Sustainability used to be seen as a niche activity to be kept separate from the actual running of a company. Today, sustainability issues (also called ESG – environmental, social and governance – issues) are framing some of the biggest challenges that companies and society as a whole will have to deal with in years to come.
Environmental challenges include scarcity of water and other vital resources, dealing with the physical impacts of climate change and the need to respond to the stronger-than-expected global deal to cut greenhouse gas emissions agreed in Paris. Social challenges range from the use of child labour in the supply chain to bribery and corruption, while the Volkswagen “defeat devices” scandal is an illustration of how poor governance can have a devastating effect on company valuations. When the scandal broke, it wiped more than a third off the company’s value in just two days.
“It involves seeing the world in a different way and using skills that are not taught in schools or universities.”
It is becoming clear that to meet these challenges, we will need a different set of skills than those that got the world to where we are today.
Some of these are simply due to a new focus on challenges such as reducing waste and the use of water, energy and other resources. Some of them are related to technological advances such as electric vehicles and renewable energy. But it is also because sustainability is such a wide-ranging issue, according to Catherine Tilley, director of education at the Cambridge Institute for Sustainability Leadership.
“It involves seeing the world in a different way and using skills that are not taught in schools or universities,” she says. “The education system is always slightly retrospective. In a world that is changing very rapidly, a lot of the learning we draw on is not going to match the environment we’re in.”
Antoine Heideveld, director of Het Groene Brein (The Green Brain), a Netherlands-based organisation that helps companies to implement sustainability strategies, puts it another way. “We’re educating children in the problems of yesterday, not the solutions of tomorrow.”
Risk and opportunity
The UK’s Institute of Environmental Management and Auditing (IEMA) says that “making the transition to a sustainable economy will pose risks for businesses, but also presents significant opportunities”.
Those companies that are ahead of the game, leading the way to embed sustainability into the very core of their strategy and operations, are the ones most likely to succeed in the face of the challenges. However, “a critical barrier to organisations making the transition is the lack of relevant skills and expertise,” it adds. “Ensuring environment and sustainability skills are embedded throughout the organisation is a pre-requisite for all companies being able to gain competitive advantage.
IEMA research shows that investment in developing organisational capability and skills to address the sustainability challenge is significantly lagging behind other areas. This needs to change, it asserts.
IEMA’s research into more than 900 UK businesses showed that many lack the basic skills to take advantage of the opportunities offered by sustainable business management, or to make the transition needed to guarantee their survival in the new economy, says Martin Baxter, executive director for policy and engagement. “Skills gaps occur across business from internal resourcing, to the supply chain, to recruitment and operations,” he says.
Among the skills that are lacking, according to IEMA, are:
- Skills to compete - Only 13% of companies are fully confident that they have the skills to successfully compete in a sustainable economy.
- Strategic skills planning – 65% haven't carried out a strategic evaluation of skills needed to successfully compete.
- Leadership skills - Only 25% of leaders, and 20% of senior managers, are fully capable of addressing sustainability agenda roles.
- Skill gaps also in supply chains – 78% of organisations say that they are not fully, or only partly, confident that their supply chain has the capability to make the transition to a sustainable economy.
In addition, the organisation says that levels of investment are too low – in 62% of organisations, investment in environment and sustainability skills is less than for other disciplines such as safety and finance and 10% say they have no environmental training budget at all. Companies also face a recruitment challenge – more than half (53%) of organisations are unable to recruit environment and sustainability professionals with the right skills.
Working across disciplines
Part of the challenge of dealing with sustainability issues is that “it’s not one thing, you have to do many things,” says Heideveld. “If you do things without integration, there are unintended consequences.
“Most of the problems we face today are cross-disciplinary, so it is very important that we learn to work across disciplines.”
What is needed is more “systems thinking” which takes a more holistic approach to dealing with the challenges we face, Heideveld says. This broader approach entails more collaboration across boundaries, whether that is with customers, suppliers or competitors.
Gerald Naber, a member of the Sustainable Finance team at ING, says that the ability to collaborate with people outside your business and to talk their ‘language’, whether they are accountants, sales teams or procurement experts, is now crucial.
“There is a need for new sorts of analytical skills so that companies can assess risks upstream and downstream of their own operations and understand the total impact of their goods and services,” Tilley says. It is knowing where the biggest impacts of their products lie that has led clothing brands such as Levi Strauss to encourage customers to wash their clothes less often and at lower temperatures, and tea producers to encourage people to boil their kettles more efficiently.
“Consumer goods companies might have taken all of the problems out of their own operations, but often they are sourcing commodities such as cotton, tea or coffee from parts of the world with significant environmental and social issues. To be truly sustainable, they need to understand what those impacts are,” Tilley says.
The education system has a key role to play, she adds. “There needs to be both a mindset change and specific learning. Some of the skills that people need are quite technical, for example how to calculate the risk profile of a particular organisation or activity, but they also need to be able step back and think about broader issues as well.”
For such skills to become commonplace companies need to ask for them, says Heideveld. But equally, they need to train people on the job, Tilley adds. “We have a cadre of people coming through now who are more open to the environmental and social aspects of sustainability but having that awareness is not enough. People need to learn by doing. How companies expose employees to sustainability is very important.”