Strategic sustainability readiness and responsible stakeholder management

Abstract

With society becoming ever more aware of sustainability and organisations realising their responsibility in these terms, it is necessary to look deeper into organisational strategy and practice. This essay shall discuss possible organisational approaches to achieving strategic excellence in this fundamental challenge of the current century. It will examine the premises for strategic readiness and organisational self-understanding as well as the effects of close stakeholder management to find that responsiveness, embodied management and dialogue is vital for strategic success. For illustration, the business case of Naturata AG will be consulted.

Introduction

Some might think sustainable development is an old hat by now. Nearly every organisation has somehow discussed the issue and many organisations release a yearly sustainability report. The Brundtland Report (WCED, 1987), the UN Conference on Environment and Development (1992) and the UN World Summit on Sustainable Development (2002) surely made sustainability become ubiquitous.

I believe, it is especially due to that, that the efforts of organisations need to be thoroughly observed and critically analysed to ensure the real scope is not being undermined. A survey by McKinsey (Bonini & Bové, 2014) has shown that in the past years, organisations have mainly seen sustainable efforts in the light of cutting costs or managing reputation. Even though this is slightly changing in 2014, the survey clearly shows that the sustainability leaders are taking their understanding of sustainable management much further.

Not only do they perceive sustainability as one of the top concerns of their CEOs, they are also much more likely to to form a broad leadership coalition, to have a clear unified sustainability strategy, to set aggressive internal and external goals and to understand the importance of it for the organisational success. So it’s not only cherry picking.

Sustainability is not just any other organisational function for which it is sufficient to build up a management team or department. Sustainability is what makes life possible. Sustainability is what the so much praised achievement of the modern world - the universal human rights - is all about. Sustainability is not an option - it is a duty (Charter et al, 2006). If organisations want to survive changing environments and prepare for future organisational performance, they need to develop a suitable sustainability strategy (cf. Lacy et al, 2010).

Society has evolved in parts to a we-society in which partners want to co-create and not just consume, or at least have a look behind the scenes and see authentic organisations and practices (Carbonaro, 2009). So while it is known that “consumer brands that demonstrate commitment to sustainability outperform those that don’t” (The Nielsen Company, 2015) and that green washing is on the rise provoking considerable damage (Markham, Khare & Beckmann, 2014), how could an effective sustainability strategy look like? What needs to be considered to not just pass a resolution but to achieve excellence in implementing what it actually is all about?

Therefore, the question that I want to discuss, is how a close stakeholder management can help to achieve strategic sustainable excellence and what organisational premises are needed. Analogies will be established to the business case of Naturata AG.

A short historic view on the matter

In my opinion, the critical aspect in the sustainability discourse and its shabby consideration by organisational leaders, lies in the emergence of it as a trend topic. The marketing departments of the 1980s onwards, headed towards this topic as they saw the interest of consumers, politics and NGOs arising. Latest with the popularity of and discussion about the triple bottom line concept, delivered in the late 90s by Elkington (1998), it became clear for organisations that sustainability had to go beyond sole marketing. The ISO 14000 series and also the United Nations Global Compact initiative, developed just at the same time, came in handy. Organisations had a way to engage with sustainability on a more strategic, managerial level, the marketing departments had new labels of well-recognised institutions justifying their claims and consumers were satisfied by seeing progress.

But with the effects of externalised costs far from hand, the urgency was still not high enough to make sustainability become part of the core aspect of organisations. The most polluting organisation in the world would still get an ISO 14001 certificate, if introducing a management scheme to reduce them over a decade and the Global Compact is a voluntary programme with low minimum requirements. Both, as examples for many, are standardised processes, individualised by organisations on their main problematic areas. Not more.

But when looking at the unthinkable size of the problems at hand (Stern, 2007; Rockström, 2015) this approach cannot be seen as valid. We need a holistic approach and a completely different understanding of what the role of organisations is.

Finding the own role in the discourse

In the following I want to depict the organisational self-reflection and re-invention that is needed to prepare itself for exercising a strategic management that eventually leads to sustainability excellence.

Still today, not all organisations have understood the importance of sustainability for the viability of this planet and the social system, but also for the opening up of new markets and the innovation of products. Thankfully, the pressure on them is ever increasing. Senge et al (2008) have presented a model of five stages and their main drivers in which companies can find themselves concerning their advancement in corporate social responsibility (figure 1). Acting to the external impulses, some organisations only follow these in an attempt to circumvent the challenges instead of adapting or best, taking a leading role.

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1: Stages and Drivers of CSR Development, Senge et al (2008)

The model affirms the position that sustainability excellence goes beyond typical understanding of strategy (stage 3 and 4) and finds its ideal hotbed in the alignment with core values of the organisation (stage 5). As with any good organisation, taking a step backward to think about its purpose before starting operation, strategy for sustainability excellence needs to first ask ethical and practical questions before it can become effective in the implementation (DesJardins, 2016). Effective sustainability strategy certainly needs some organisational premises.

I believe, this is because sustainability is a term that is equally general, broadly and nearly daily used as it is the term strategy. Its interdisciplinary character makes it difficult to fully formulate it in a few theories (cf. Ekardt, 2011) and through this complexity the perception of effectiveness can be misleading. Again, celebrating small successful steps is important for the morale, but can quickly turn to contentment and irrational behaviour (single action bias, licensing effect, etc.) if the perspective towards the size of the problem is being lost.

I therefore consider it as important to elaborate a well-substantiated understanding of the issue, based on accepted theories, recognised institutes and relevant NGOs and by building up knowledge capacities. Only after this, it is possible to find an appropriate and satisfying participation in it.

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