The Sustainability Imperative

As we explore in this Advisor, electric tractors offer both environmental and economic benefits and can play a significant role in sustainable agriculture efforts. In addition to pollution-reducing EV technology, these quiet, no-exhaust tractors use AI, robotics, and the IoT to enable autonomous operations and support precision agriculture.

The contemporary context of corporate responsibility involves a deep and wide set of concepts and tasks. Fundamentally, it involves working with multiple stakeholders and a range of disciplines. Managers then face decisions around how to take ownership of a number of company impacts throughout the value chain, including design, production, marketing, sales, and communications. And because corporate responsibility is tethered to calls for greater accountability, managers must also consider how their corporate governance framework serves to encourage, restrict, and ultimately shape the company’s relationship with society. In this issue of Amplify, we explore the conflicting pressures governments, shareholders, customers, and workforces are exerting on firms and their leaders in emerging corporate responsibility strategies involving ESG issues.

Oana Branzei, Dusya Vera, and Kimberley Young Milani take a deep dive into leadership in the eye of the “ESG storm.” The authors look at how today’s frames change tomorrow’s leaders and leadership, a critical aspect of the future of corporate responsibility. The stakes on leading responsibly have never been higher, they write, with leading business outlets warning companies about getting ESG “just right” while calling on leaders to “act purposefully.” How leaders solve this paradigm will change the future of corporate responsibility, say the authors. They then describe a framework that can help leaders see the future as the poly-activation of character dimensions and argue that as leaders activate a broader expanse of dimensions, including temperance, integrity, drive, and deep collaboration, their judgment becomes stronger, and additional futures open up. And as more character dimensions are exercised, the future’s leaders become more inclusive, collaborative, and sustainable — with or without the letters E, S, and G.

Ryan Flaim and Maureen Wolff offer detailed advice on how to combat anti-ESG sentiment. Acknowledging that ESG has become a political tinderbox, the authors say companies can still reap the benefits of their ESG initiatives. They suggest a three-pronged solution that starts with closely aligning ESG goals with corporate strategies, as Trane Technologies and Adidas have done. Second, tell a cohesive, integrated ESG story, including how your company refers to these efforts (use “ESG” or maybe go with “impact” or “sustainability”), using KPIs and case studies and ensuring your metrics are validated. The latter is not only the best antidote to greenwashing accusations, it’s also been shown to lead companies to make more carbon-emission reductions than companies that don’t externally verify their data. Third, Flaim and Wolff advise taking a proactive, creative approach to stakeholder engagement. One-on-one meetings with analysts and stewardship teams, ESG investor briefings (perhaps less controversially called “Sustainability Days”), and developing employee ambassadors could all be in the mix. Recent backlash doesn’t necessarily mean an ESG strategy isn’t relevant, assert the authors. Rather, by focusing on strategy, transparency, accountability, and performance, ESG can be a meaningful competitive advantage and an enabler of responsible business.

Ryan M. Bouldin and Elizabeth Levy look at corporate responsibility through the lens of product design. The authors point out that when sustainability considerations are incorporated at the end of design, inefficiencies and excess costs often result. One reason these efforts come so late is that two-thirds of chief sustainability officers report through functions far from product decisions, such as corporate affairs, general counsel, or HR. Bouldin and Levy suggest a new framework for incorporating corporate responsibility into product design; its categories include equity and justice, transparency, health and safety impacts, circularity, and climate and ecosystem impacts. The authors explain how this method results in an inclusive design process that embodies corporate responsibility. Done this way, product design would include verifying worker protection, specifying greenhouse gas emissions alongside chemical and material-safety data, and choosing chemicals and materials for their lack of hazards. Finally, the authors note, although companies should be transparent about their circularity goals, they should not market their initial efforts as sustainable, as this could open them up to greenwashing claims.

Punit Arora considers how companies might live up to various environmental commitments, a topic where we need more insight. Arora takes us into the motivation behind corporate environmental disclosures — specifically the practices of greenwashing and “brownwashing” and their relationship to innovation. The author points to brownwashing firms, which are either content with their sustainability performance or hesitant to acknowledge it for fear of backlash. These firms don’t exhibit a significant appetite for what Arora calls “ecovation” (the relationship between environmental disclosure and environmental innovation). At the other end of the spectrum are “greenwashers,” companies that express false environmental commitments. Although the press is keen to report on these instances, Arora points out that we don’t yet have data on the long-term effects of greenwashing. What the author calls “green highlighting” may be the answer: a balance of substantive action with symbolic disclosures that research suggests makes firms more likely to live up to their environmental commitments.

The buzz around the circular economy is not new, but the pandemic and climate change have led to more serious discussions and activities for large companies like Apple, Nike, and Unilever. This Advisor explores how these companies and others are supporting circularity and communicating their progress.

This Advisor explores the relationship between urban density and transport-related energy consumption and offers strategies for decarbonizing urban transportation systems.