Sustainability Business Success Hinges on CEO Mindset Change

by | Nov 15, 2013

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SustbusSustainable business initiatives will fail unless business leaders change their mindset to see business, civil society and nature as “deeply and existentially” interconnected, according to a Harvard Business Review article.

Currently business leaders views these relationships through an isolated mindset that sees the relationship between business and nature as “separate, instrumental and reducible to market transactions alone,” according to the article. This leads corporations to focus mainly on the parts of the business-nature relationship that can be measured, and to ignore less tangible social and ecological factors.

But often the success of a sustainability initiative hinges on emotional drivers such as how an initiative makes people feel and these are the intangible factors that are under-analyzed under current practice, the article says.

In the case of sustainable development, business leaders with an isolated mindset would typically emphasize such things as the economic valuation of natural capital, laws and regulations regarding biodiversity, economic incentives for green development and other factors that can be quantitatively analyzed.

By contrast, leaders with an integrated mindset would consider these factors and other contextual factors such as customary rights to ecosystems that are not enshrined in the legal system, the existential value of an ecosystem to local and indigenous people, and local perceptions of the  business that could harm its “social license to operate.”

According to the article, the mining company Verdanta had to abandon bauxite operations in Orissa, India, because it did not pay sufficient attention to non-quantifiable factors. Indigenous groups felt shut out of agreements the company made with regional governments that limited their access to land they considered culturally important. The opposition to the project by these groups led to the project’s abandonment, the article says.

A survey conducted by Accenture and the UN Global Compact released in September found most companies are not integrating social, environmental and governance issues into their core business strategies. Some 67 percent of CEOs in the study believed business is not doing enough to address global sustainability challenges.

While 84 percent believed business should lead the way in addressing those challenges, CEOs in the survey cited a number of barriers including a lack of financial resources and a failure to make a link between sustainability and business value.

Photo Credit: businessman on spring field via Shutterstock

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