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The Sustainability Transformation – Leading Through Purpose

The world in 2050

How can 10 billion people live on earth by 2050? It seems that in 2019 the world has finally woken up to the challenges we face as humankind. We must all ask ourselves, how we can build a society that uses only the amount of resources it produces in a given year? How can we change our infrastructure to support electric mobility? How do we transform farming to use less water while producing higher yields? How do we all become conscious consumers that through our choices impact the way things are manufactured and consumed?

If we do not solve these key issues by the time 10 Billion people populate this planet, we will no longer be able to live here harmoniously. Rather, we will be fighting for scarce resources due to rising sea levels, uninhabitable climates, and unequal agricultural land use to support only the wealthy nations.

The future role of business

Corporations have come to terms with the challenges and opportunities posed by the required transformation in the coming years. Was it the power of Greta Thunberg´s Fridays For Future movement or Blackrock CEO Larry Fink’s statement that “Companies we invest in need to serve a social purpose” that made an impression? The business round-table representing the 200 largest companies issued a new statement on the purpose of corporations this year, in which their essential role for improving society is explicitly highlighted, and the concept of shareholder value creation is being replaced by a more holistic stakeholder approach, including customers, employees, suppliers and communities. We have reached an inflection point in history: Either businesses continue as before and we lose the battle for our future, or businesses become drivers of the changes needed for a more sustainable future.

The next transformation: Sustainability

Some companies are already showing such commitment. As Unilever CEO Alan Jope puts it: “Our vision is to be the leader in sustainable business.” It plans to divest brands that don´t meet the firm’s new standard. Microsoft’s recently announced to be carbon negative by 2030 – introducing amongst other things an internal carbon tax and new procurement processes to enable and incentivize suppliers to reduce emissions.

In these leading-edge companies, it seems that the much-hyped “digital transformation” is now being replaced by a “sustainability transformation.” This means that businesses take the concept of sustainability out of the box at the sidelines of an organization and put it at the heart of their business operations. With this move, these organization will become the leaders for a new world with more equality, less poverty, improved health, cleaner water, sustainable energy and responsible consumption.

Corporate purpose creates momentum

The key to start the sustainability transformation within organizations is the concept of corporate purpose. Corporate purpose is the force that sets an organization and its people in motion. It is an organization´s reason for being and sits at the intersection of three areas, each with an intrinsic question:

The purpose of an organization

Organizational purpose

The answers to these fundamental questions can help organizations define their purpose beyond creating shareholder value. It gets to the core of why organizations exist and it uncovers their role in creating a sustainable future for all of society.

The required organizational change

Once an organization has found its purpose, it needs to become the driver behind its internal transformation. “What will we stop doing (that earns us money) now that we have defined our new purpose?” is one of the hard questions leaders need to ask themselves in order to understand the commitment to change.

Here, action speaks louder than words. The result of any purpose development will be judged by its perceptible long-term impact not by the direction it describes for the organization. Because once defined, “Purpose” needs to affect everything: What innovations an organization generates, what product it creates, the people it hires, the culture it fosters, and how it communicates to the world about itself. In the end the purpose needs to become a framework for decision-making on what to do and what not to do in the future.

Unilever, for example, supported their purpose of “making sustainable living commonplace” through clearly defined activities and strong, measurable KPIs, ranging from reducing greenhouse gasses to supporting inclusive business practices. This allows for conscious corporate decision-making and that progress can be measured along the way.

When corporate leaders embrace the change

Another way to inspire action is to issue bold statements of ambitions by the leadership of organizations. When Volvo promised “By 2020, no one will be killed or seriously injured in a new Volvo car or SUV”, it sent a clear message to the world that it was serious about delivering on its purpose of safety. This was followed up recently by an announcement to reduce the maximum speed of the brand’s cars in Germany to 180 km/h. Clearly an action that will initially cost Volvo some business with speed happy German customers, but it will deliver on Volvo´s long term commitment.

“When we meet, we party together like rock stars” announced Elon Musk while standing comfortably next to Volkswagen´s CEO Herbert Diess at the Goldene Lenkrad awards in Berlin. Elon views Volkswagen and its electric vehicle ambition not as competition but rather a valuable ally to deliver its own purpose of “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”. Tesla has also open-sourced all its patents so that other car companies can join in delivering its purpose.

In summary, we can conclude that it is time for businesses to start the sustainability transformation. Corporate purpose is a great lever for management teams to set in motion plans for pursuing higher goals beyond making money. However, in order for corporate purpose to have a true impact, it needs to be supported by clear commitments, bold actions and a long-term programmatic approach to drive change on all levels of decision-making. Otherwise, the desired momentum will be lacking, and the pledge to create a better world will remain empty words on an eye-catching corporate website.

_Daniel Rosentreter is Head of Strategy at MetaDesign Berlin