By Shawn Cooper

Canadians have seen their communities change drastically in the last few years due to the COVID-19 pandemic and heightened worry about climate change and social justice, motivating them to make sustainable changes in their everyday lives. Employees, customers, and investors are starting to expect more from the companies they buy from and work for. They are increasingly seeing businesses as an important contributor to the greater community and economic ecosystem of Canada.

New data indicates that Canada’s executives face a significant opportunity to tackle sustainability and improve social—and business—outcomes.

Our Divides and Dividends research set out to find out how much progress Canadian corporate leaders are making towards sustainable business. We surveyed three groups of people—C-suite executives, next-generation leaders, and employees—to understand what a cross-section of Canada’s workforce thinks about their organization’s sustainability efforts and the readiness of leaders to advance the agenda.

We found bright spots of progress, as well as opportunities for Canadian business leaders to do more to accelerate their sustainability actions. First, the good news: Overall, 41 per cent of C-suite leaders say their organization has a sustainability strategy that has been acted upon and clearly communicated. This is broadly in line with the global average (43 per cent).

Notably, however, this optimism is not shared by others across the organization: just 24 per cent of employees and 33 per cent of next-generation leaders agree that their organization has a clearly communicated sustainability strategy. The fact that senior leaders are more optimistic than next-generation leaders and employees is a concern. A compelling vision and expert communication will be critical to mobilizing employees and fostering an authentic enterprise-wide culture of sustainability.

Our research also indicated that Canada is at the early stages of its sustainability journey. When we asked C-suite leaders why their organization was taking sustainability action, 42 per cent cited brand management concerns—they wanted to be seen as socially responsible or reputable. By comparison, just 14 per cent said value creation motivated their sustainability activities.

Key Canadian themes

Russell Reynolds Associates set out to understand how much progress organizations are making towards sustainability across 11 countries—and map a path forward. In Canada, three key themes emerged:

  1. Macro, Micro and “Me” – There is an opportunity for Canadian C-suite leaders to better understand the issues that their employees care about. When asked about the top challenges affecting the future of society, C-suite leaders zeroed-in on economic challenges, such as corruption and trade wars. Employees, meanwhile, centered on environmental threats, such as climate change and pollution. Leaders who simultaneously address business-level issues and employee concerns stand the best chance of securing buy-in for their sustainability strategies.
  2. Brand Management Versus Value Creation – Canadian organizations are at risk of only engaging with sustainability at a surface level: 49 per cent of C-suite leaders admit that their sustainability actions are motivated by brand management concerns, the highest proportion across the mature markets we studied. By comparison, only 14 per cent say value creation sets the agenda. Looking ahead, it will be critical for leaders to challenge perceptions that sustainability is only a reputational issue to be managed.
  3. Next Gen Leaders at the Vanguard – Canadian next-generation leaders are heavily involved in driving sustainability action. In the past two years, 39 per cent have had three or more job responsibilities to improve environmental or social outcomes, in line with global trends. Yet there is an opportunity to expose Canada’s future executives to a broader range of sustainability experiences. For example, just 14 per cent have hands-on experiences in making products or services more environmentally friendly, compared to 28 per cent globally.

Next steps for a more sustainable future

Radical transformation—including the kind required to transition to sustainable business—is tough to deliver. There is no pre-established playbook, and it involves many complex trade-offs. Yet those who succeed stand to unlock myriad financial and non-financial dividends—from faster top-line growth to more engaged employees, more loyal customers, and more supportive investors.

To achieve change at the scale and pace needed, it is important that leaders make sustainability a central strand of business strategy, motivating the transformation of operations and business models, and ensuring all opportunities are evaluated through a sustainability lens.

Realizing the shift to sustainable business will come down to one thing: leadership. Updating selection frameworks to ensure top executives possess sustainable leadership potential is a critical first step. Beyond this, rewarding those who lead sustainably, such as by tying sustainability outcomes to the remuneration of the CEO and executive team, can also help accelerate action on the ground.

Ultimately, executives who have the freedom—and vision—to completely rethink strategy, business models and operations, and the humility to bring others along on their journey, will likely have the biggest impact on sustainability.

Shawn Cooper is managing director of the board and CEO advisory partners at Russell Reynolds Associates. He advises Canadian and international corporate and governance leaders on talent management and culture transformation, strategic succession planning, ESG and sustainability, and board composition and effectiveness. 

Featured image credit: Bill Oxford @unsplash.

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