Shaping the Sustainable Organization

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

In collaboration with the World Economic Forum

 

Overview

  • The pandemic has increased pressure on leadership teams to deliver financial value with societal and environmental impact for the benefit of all stakeholders.
  • Business and operating model transformation is necessary to become a truly sustainable organization. Tangible commitment to stakeholder-centricity provides the foundations for this shift.
  • But the responsible values and the environmental, social and governance (ESG) intentions of leadership teams are outrunning the ability of their organizations to deliver the necessary behavioral change.
  • To succeed, they must strengthen their “Sustainability DNA,” the management practices, systems and processes that shape new behaviors and decision-making capabilities.
  • Companies with strong "Sustainability DNA" are more likely to deliver financial value and a lasting positive impact for their people, society and the environment.

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. But progress on most of the United Nations’ 17 Sustainable Development Goals has stalled or been eroded, according to recent Accenture research. 1

Companies 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 2

The scale of the social and economic upheaval precipitated by the pandemic also offers a strong impetus for change.

Operating sustainably is a business imperative



What’s preventing leaders from achieving financial value and sustainable impact?

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 over the next three years.

But how can they turn that purpose into profit? In our previous study, Seeking New Leadership, we identified five leadership qualities executives need to guide their companies in the decade ahead.

Change starts with the Five Elements of Responsible Leadership

St

Stakeholder Inclusion
Trust
Accountability
Impact

Em

Emotion & Intuition
Instinct
Humility
Compassion

Mi

Mission & Purpose
Integrity
System thinking
Sensemaking

Te

Technology & Innovation
Tech vision
Responsible innovation Creativity

In

Intellect & Insight
Data-to-knowledge
Critical thinking
Continuous learning

St

Stakeholder Inclusion
Trust
Accountability
Impact

Em

Emotion & Intuition
Instict
Humility
Compassion

Mi

Mission & Purpose
Integrity
System thinking
Sensemaking

Te

Technology & Innovation
Tech vision
Responsible innovation
Creativity

In

Intellect & Insight
Data-to-knowledge
Critical thinking
Continuous learning

But these leadership qualities alone no longer suffice.

Leadership teams must infuse the five elements throughout the business ecosystem to drive behavioral change and meet stakeholders' rising expectations. Too often, however, such change borders on the cosmetic, with leaders bolting-on their new focus on stakeholders rather than fully embedding it throughout the organization. This is often due to a false assumption that purpose and profit are at odds.

Barriers to true stakeholder-centricity

Rising to the challenge


Our new analysis finds that leaders steeped in the Five Elements are more likely to drive fundamental organizational change by strengthening their "Sustainability DNA" – the management practices, systems and processes that shape behaviors and decision-making capabilities to deliver tangible outcomes.

We have identified 21 practices, categorized into 10 enablers, that address three long-standing challenges that prevent stakeholder-centric behavioral change.

The three barriers to true stakeholder-centricity

How Sustainability DNA helps

Relationships

Organizations fail to deeply understand stakeholders’ needs and desires.

The problem is that leadership teams lack "human connections:” active, two-way communication channels, and so struggle to keep pace with rapidly evolving views of what constitutes “sustainable” business.

Human Connections

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

Insight

Leadership teams struggle to embed stakeholders' perspectives into decision-making.

Financial performance remains a more important priority for leadership teams compared with sustainability; 3 this often results in a narrow, short-term focus which overlooks stakeholder concerns.

Collective Intelligence

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

Shared Accountability

Leadership teams are unable to drive accountability for operating sustainably down through the organization.

“Responsibility” issues remain in the scope of executive committees and senior leadership rather than being shared at all levels.

Accountability at All Levels

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

The three barriers to true stakeholder-centricity

Relationships

Organizations fail to deeply understand stakeholders’ needs and desires.

The upshot is that leadership teams lack "human connections:” active, two-way communication channels and so struggle to keep pace with rapidly evolving views of what constitutes “sustainable” business.

Human Connections

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

Insight

Leadership teams struggle to embed stakeholders' perspectives into decision-making.

Financial performance remains a more important priority for leadership teams compared with sustainability; 3 this often results in a narrow, short-term focus which overlooks stakeholder concerns.

Collective Intelligence

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

Shared Accountability

Leadership teams are unable to drive accountability for operating sustainably down through the organization.

“Responsibility” issues remain in the scope of executive committees and senior leadership rather than being shared at all levels.

Accountability at All Levels

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

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

Decoding Sustainability DNA to deliver value and impact for all stakeholders

Sustainability DNA comprises 21 practices, categorized into 10 enablers, that drive human connections, collective intelligence and accountability at all levels.

Click 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

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 Chart Chart
EBITDA margin (% 2017-2020)
Bottom quartile
Sustainability Performance (Score/100)
Top quartile

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

Copyright © 2021 Accenture. All rights reserved

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:

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.

Sustainability starts here

So, what practical actions can leadership teams take to strengthen their Sustainability DNA?

We recommend organizations commit to a continuous cycle of actions to generate value for all stakeholders.
High performing organizations pursue this sequence continually as circumstances change, as new stakeholder expectations arise and as new organizational capabilities emerge.

Actions to shape the sustainable organization

Understand how strong the Sustainability DNA of your organization is today by taking the diagnostic.

  • 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 what needs to change to meet your organization's sustainability goals and who is critical to making that happen.

  • 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 a roadmap for change with a clear set of KPIs to measure your success in strengthening your Sustainability DNA.

  • 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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Endnotes

1. Accenture, 2021; "Delivering on the promise of sustainability"
2. Blackrock, 2021. Set of 32 globally-representative, widely analyzed sustainable indices and their non-sustainable counterparts; https://www.blackrock.com/corporate/investor-relations/larry-finkceo-letter
3. Accenture, 2020; "The hidden value of Culture Makers"