Sustainable Business in 2021: Insights from our students

Over the past months, I had the pleasure of leading over 100 master’s-level Senior Leader apprentices through a Leading Sustainable Business module at Cranfield School of Management. These students work for a wide range of UK employers across sectors including aviation, finance, healthcare, retail and agriculture.

Our conversations during sessions have been inspiring and have given me cause to be optimistic that we are reaching something of a tipping point in terms of the seriousness with which companies are considering and acting on the major social and environmental issues facing us today.

The ‘business case’ for sustainability

Among our students’ employers, there is a growing understanding that sustainability is a strategic issue. Companies are seeing demands for change, from their investors, their customers (end consumers and B2B customers) and their employees (and future employees). Rather than managing their social and environmental performance as a tick box exercise, or at best an opportunity for cost reduction, most are seeing an effective response to social and environmental issues as critical to their long-term business performance. Not only does this help to manage and mitigate reputational and physical risks, it also helps to increase their attractiveness as an employer and supplier, and to drive innovation and growth in new or changing markets. As one student put it: “there is really no tension between sustainability and profit.”

Investor expectations

Perhaps one of the biggest changes our students commented on is the level of interest in Environmental, Social and Governance (ESG) issues from investors, with students reporting that ESG issues were increasingly dominating their investor conversations and that investors are increasingly “holding businesses to account” on sustainability issues.

Materiality: from operational to supply chain impact

These meaningful conversations on sustainability with investors, and indeed other stakeholders, must be underpinned by a clear understanding of materiality, or as a student defined it “where we have the biggest impact and the biggest influence.” There is no one-size-fits-all answer across the diverse sectors represented by our students, but climate change and diversity and inclusion are issues topping many organisations’ sustainability agendas. There is an increasing realisation that when it comes to issues such as carbon emissions and human rights, paying attention to your direct operations is only the tip of the iceberg. For example, one retailer represented has recently calculated that 98% of their carbon emissions are in their Tier 2 and 3 supply chain. So, businesses are beginning to grapple with the complexity of understanding and managing their impacts along the length of their supply chain. The implication for many of the B2B companies represented on our course is that much of the pressure for improvement in environmental and social improvement is coming from their customers. For service businesses, advising clients on improving their sustainability performance, whether that is energy efficiency or inclusive recruitment processes, represents a growing opportunity.

Collaboration

Working in partnership with other organisations within, or beyond, your supply chain, or in multi-participant industry coalitions―our student’s citied coalitions as diverse as the Cattle Sustainability Programmes and the Coalition for Climate Resilient Investment―represents an increasingly common approach to tackling sustainability issues which extend beyond the boundaries of any individual business.

Just and sustainable

Whilst environmentally-friendly products may once have been developed for a minority group of ‘conscious consumers’ there is now broad acknowledgement that the sustainable solutions businesses come up with have to be understandable and affordable for all (we need, as one student put it, a “democratisation of sustainability”). On the one hand, this is because we will not achieve the necessary impact if innovations are not adopted at scale. Importantly though, it is because environmental sustainability and social sustainability go hand in hand. As Covid has demonstrated so vividly, the health and wellbeing of our communities and citizens are the necessary foundation for seeking environmental balance and economic stability.

Broaden the accountability

At the same time, we need to broaden the accountability for sustainability within our organisations. Of course, companies who are setting out on their sustainability journey typically still rely on an individual―or small team―with sustainability expertise to get them started. However, many now are working to integrate sustainability across their department, and make thinking about triple-bottom-line performance part of everyone’s role. Often this starts with a matrix structure, with sustainability representatives or champions in each team. Ultimately, though, this takes a culture that enables employees to include sustainability in their decision making and empower them to innovate where they see opportunities to do things differently and better. It also means setting KPIs (and associated remuneration) relating to material sustainability issues. In some businesses, this culture shift has been catalysed by a change in CEO. In most, defining and ‘living’ a purpose beyond profit―or as a student put it “thinking about what we contribute to the world, why we are here”―is critical.

Capacity building

One student commented “if we ask our employees to include sustainability in their decision making, we need to give the tools and skills to do that”. For example, someone in procurement needs to learn how to speak to suppliers so they can evaluate them on price and quality and now sustainability, and to understand what the implications are of not making good choices, for example, the cost of carbon offsetting. We are working hard to ensure that Cranfield students study management through the lens of sustainability. We also offer a full-time MSc in Management and Corporate Sustainability. In March 2022, we will launch a new ‘Sustainability Business Specialist’ Level 7 apprenticeship designed for those for whom sustainability is becoming a major part of their role.

Innovation

The Leading Sustainability module challenges students to develop a proposal for a sustainability-oriented innovation for their organisation. These proposals showcase the myriad ways in which social and environmental value can be created alongside business value if we apply a ‘sustainability lens’ to change and innovation. One of the most exciting things about my job is hearing about these proposals being implemented in students’ organisations. Good luck to the student whose proposal is due to be reviewed as part of their organisation’s “idea incubator” on Earth Day.

The Covid crisis itself has shown that we and our organisations can innovate rapidly in the face of immediate crisis. One student told us their company even completed an acquisition during lockdown without either of the parties having met in person. Many employers plan to continue with home working and virtual meetings, reduced travel and reduced office space to bake in the carbon reductions achieved by these changes in behaviour.

I am grateful to all the students I have taught and learnt from over the past months, and wish them courage and conviction to go on to be change-makers for good in their organisations.