It is hard for any business leader today to ignore sustainability.
Indeed, the latest UN Global Compact–Accenture CEO study found that 97% of the 1,000 CEOs interviewed across 103 countries and 27 industries see sustainability as important to the future success of their business. Moreover, 78% see sustainability as an opportunity for growth and innovation. Notably, 84% of the CEOs believe that business should lead efforts to define and deliver sustainable development goals, and 79% of them see sustainability as a route to competitive advantage in their industry.
Effective and responsible leaders are those who are able to integrate sustainability throughout all aspects of their business and their strategy. In previous decades we mostly focused on leaders who were exceptionally good at managing within the economic context. Now we need leaders who can also thrive within the social and environmental context in which their businesses operate. The two are in fact intrinsically interdependent and building an integrated business model is the way to establish a truly sustainable competitive advantage in the long term.
This is where leading business schools can play a critical role. We need to develop leaders capable of thinking beyond the short-term economic objectives and ambitious enough to take on the world’s biggest challenges such as climate change, extreme poverty and income inequality. We need to teach them how to synergistically manage the social and environmental contexts in combination with the economic one and how to value, understand and be accountable for, their businesses’ financial as well as non-financial performance.
The truth is this is still unchartered territory. As academics, we are only now beginning to understand how businesses become sustainable given that businesses themselves are still experimenting in terms of the strategies and initiatives that they are adopting.
While there isn’t a comprehensive set of best practices that business schools can confidently prescribe, what we can do is to be actively involved in an exciting series of experiments and active learning with the business community, and its stakeholders. Sustainability has to be discovered. The role of business education therefore, for now, isn’t to teach best practice. It is rather to provide a structured understanding of the challenges, establish the parameters of possible solutions and accordingly drive curiosity, collaboration and adaptability.
Outside of business schools we know that we have collective obstacles to sustainability, such as our often-exclusive focus on the short term and on profitability. Profitability, of course, is not a bad thing, indeed it is a necessary condition. But it is not a sufficient condition. To overcome collective obstacles what we need is collective learning: conferences, collaborations and knowledge-sharing with peers and competitors inside and outside of, our own industries. Business Schools are uniquely placed to host these informed debates.
Ioannis Ioannou - Assistant Professor, Strategy and Entrepreneurship, London Business School