams that are purpose-built to deliver sustainable growth. Robust yet flexible, this framework will adapt as the next generation of leaders comes to the fore with evolving priorities and values.
We invite corporations, governments and non-profits to join us in this effort to shape sustainable organizations and ensure this is the decade in which the world delivers positive outcomes for all.