How To Turn Sustainability Into A Winning Strategy—A Trojan Horse Approach

Business contributions to the Sustainable Development Goals (SDGs) are far from being on track, a recent global CEO study by the United Nations Global Compact and Accenture Strategy shows. At the time of formulating the 2030 Agenda for Sustainable Development in 2015, 90% of CEOs said they were personally committed to ensuring that their companies lead on the sustainable development agenda. Today, in 2019, only 21% of CEOs believes their business currently plays a critical role in achieving the SDGs. Why is this and what can be done about it?

Problems

The problem is not that businesses don’t know what the problems are. As the global CEO study shows, CEOs are very much aware of the fact that the 2030 SDGs are far from being realized. And they were equally so in the years before. Furthermore, the solutions are known and available too. For climate-related SDGs, for example, in 2017, Project Drawdown presented a list of no less than 100 solutions based on existing technology that, so they argue, can together stop and reverse global warming.

The problem is also not that businesses don’t want to be sustainable or don’t see the value of sustainability to their business. On the contrary, as the report shows, 99% of CEOs from the world’s largest organizations say sustainability is critical to the future success of their company. Furthermore, CEOs agree business has an opportunity to step up action on the SDGs: 71% say business could play a critical role with increased commitment.

One might be skeptical and argue that the CEOs just pay lip service here and of course have to say that sustainability is key. Sure, there will be a bit of social desirability in their answers, or perhaps more than a bit. But it is not just that. As the CEOs also indicate in the study, they see consumers and employees as the two groups of stakeholders that will have the biggest impact on the way they manage sustainability. As those two groups increasingly demand businesses becoming more sustainable, and since businesses depend on them, one can assume that at least a large share of CEOs really believe sustainability is key to their business.

The main problem is that achieving the SDGs requires system-wide solutions. And this is highly complex. It requires a large number of different stakeholders—suppliers, buyers, governments, boards, and so on—to make changes in their behavior. And this needs to happen in a global competitive landscape where no single party can enforce changes upon the other. Coordinating such efforts is close to being impossible. Interests, power and different views on who should be doing what, make that no individual, organization, or institution can make it happen alone.

Solutions

The solution, I believe, is not merely in more calls to action. Of course, the more urgency is experienced, the more effort CEOs will make. But as long as the urgency is not really felt because it directly impacts the business, I don’t expect much change. In this light, despite its strong title “The Decade to Deliver: A Call to Business Action,” I am afraid the report won’t have a lot of impact.

The solution is also not in expecting others to act first. Businesses might point at governments and consumers, governments might point at businesses and consumers, and consumers might point at businesses and governments. But the fact is that all of them—us—need to change if we want to achieve the 2030 SDGs.

For all these stakeholders, the solution lies in asking what they can do, not what the others should do. For business this means making sustainability an integral part of business strategy. As Alan Jope, CEO at Unilever, expresses it: “There is no difference between our business strategy and our sustainability strategy...they are totally integrated.”

The Trojan Horse Approach

Integrating business strategy and sustainability may sound easier said than done. But maybe it isn’t. It is only difficult as long as the two are juxtaposed as being different or opposites. But sustainability is and in some way has always been at the heart of business strategy. Ever since Michael Porter’s work, the holy grail of strategy has been building a sustainable competitive advantage—an advantage that will sustain over time even if competitors try to beat you.

Although the meaning of the word sustainable here differs a bit from the same word in the SDGs, the differences are not that big, as Porter also emphasizes in his more recent work on creating shared value. Both ways of using the word refer to being able to sustain something for a longer period of time. This means, also in traditional strategy, that resources should not be depleted and that the interests of various necessary stakeholders are taken into account.

Along these lines, the approach to sustainability I use in my writing, teaching and consulting is to make it part of the very definition of strategy. As discussed in earlier posts (here, here and here) and in The Strategy Handbook, I define strategy as “an organization’s unique way of sustainable value creation.” What this definition entails in detail I have explained here. But at its heart, it means making creating value in a unique and sustainable way the very core of strategy.

Of course, a definition by itself doesn’t have any impact. But if this definition is taken as a starting to build an entire business strategy on, if this strategy is entirely focused on creating unique sustainable value and if this strategy is executed successfully, then business will become more sustainable as well.

I call it a Trojan Horse approach because it is a more hidden and implicit approach to sustainability than the explicit calls to action that we find in the report. Bringing in sustainability “secretly” in the definition and approach to business strategy, takes away some of the controversy around sustainability. It enables a natural, integral adoption of sustainability and can thereby be an effective complementary approach to turn sustainability into a winning strategy.