The multifaceted journey to corporate sustainability6 min read

Rapid strategy shifts in businesses, especially around sustainability, might be misleading. The focus tends to be on the surface aspects, like ESG metrics, rather than questioning the core principles. True clarity emerges when companies recognize the difference between mere sustainable actions and foundational sustainable governance. This dance between a business’s societal role and its foundational ethos isn’t new. From the ‘business ethics’ discourse of the 1980s, through the ‘corporate social responsibility’ era of the 2000s, to today’s ‘environmental, social, and governance’ (ESG) debates, the core dilemmas oscillate between public action and private interest.

Prof. Dr. Michael Hilb, founder of the DBP Group and chair of the Board Foundation, is a prominent figure in sustainable corporate governance. With academic credentials from the University of St. Gallen, INSEAD, and Harvard University, he emphasizes sustainability in his teachings at the University of Fribourg. Serving on boards like Klingelnberg, Kuhn, and Sigvaris Group, as well as advisory roles in organizations such as the International Corporate Governance Network, Michael is also one of the distinguished authors of “Governance of Sustainability: The Role of the Board of Directors and Management in Sustainable Value Creation“. This book delves deep into the synergy between corporate governance and sustainability, offering diverse viewpoints and practical insights from 16 specialists.

Journey of engagement and dialogue in Sustainable Governance

The path to truly sustainable governance involves looking through cognitive, political, and ethical prisms at every decision-making juncture.

Two distinct perspectives arise when discussing sustainable governance:
Functional Perspective: Primarily a signaling model, senior managers demonstrate sustainability efforts to stakeholders through stand-alone initiatives, often without a fundamental change in underlying motivations. It often leads to isolated sustainability initiatives, more a response to external pressures than true integration. This approach often results in a ‘“greenwashing” business model.

Foundational Perspective: A holistic model in which everyone in the company is dedicated and aligned to create new positive value for all stakeholders, underscoring genuine commitment to sustainable value creation. The profound integration requires revisiting a company’s motivations, refining its mission, and developing comprehensive metrics and measures, all underpinned by transparent assessment systems.

Both perspectives carry risks and have unique challenges. While the functional approach might face criticism for being too superficial, the foundational process requires comprehensive stakeholder engagement, from aligning motivations to measuring performance.

For proper sustainable governance, a company must consider five impact levels:
Motivation: Adopt a mindset centered on sustainable value creation.
Mission: Reflect sustainability in the company’s mission and ensure it guides business partnerships. The owners define a corporate purpose, according to M. Hilb.
Metrics: Commit to clear, measurable sustainability goals.
Measures: Implement clear strategies and structures to achieve the mission.
Measurements: Ensure transparency in assessing progress towards sustainability goals.

Unlike traditional models, companies are now seen as product competitors and as entities that stand out based on distinct societal purposes aligned with stakeholder philosophies. It’s a shift from a singular profit-focused lens to a multipurpose one, accentuated by the “Value Growth Star” framework described in the mentioned book “Governance of Sustainability…”. This model emphasizes growth in areas such as company prosperity and environmental care. However, it’s not without challenges. Issues like trust, demand, complexity, and the ever-present confrontation versus collaboration debate need addressing. Explore this transformative approach further with Michel Hilb.

Daniel Marcos about the balanced CEO method

Daniel Marcos is the CEO and co-founder of Growth Institute, a premier online platform for executive education, reaching over 40,000 members globally. A serial entrepreneur with a mission to enhance entrepreneurial impact, Daniel’s experience spans over two decades, including a CEO stint of 23+ years and recognition with 4x INC5000, the magazine’s (INC) annual list of the 5,000 fastest-growing privately held companies in the U.S. It’s a prestigious list that showcases companies based on their percentage revenue growth over three years. He’s an active YPO and EO member, a certified Scaling Up coach, and a seasoned international speaker. Daniel’s academic accolades include programs from renowned institutions like Harvard, MIT, and Stanford. In his recent article “The Balanced CEO: A Recipe to Drive Your Company Toward Sustainable Growth,” Daniel underscores the paramount importance of CEOs finding balance in both their professional and personal lives.

By advocating for self-care and personal growth, CEOs can instill a culture that emphasizes employee well-being. Marcos outlines critical pillars for a CEO’s sustained growth:
Clear Strategy Execution: A successful strategy is simple and powerful, enabling teams to implement the vision autonomously and effectively without constant oversight.
Predictable Sales System: Companies must develop a sales system that operates predictably and autonomously, minimizing the CEO’s direct oversight.
Pursuit of Exponential Growth: Leaders should focus on enduring market needs while embracing disruptive trends and staying ahead of technological shifts.
Maximizing Company Value: Entrepreneurs should continually enhance their company’s value, ensuring it remains an attractive asset, ready for sale or transition, to secure its legacy and impact.

Conclusion

The path to a sustainable world is nuanced and multifaceted. Dr. Michael Hilb’s insights and the “Governance of Sustainability…” book shed light on the evolving relationship between corporate intent and societal impact. Two approaches mark the evolution of sustainable governance: one that views sustainability as an external, almost cosmetic endeavor, and another that aims to weave it into the core fabric of organizational culture and strategy. It’s vital to realize that sustainability transcends green business models. It’s about a paradigm shift in thinking, an ethos that values long-term viability over short-term gains.

Dr. Daniel Marcos advocates for a holistic leadership approach, emphasizing that CEOs should find a balance in their professional and personal lives, while cultivating a culture that values growth and employee well-being. When Michael Hilb speaks about the profound integration of sustainability, or when Daniel Marcos stresses balanced leadership, underscore a departure from superficial gestures towards deeper, more profound systemic change.

As the corporate world navigates its role in society, it’s imperative to recognize that the journey to genuine sustainability is not a mere adoption of green practices. It’s about cultivating a mindset where every decision, big or small, is taken with an eye on enduring and equitable impact. An excellent example is the Healthcare Circular Economy (HCE) model in India, underlining the roles of government responsibility and stakeholder participation, while showcasing the model’s scalability across developing economies. While it addresses environmental concerns, it’s the model’s emphasis on holistic sustainability – economic, ecological, and social. This study by Anuj Dixit and Pankaj Dutta champions the HCE model, a blueprint designed to streamline waste management. It accentuates the urgency for a global pivot, showing how genuine commitment, backed by strategic insights, can achieve a sustainable future. In corporate governance and entrepreneurial leadership, the message is clear: superficiality is outdated.

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