Sustainability must become central to corporate strategy

All experienced leaders are well accustomed to outlining company-wide strategies, taking into account growth trajectory, expansion plans and financial performance. 

These days, however, there is perhaps one point of strategy which is considered to be more important than anything else: sustainability.

The modern-day CEO must prove to employees, customers and shareholders alike that their business plans are being delivered in sustainable fashion; they must strive to find the perfect balance between profit and planet. 

Much like technology, we have reached a point where sustainability can no longer be considered a siloed function, but should instead be factored into the decision-making of every division and department. 

Big-name organisations which once drew praise for the ambitiousness of their sustainability targets are now being actively judged on whether their efforts have been successful. 

Clearly, good intentions do not always translate into discernible action, as was demonstrated by recent research carried out by Heidrick & Struggles. While two-thirds (66%) of directors agreed that sustainability considerations should be fully integrated into business strategy, only 38% said it was happening in practice. 

Furthermore, even though around half of surveyed leaders thought sustainability should be entirely integrated into the board agenda, investment decisions and asset allocation, less than 30% have seen this coming to fruition. 

Alice Breeden, Co-Leader of the European CEO and Board Practice at Heidrick & Struggles, says: “This summer we had the hottest July on record, mixed with intense rainfall and flash flooding in multiple regions around the world, so it is clear that, collectively, we need to up our game – citizens, governments and businesses. 

“We need to put sustainability at the heart of everything we do, and that’s what senior executives and board members are telling us, too. There is clearly a gap between ambition and execution that needs to be bridged.”

ABB: Leading the sustainability charge

One business leading the way from a sustainability perspective is ABB, a technology giant whose activities encompass multiple sectors. 

The company’s purpose says it all: to enable a more sustainable and resource-efficient future with our technology leadership in electrification and automation.

“Sustainability is embedded in everything we do as a company,” adds Stefano Cinquina, a Global Business Line Manager at ABB. “It is the driving force that guides our actions every single day.”

ABB continues to set the standard in tech development and sustainable innovations that allow industries to make meaningful progress, supporting customers with both rapid and gradual transformations. 

From the rapid adoption of digital tools for remote work, to the shift from fossil fuels to clean energy sources, the organisation remains dedicated to combining automation, carbon neutrality, electrification and social progress. 

Like countless other well-intentioned businesses, ABB has a sustainability strategy taking it to 2030, which includes a commitment to achieving carbon neutrality – not only within its own operations but across the value chain.

Efforts are also ongoing to actively advance the circular economy by promoting the concept of circularity in all its products and services. The aim is to extend product lifespan, optimise resource usage and embrace recycling initiatives, thus minimising waste and maximising resource efficiency. 

ABB has 130 years worth of experience in forming partnerships with key industrial players to drive progress, and Cinquina insists there is little difference when it comes to the sustainability agenda.

“The customers we engage with are not working in silos trying to solve operational practices for greater efficiency themselves,” he adds. “It takes a team mentality. No single organisation can do this alone and we’re there as a technology leader with some of the answers.

“No silver bullet exists to make operations sustainable, so collaboration across organisations is key to accelerating progress in this space.”

AI’s role in industrial decarbonisation 

Accelerating sustainability progress is something which sits at the very heart of Sherif Elsayed-Ali’s business, Carbon Re, an artificial intelligence and climate tech specialist spun out of Cambridge University and UCL.

Carbon Re’s aim is to help solve the fundamental challenge of industrial decarbonisation, harnessing the power of AI to achieve previously out-of-reach fuel efficiencies and create a zero-carbon future using zero-carbon materials.

Elsayed-Ali, the company’s CEO and Co-founder, explains: “While a lot of companies focus on the energy side of things, we want to enable zero-carbon materials by transforming the way they are made and designed.

“It’s a big, ambitious goal, but we think the route that unlocks this possibility is applying the concept and ideas surrounding AI to the creation of materials. 

“Industrial decarbonisation is often overlooked but, if you look at the big industries like cement, steel, glass, ceramic, paper, bulk chemicals, they account for more than 20% of global emissions.”

Elsayed-Ali’s is in no doubt that AI has the potential to play an integral role in boosting the sustainability strategies of various organisations and, as a consequence, help slow down climate change. 

“Logically speaking, there is probably no economic or social endeavour that cannot be augmented or made more efficient by combining with human intelligence with AI,”

“We are still very at the tip of the iceberg, but it becomes super interesting when you start applying it to physical sciences.”

Time for leaders to step up 

As the aforementioned research from Heidrick & Struggles demonstrates, there is still plenty of work to be done when it comes to businesses fully and credibly integrating sustainability into their strategy and board operations.

While this process is far from straightforward and carries a number of complexities, Breeden believes every leadership team has an opportunity to forge an appropriate forward by following three key principles. 

“Firstly, boards can further sharpen governance, including by reevaluating their makeup, ensuring deliberations take a long-term perspective and improving transparency on issues such as director selection and evaluation. 

“Second, the board can carve out and better safeguard time for addressing how sustainability will impact the business, digging into short, medium and long-term issues that have the ability to affect their business directly and indirectly in the coming years. 

“Finally, directors can personally model strong and consistent leadership behaviours when it comes to ESG, including by making tough, consequential decisions and bridging the divide between stakeholders on contentious issues.”