Where organisations go wrong on sustainability

The climate crisis has firmly pushed organisations to be more sustainable (or ESG-centric). While many organisations have done well and are on the path to becoming sustainable, others have struggled in their endeavours. Here are some roadblocks that hinder companies from becoming sustainable.

Hierarchical mindset: The organisational culture is that of obedience. Employees only do what their bosses tell them to do. Organisations are primed to follow government mandates. Both organisations and employees avoid going beyond what their superiors ask them to do. Thus even when the organisation or the employee has the competence and resources to be sustainable, they seldom do so as they wait for mandates or orders.

Not my job: Environment and sustainability are separate functions in most organisations. Executives often see sustainability as a different programme or function and do not integrate it with purchase, production, marketing, sales, design etc. This siloed approach often leads to the status quo. For an organisation to be sustainable, sustainable actions need to cut across departmental boundaries.

Lack of vision for sustainability: Many organisations do not have a clear vision on sustainability. They rely on either ad-hoc actions or believe that mere compliance with regulations is enough. A clear vision motivates and excites people leading to increased commitment and energy.

The cause and effect confusion: Most companies tend to take actions that reduce emissions and discharges. These emissions and discharges are the effect and not the cause. Emissions and discharges come from the way products and processes are designed. The materials, chemicals and energy used to produce are the cause. Emission control temporarily masks these problems.

Information gaps: For sustainability actions to succeed, people across levels require information on the benefits of sustainability programmes. Unfortunately, many organisations fail to communicate the needs and purpose, strategies and expected outcomes of their sustainability efforts effectively..

Learning gaps: Many executives have grown up without studying sustainability. The topic is now gradually entering syllabuses. Thus, executives need to be incentivised to expand their knowledge, test new ideas, and learn how to overcome barriers to change.

Failure to institutionalise sustainability: The success of sustainability programmes depends on how sustainability is institutionalised in an organisation through operating procedures, policies and culture. Benefits accrue when an organisation links compensation, promotions, new hiring, and succession planning to sustainability. However, with many organisations failing to embed sustainability into their core policies and procedures, employees’ commitment to sustainability remains superficial.

Published by Utkarsh Majmudar

Utkarsh Majmudar is a Fellow, IIM Ahmedabad and a professional with experience encompassing academics and administration at top business schools in India (IIM Lucknow, IIM Udaipur, and IIM Bangalore) and working with large corporations. His interest areas include corporate finance and CSR.

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