A new report by global higher education alliance CEMS reveals environmental concerns have overtaken technological advancement as the greatest challenge facing modern-day business leaders.
Titled Leading for the Future of Our Planet, the report states that the world is “headed for environmental catastrophe if urgent action is not taken".
Of the 4,206 professionals surveyed worldwide, 43 per cent of respondents identified the environment as the biggest issue to tackle, followed by technological advancement (26 per cent), shifts in world economic and political power centres (14 per cent), political instability (6 per cent), and global pandemics (3 per cent).
“We talk about biodiversity and the environment as though they are external and separate from us: the environment is ‘doing something’ or biodiversity is ‘in trouble‘. One of the biggest challenges is convincing people that the problem is humans and our astounding abdication of care for anything other than ourselves,” University of Sydney Business School Professor in Business Information Systems, Dirk S. Hovorka, wrote in the report.
“As companies, we must also move away from the idea that growth is the ultimate goal and that the world’s resources are infinite. Sustainable growth is an oxymoron, as you cannot grow indefinitely – there is going to be an end to growth in a finite planet.
“Leaders need to recognise that if they want their organisations, people and biodiversity – the world – to thrive in the future, they have to change their ideology. It must shift away from the primary purpose of profit and prioritise other values.”
According to the United Nations (UN), in a worst case scenario carbon dioxide emissions could increase global temperature by as much as 4.4°C by the end of the century.
We are not on track to meet the Paris Agreement target to keep global warming from exceeding 1.5°C above pre-industrial levels, which is considered the upper limit to avoid the worst fallout from climate change.
“We are facing a multitude of threats: from climate change to the loss of biodiversity: floods; fires; and extreme weather. As a global population, every country, state, city and organisation in our world is living beyond our planetary boundaries right now,” L’Oreal executive vice-president and chief corporate responsibility officer Alexandra Palt said in the report.
“Going forward we are going to need new kinds of leaders. In the past, leaders were expected to look inside the organisation in order to maximise profit. But this has been changing over the last 25 years or so.
“Increasingly, companies are expanding their focus; thinking more about their external stakeholder ecosystems. We’ve seen the rise of this kind of tripartite force that connects governments, businesses and civil societies or communities.”
Recommendations for business leaders include moving to longer-term, generational thinking, working with employees to set clear and measurable sustainability targets and KPIs for each business function, as well as listening to voices across an organisation - especially those who advocate priorities other than shareholder profit.
Greater China United Overseas Bank CEO Christine Ip reiterated the need for each business to have clear targets in order to improve their environmental, social, and governance (ESG) practices.
“ESG can be very abstract, so leaders need to successfully share the vision, set out very clear objectives, and then set measurements around them. At the end of every year, many slight changes across an organisation can add up to a quantum leap,” Ip said.
“By having KPIs in place that look to wider ESG measures and modelling the right behaviours, people will make slight changes that together add up to a big shift for an organisation.
“Leaders must also recognise that their ability to stop is as important as their ability to do, and they will need to find the courage to ‘not do’. By this I mean introducing more sustainable, environmentally friendly initiatives.”
Other recommendations include teaching employees the impact their work has on the environment regardless, and ensuring leaders are upskilled to think and operate in a circular economy model.
More direct action business leaders can take involves conducting regular listening sessions with employees, setting up cross-functional task groups with environmental ambassadors, partnering with educational institutions and introducing learning modules to employees focused on teaching sustainability, diversity, inclusion, or resilience.
“The threats we face are not about saving the planet or protecting endangered species at this point. The threats we face are existential,” Palt said.
“All signs are pointing to a mass extinction – the sixth mass extinction in the history of the Earth.”
Conducted in September 2021, survey participants came from a broad range of sectors including consulting (19 percent), tech and financial services (17 percent each), consumer packaged goods (10 percent) and healthcare (5 percent).
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