Shaping the Sustainable Organization

How responsible leaders create lasting value and equitable impact for all stakeholders

In collaboration with the World Economic Forum

 

Overview

  • Operating sustainably has become a source of competitive advantage, but unlocking its potential relies on building strong stakeholder relationships.
  • New research reveals large consensus gaps between leaders and stakeholders on sustainability performance. This misalignment obstructs the link between sustainability and profitability.
  • Executives must strengthen their organizations’ Sustainability DNA through a three-stage cycle of change: Diagnose, Define and Develop.
  • By closing consensus gaps and operating more sustainably, businesses can deliver greater financial value in tandem with positive environmental and societal impact.

Stakeholders are demanding more of businesses

Everyone is holding business to a higher standard

The health, economic and social crises of recent times have raised people’s expectations about the role of business in solving global problems. However, progress against many of the United Nations’ 17 Sustainable Development Goals (SDGs) has stalled.

Business activities are being scrutinized like never before.

Employees

0%

believe organizations should be responsible for leaving their people “net better off” through work.

0%

want the flexibility to be productive anywhere.

Consumers

0%

plan to make more sustainable or ethical purchases over the next six months.

0%

believe that ethical corporate practices and values are an important reason to choose a brand.

Investors

0%

increase in investor signatories in 2020 to the UN’s Principles for Responsible Investment.

0%

of sustainable indices outperformed their peer benchmarks in 2020.

Employees

0%

believe organizations should be responsible for leaving their people “net better off” through work.

0%

want the flexibility to be productive anywhere.

Consumers

0%

plan to make more sustainable or ethical purchases over the next six months.

0%

believe that ethical corporate practices and values are an important reason to choose a brand.

Investors

0%

increase in investor signatories in 2020 to the UN’s Principles for Responsible Investment.

0%

of sustainable indices outperformed their peer benchmarks in 2020.

Sources: Accenture Future of Work Study; Accenture Covid-19 Consumer Pulse Study; Principles for Responsible Investment; Accenture Global Consumer Pulse Research; Blackrock

The sustainability consensus gap

Executives appear to be overconfident about sustainability progress


Business leaders recognize the need to act. When Accenture interviewed executives at the height of the pandemic, 73% of them identified “becoming a truly sustainable and responsible business” as a top priority for their organization during the next three years. In our latest research, 72% hold firm to that view.

But our new analysis reveals a misalignment between business leaders and their stakeholders on progress towards sustainability performance. It suggests that the voices of stakeholders are not being heard.

While leadership teams are broadly convinced that they are on track to operate more sustainably, employees—an important stakeholder group as key change-makers in organizations—tend to disagree.

Copyright © 2022 Accenture. All rights reserved.
Source: Accenture analysis of executive and employee/consumer/citizen surveys.

The apparent overconfidence of leadership teams is also evident in how they grade their organizations’ overall sustainability performance.

Our analysis reveals that executives score their organizations 71/100 on average. Scores are lower for employees overall (67) and for those below manager level (65). Customers (57) and local community citizens (56) are even less enthusiastic. Clearly, the further stakeholders are from the management core, the more their perspectives diverge, and the less able organizations are to use their insights to shape decision-making.

Executives rate the sustainability performance of their organizations higher than other stakeholders

Sustainability performance perception score (Max=100)


Copyright © 2022 Accenture. All rights reserved.


Source:Accenture analysis of executive and employee/consumer/citizen surveys.
Note: Respondents were asked a series of questions relating to the 21 practices and 10 enablers from our Sustainability DNA model. Executive and employee scores were calculated from 23 questions; consumer and citizen scores from 10 questions.

Consensus gaps limit stakeholder trust

The ambiguity around sustainability performance is already having a negative impact. Our survey finds that relatively few stakeholders have full faith in the sustainability promises that leadership teams make. Less than half of employees (49%) believe senior leaders “walk the talk” on sustainability “often” or “always.” This falls to just 40% of consumers and 37% of local citizens.

The credibility and authenticity of company sustainability commitments should concern leadership teams. These consensus gaps are leading to an erosion of trust that can be felt across the entire enterprise and stymie efforts to shape sustainable organizations that deliver value and impact.

Sustainability remains a second-tier
priority for executives

Shaping more sustainable and equitable organizations presents a major challenge to many leadership teams: Most executives recognize the benefits, but 58% believe operating more sustainably involves a trade-off with growth. As such, sustainability remains a second-tier priority, in urgent need of more visibility, data and resources to drive fundamental organizational change.

When forced to choose, executives show a clear preference for more traditional concerns:

Sustainability trails other organizational priorities

Top business priorities (percentage of executives):

Copyright © 2022 Accenture. All rights reserved.

Source: Executive survey (N=1,496).

Note: Respondents were presented with 17 priorities which we then assigned to five buckets.
Graph shows the weighted average for each bucket.


Just 25% of executives have put sustainability goals in place systematically across their entire organization, while 19% say they are standard practice in “parts of the organization.” This leaves more than half (56%) of organizations piloting, discussing or holding back from setting sustainability goals, and raises questions over executives’ claims to have sustainability under control.

The opportunity cost of persistent
consensus gaps

The lack of leadership focus on sustainability—and on nurturing the stakeholder relationships underpinning it—is an opportunity cost that not only prevents progress but carries a financial risk.

Companies in the top quartile for positive executive-employee alignment based on the strength of their sustainability performance (top quartile) are financially outperforming those where alignment is weakest (bottom quartile) by 13%.

Stronger consensus on sustainability performance is associated with better financial performance

Positive sustainability consensus vs financial performance:

Copyright © 2022 Accenture. All rights reserved.

Source: Accenture analysis of executive and employee surveys.

Note: The X-axis is a composite index of executive and employee perceptions of sustainability performance, and the gap between the two. The Y-axis is a composite index of self-reported revenues and EBITDA growth over the past 3 years. Each datapoint shows a group of companies of the same size, in the same industry.

Sustainable organizations are purpose-led businesses which inspire their people and partners to deliver lasting financial performance, equitable impact and societal value that earns and retains the trust of all stakeholders.

Shaping change through Sustainability DNA

We have identified the 21 practices that deepen stakeholder relationships and embed their perspectives at the core of the business. These practices constitute Sustainability DNA and strengthen stakeholder-centricity in three ways: driving human connections, collective intelligence and accountability at all levels.

Interact with the chart below to see Sustainability DNA in action.

St
Human Dignity
Champions inclusion, diversity and equality inside the organizations and beyond.
Equal Workplace Opportunity
Human Development
Sustainability DNA in action
Vinci developed an online tool to help employees build resistance to bias and discrimination across 150 workplace interactions.

Stakeholder Inclusion

Emotion
& Intuition

Mission
& Purpose

Technology
& Innovation

Intellect
& Insight

Stakeholder Inclusion

Emotion & Intuition

Mission & Purpose

Technology & Innovation

Intellect & Insight

Human Connections
Collective Intelligence
Accountability at All Levels

How Sustainability DNA helps

Human Connections:

Sensing and championing the values and needs of diverse stakeholders across the business ecosystem.

Collective Intelligence:

Decision-making mechanisms that help organizations make better stakeholder-centric decisions.

Accountability at All Levels:

Making stakeholder value creation a requirement at all levels of the organization.

Sustainable organizations deliver value and impact



Strong Sustainability DNA is associated with higher financial value and sustainable impact for all stakeholders

Companies with strong Sustainability DNA are more likely to deliver environmental, social and governance (ESG) impact.
By building strong, mutually beneficial relationships with diverse stakeholders, leadership teams can also bolster financial performance.

Our Sustainable Organization Index (SOI) grades almost 4,000 companies according to market-facing evidence of ESG-supporting practices in 146 areas. Econometric analysis finds a positive relationship between these index scores and financial and non-financial performance measures at the company level. In other words, the strength of a company's Sustainability DNA is central to the ability of companies to operate both profitably and mindfully.

Companies with stronger Sustainability DNA are more likely to deliver financial value and a lasting positive impact on society and the environment

The EBITDA margin of top quartile companies on the index is 21% higher (+3.4 percentage points) compared with the bottom quartile. Their sustainability performance is also 21% higher (+9.2 index points).

Chart

Copyright © 2022 Accenture. All rights reserved.

Source: Accenture analysis; Arabesque S-Ray; S&P Capital IQ

Sustainability DNA in action

Tune into this podcast to learn how some leaders are uncovering the business potential
of sustainability when embedding it into the core of their organizations.

AB InBev - Innovating to close the loop

Challenge: Reducing waste throughout the supply chain.

Solution:  AB InBev has set a goal of “closing the loop” throughout its value chain – for 100% of primary packaging to be returnable or made from majority-recycled content – by 2025. Collaboration is central to these efforts. Since 2017, the AB InBev team has enhanced its strategic engagement with suppliers big and small, including forging new partnerships with local entrepreneurs through its 100+ Accelerator program.

To further their efforts, AB InBev has worked with a number of start-ups, inventors and suppliers on a range of innovations including the first ever fully compostable keg cap, upcycling of by-products such as barley straw and elimination of plastic beer rings using recyclable paperboard. The AB InBev team has also focused on shifting behavior, leveraging its brands to change consumer behavior, or for example, working with Oxfam to understand the needs and challenges of informal waste collectors.

Ezgi Barcenas, Chief Sustainability Officer:
“With our returnable bottles and kegs, we are arguably one of the largest circular businesses in the world. Consumers are increasingly embracing the concept of a circular economy but one of the barriers still remains meeting consumer expectations for convenience. So we are constantly innovating, and in doing so, building a more sustainable and inclusive value chain.”

Sustainability DNA in action:

Cisco - Delivering inclusive virtual interactions

Challenge: Creating a more inclusive virtual communication and collaboration experience for customers.

Solution: Cisco has identified the link between digital inclusion and economic and social opportunity as an area in which the company could make a tangible difference in the world. Drawing on customer feedback to map out key pain points, the company developed a roadmap to increase inclusion in the virtual environment. Harnessing the power of responsible AI to solve specific challenges—such as social anxiety and differences in linguistic fluency—has been a key enabler of progress. WebEx now allows a meeting host to see who has yet to contribute to a conversation and provides real-time translation in 15 languages. With the acquisitions of BabbleLabs and Slido, Cisco is also working to mitigate issues such as background noise and sustaining participant engagement.

Ruba Borno, Senior Vice President and General Manager of Global CX Centers:
“We have a very clear North Star: To make virtual interactions 10 times better than in-person interactions. So we’re constantly thinking about how we adapt our products and services to give everyone a seat at the virtual table."

Sustainability DNA in action:

Ecoware - Creating a gender balanced workforce

Challenge: Trying to create a more gender equal workforce in the face of strong cultural resistance.

Solution: Rhea Mazumdar Singhal, the founder and CEO, prioritized bringing more women into the workforce. Sensing resistance from her male-dominated teams, she first connected with her team on a human level, setting a clear tone from the top around the importance of women in the workforce. She then engaged in regular, open conversations with male managers to understand and mitigate concerns about hiring women. Then to help women at all levels better manage their careers, she developed and embedded a set of practices that offered greater flexibility to work around personal commitments.

Rhea Mazumdar Singhal, Founder and CEO:
“We got a lot of pushback from middle management on the idea of hiring more women. They gave us excuses such as ‘women can’t work in the night which makes shift rotations harder to plan’ or ‘women will always have issues with their children, meaning they’re not reliable’. But now over 30% of our workforce are women, and we won't stop there. Our managers understand that gender equality is central to our purpose as a company—and that we expect them to help us deliver on that purpose.”

Sustainability DNA in action:

Putting Sustainability DNA in action


AB InBev - Innovating to close the loop

Challenge: Reducing waste throughout the supply chain.

Solution:  AB InBev has set a goal of “closing the loop” throughout its value chain – for 100% of primary packaging to be returnable or made from majority-recycled content – by 2025. Collaboration is central to these efforts. Since 2017, the AB InBev team has enhanced its strategic engagement with suppliers big and small, including forging new partnerships with local entrepreneurs through its 100+ Accelerator program. To further their efforts, AB InBev has worked with a number of start-ups, inventors and suppliers on a range of innovations including the first ever fully compostable keg cap, upcycling of by-products such as barley straw and elimination of plastic beer rings using recyclable paperboard. The AB InBev team has also focused on shifting behavior, leveraging its brands to change consumer behavior, or for example, working with Oxfam to understand the needs and challenges of informal waste collectors.

Ezgi Barcenas, Chief Sustainability Officer:
“With our returnable bottles and kegs, we are arguably one of the largest circular businesses in the world. Consumers are increasingly embracing the concept of a circular economy but one of the barriers still remains meeting consumer expectations for convenience. So we are constantly innovating, and in doing so, building a more sustainable and inclusive value chain.”

Sustainability DNA in action:


Cisco - Delivering inclusive virtual interactions

Challenge: Creating a more inclusive virtual communication and collaboration experience for customers.

Solution: Cisco has identified the link between digital inclusion and economic and social opportunity as an area in which the company could make a tangible difference in the world. Drawing on customer feedback to map out key pain points, the company developed a roadmap to increase inclusion in the virtual environment. Harnessing the power of responsible AI to solve specific challenges—such as social anxiety and differences in linguistic fluency—has been a key enabler of progress. WebEx now allows a meeting host to see who has yet to contribute to a conversation and provides real-time translation in 15 languages. With the acquisitions of BabbleLabs and Slido, Cisco is also working to mitigate issues such as background noise and sustaining participant engagement.

Ruba Borno, Senior Vice President and General Manager of Global CX Centers:
“We have a very clear North Star: To make virtual interactions 10 times better than in-person interactions. So we’re constantly thinking about how we adapt our products and services to give everyone a seat at the virtual table."

Sustainability DNA in action:


Ecoware - Creating a gender balanced workforce

Challenge: Trying to create a more gender equal workforce in the face of strong cultural resistance.

Solution: Rhea Mazumdar Singhal, the founder and CEO, prioritized bringing more women into the workforce. Sensing resistance from her male-dominated teams, she first connected with her team on a human level, setting a clear tone from the top around the importance of women in the workforce. She then engaged in regular, open conversations with male managers to understand and mitigate concerns about hiring women. Then to help women at all levels better manage their careers, she developed and embedded a set of practices that offered greater flexibility to work around personal commitments.

Rhea Mazumdar Singhal, Founder and CEO:
“We got a lot of pushback from middle management on the idea of hiring more women. They gave us excuses such as ‘women can’t work in the night which makes shift rotations harder to plan’ or ‘women will always have issues with their children, meaning they’re not reliable’. But now over 30% of our workforce are women, and we won't stop there. Our managers understand that gender equality is central to our purpose as a company—and that we expect them to help us deliver on that purpose.”

Sustainability DNA in action:

Most companies need to
strengthen their Sustainability DNA

On average, companies score 52 out of 100 on the Sustainable Organization Index.

0

Score

Human Connections
Companies perform better at listening to their stakeholders through activities that deepen human connections.

0

Score

Collective Intelligence
Companies are weaker at turning insights about stakeholder perspectives into action.

Human Connections
Collective Intelligence

How strong is your Sustainability DNA?

Note: Scores have been scaled to highlight the differences between the top performing companies (score = 100) and worst performing companies (score = 0) for each enabler.

Becoming stakeholder centric

Building consensus
with stakeholders

A truly sustainable organization cannot be shaped in a vacuum. Design of a credible sustainability strategy should be based on building closer stakeholder relationships.

To do this, leadership teams must strengthen the Sustainability DNA of their organizations to gather the insights they need to ensure robust, stakeholder-centric decision-making combined with the transparency and communication stakeholders are demanding.

Actions to shape the sustainable organization

Understand the strength of your Sustainability DNA from diverse perspectives through feedback from multiple stakeholder sets. Tools such as the “Sustainable Organization Diagnostic” could help.

  • Conduct a high-level assessment of the strength of the Sustainability DNA in your organization; a diagnostic tool such as the "Sustainable Organization Diagnostic" is a good starting point.
  • Explore the root causes of existing mindsets and behaviors which help or hinder the development and employment of Sustainability DNA in your organization; for example, conduct deep analytics of existing stakeholder feedback datasets such as customer feedback and employee engagement surveys.
  • Disaggregate the data (e.g., by department or geography) and triangulate between different data sources and perspectives (e.g., customer, leader, team member) to identify areas of your business where the Sustainability DNA is relatively stronger; these can be used to build best practice case studies.

Example: you claim to have sustainability at the heart of your organization, but no executive has their compensation tied to the fulfillment of sustainability-related metrics, e.g., net-zero targets (Animated Purpose, Planetary Boundaries).

Identify key interventions to boost stakeholder alignment and key actors of change to achieve your sustainability goals.

  • Establish Sustainability DNA by aligning it with your organization's sustainability strategy; mapping specific stakeholder-centric practices to specific sustainability goals can help boost credibility.
  • Ask the owners of each sustainability goal to assess the extent to which they employ Sustainability DNA on a day-to-day basis; augment this with an objective, third-party appraisal.
  • Actively solicit stakeholder feedback on how to meet your sustainability goals; crowdourcing that is well incentivized and that moves beyond the superficial can build shared ownership.

Example: to meet your supply chain sustainability goals, you incentivize your suppliers to prioritize environmentally-positive innovation (Planetary Boundaries, Tangible Empathy).

Build your roadmap for sustainable and equitable change with a clear set of KPIs to balance value and impact.

  • Outline your vision of the transformation required to become a truly sustainsable organization; this should highlight the critical role of Sustainability DNA in realizing your ambition.
  • Develop a set of clear of KPIs to measure the extent to which Sustainability DNA informs day-to-day decion-making; build associated incentives into your performance management practices.
  • Test new approaches at speed using agile, multidisciplinary teams; leadership commitment (including investment) is critical to scaling the most promising interventions.

Example: to develop a robust inclusion, diversity and equality strategy, you set bold workforce representation goals and supporting metrics, coupled with key actions that enable you to look beyond the numbers and create sustainable change (Human Dignity, Deep Metrics).

Turn responsible
values into sustainable
outcomes

By embedding stakeholder-centricity at the heart of organizational transformation, leaders can deliver multi-dimensional value and realize the promise of stakeholder capitalism.

About the authors

Ellyn Shook

Ellyn Shook

Chief Leadership & Human Resources Officer

Peter Lacy

Peter Lacy

Chief Responsibility Officer & Global Sustainability Services Lead

Christie Smith

Christie Smith

Talent & Organization/Human Potential Global Lead


Matthew Robinson

Matthew Robinson

Managing Director Sustainability Thought Leadership

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