Businesses today face intense scrutiny from consumers, investors and employees on how they do business. As the relationship between employers and their people continues to evolve, employees increasingly expect to be able to influence their employer’s approach to sustainability and responsible business strategies. In some cases, this can lead to challenges and conflict.
What is sustainability?
“Sustainability is the method and the way an organisation manages its social and environmental impacts that, in doing business, it has on the world. The evolution of [sustainability] as a phrase has taken over from corporate responsibility and CSR, and other nomenclatures that have been around the last 20-30 years Sustainability has become the umbrella concept which encompasses all the impacts an organisation has, positive and negative, in relation to its social and environmental impact.” – Giles Gibbons, CEO and Co-Founder – Good Business
The importance of consumer and employee activism
Consumer and employee activism are increasingly crucial in driving corporate action on sustainability. Sustainable and ethical values increasingly form part of an individual’s identity and sustainability is increasingly important in attracting, motivating and retaining the best people. Businesses increasingly need to refine their employee value proposition to respond. Customers and employees are more invested in how businesses operate, with sustainability and diversity becoming essential components of this scrutiny. A Deloitte Consumer Centre survey from March 2023 revealed that 69% of respondents desire their companies to invest in sustainability efforts, such as reducing carbon emissions, using renewable energy, and minimising waste. These changes in the social contract and growing focus on ethical behaviours are driven by the Covid-19 pandemic, evolving societal values and the influx of new generations into the workforce. According to Deloitte’s latest Gen Z and Millennial survey, 64% of these younger workers believe they have the power to drive organisational change and expect employers to respond to their input
“It is really important for people that they’re working for a company that they’re proud of, that they believe is having a positive impact on the world… I think increasingly employees have a greater share of voice in the importance of sustainability within an organisation.” – Giles Gibbons, CEO and Co-Founder – Good Business
In the UK, there is an ethical, competence and trust deficit in government, and business continues to be seen as the institution that is most competent and ethical. Businesses are inextricably intertwined with the societies in which they operate and have a significant impact on major societal issues. It is crucial for them to understand, monitor and manage these impacts. Trust is essential to business as they operate under the pressure of diverse, dynamic, and growing stakeholder expectation.
More rapid change is needed
“We are not adapting fast enough. Most observed adaptation is fragmented, small in scale, incremental, sector-specific, and focused more on planning rather than implementation.” – IPCC 2024
The latest IPCC report highlights the urgency of accelerating climate change action. While many organisations have successfully reduced carbon emissions since 1990, these reductions have often come from easier, initial steps. Further reductions are increasingly challenging, requiring significant capital and business model changes. Companies face a tough balancing act: they must continue to invest in carbon reduction while also satisfying other stakeholder demands and maintaining profitability. It is becoming harder and harder, even though it needs to continue and go faster. Over the next few years, a divide is likely to emerge between companies that differentiate themselves by aggressively pursuing sustainability and those that will find it more difficult and face challenges from employees and consumers for going too slow.
Be a better business and deliver better business
The voluntary nature of sustainability has not achieved the changes that society wants or needs. Regulation will play an important and fundamental part in speeding up the pace of change.
“The European regulations coming in from next year, they are really, really tough and what’s interesting about them is that they’re not regulations about reporting, they’re regulations about ensuring that change happens within organisations.” – Giles Gibbons, CEO and Co-Founder – Good Business
The Corporate Sustainability Reporting Directive (CSRD) is a dynamic set of regulations that demands change for organisations and has the potential to drive more change over the next two or three years than over the last 20 years. The CSRD requirements do not rely on organisations deciding what to report on, but society requiring the organisation to report on it – driven by demand for transparent, measurable reporting, enabling citizens, investors, and bots to compare organisations and make informed decisions about employment, investment and purchasing.
Making practical, effective, impactful change
As the regulatory landscape evolves, policy and regulation can drive better behaviours. Compliance is necessary, but it should also drive sustainability strategy and business transformation. By combining regulatory requirements with strategy, innovation and new thinking, organisations can evolve positively to meet future stakeholder needs effectively and transform into better businesses doing better business.
In Conversation…with Giles Gibbons CEO and Co-founder of Good Business
Sustainability: Climate Change, Responsible Business, ESG and Wokeness
Listen to the latest episode of Future of Work’s podcast series where, Lucy Lewis is joined by Giles Gibbons, co-founder and CEO of Good Business, a strategy consultancy firm with almost 30 years of experience advising organisations on purpose, behaviour change, sustainability and responsible business strategies.
Strategic priorities for 2024 and beyond…
Read the latest report from our Future of Work Hub which explores how employers are navigating large scale trends to build organisational resilience in the years ahead.