Sustainability has emerged as the defining issue of our time—not just for customers and employees, but institutional investors like BlackRock. From Net Zero to Black Lives Matter, the world is looking for CEOs to step up and be part of the solution to society’s challenges and injustices.
But what specific leadership skills does it take to spearhead real change and turn promises into concrete action?
Over the past few years, Russell Reynolds Associates analyzed the visionary CEOs and board members who are already pushing sustainability to the heart of strategy and delivering extraordinary results for society, the planet, and their business. Our goal? To decode their DNA and understand what sets them apart.
These five differentiators come naturally to visionary CEOs, but the good news is that they can also be learned. In other words, sustainable leadership is within reach for every business executive. Here is what you will need.
1. A sustainable mindset
The world’s most successful sustainable leaders all have one thing in common: they share a deep-seated belief that the role of business is not just to make money, but to also be a force for good in the world.
Sustainable leaders also know that, contrary to popular opinion, there is no trade-off between sustainability and profitability. They see sustainability as a path to growth, so they put it right at the heart of business strategy.
As Lynn Good, CEO of Duke Energy, told me: “Our climate strategy and business strategy are exactly the same. It’s not an adjunct; it’s not another initiative; it’s not something we keep track of on the side. Rather, it is completely integrated with the overall strategy of the company, which is to be a leader in the clean energy transition.
2. Disruptive innovation
Would you buy a hydrogen-powered car if you didn’t know where you would get the fuel? How about a fleet of green containerships, at a cost of $2 billion?
That is exactly what Maersk CEO Søren Skou did. At the time the company announced plans to launch 12 full-size green containerships, it still didn’t know where the green fuel (methanol) would come from or how they’d recoup the extra $5 billion or so in fuel costs. It was a huge risk, but it paid off.
Since then, a consortium of organizations has come together to develop a new hydrogen and e-fuel production facility by 2025, and some of Maersk’s biggest clients (Unilever, Amazon, IKEA) have announced they will only use zero-carbon logistic services by 2040.
Søren, like many of the world’s greatest innovators, is what I call a moonshotter. Moonshotters are leaders who are comfortable making (calculated) leaps of faith, even before they have all the answers. But make no mistake: These are not wild stabs in the dark; they are courageous decisions based on the best available science.
In other words, sustainable leaders are willing to commit bold action without even necessarily knowing the exact solution—or how they will get there. They leading with the faith and determination that whatever piece of the puzzle that is missing will somehow be found. And recognize that the greater risk is taking no action at all.
3. Stakeholder inclusion
Sustainability is too big a problem for any one person or entity to solve. The best leaders recognize that they have to invite and involve others to join them in finding the answers, from their own people to their customers, suppliers, shareholders—and even their competitors.
Walter Schalka is the CEO of Brazilian pulp and paper giant Suzano SA. But he is also a leading member of the Brazilian Coalition on Climate, Forests and Agriculture—a partnership between leaders from the worlds of business, academia and the public sector. As he told me, “intra-industry collaboration, including with our competitors, is key. We are not losing our competitive edge. Because if we don’t work together, despite being in another company, industry or country, we can’t make progress.”
That same goes for working with your local community. When Duke Energy announced in 2015 the planned closure of a coal-fired power plant in Asheville, North Carolina, and replace it with a large gas-fired plant and 45 miles of new high-voltage lines, there was an outcry from the local community. So Duke Energy teamed up with local government, businesses, institutions, and environmental advocates to enlist public support and provide easy access to resources that would enable everyone to be a part of creating a clean energy future.
In the words of its CEO, Lynn Good, “We need to work together to help shape what’s achievable, so that we have broad support for the pace of change, and so that we are listening to how communities want to be a part of that change.”
4. Multi-level systems thinking
Another thing that sets the world’s sustainable leaders apart is what we call multi-level systems thinking. That is, they have an eagle-eye view of their entire ecosystem, both inside and outside their own four walls—from their employees, customers, and supply chain, to society and the economy at large—and understand how it all fits together.
João Paulo Gonçalves Ferreira, CEO of Natura & Co., Latin America, is one such leader. When the pandemic hit, 90% of their stores around the world had to close. It could have been a catastrophe. Yet the company took every action to not just ensure the physical safety of its employees and sales reps but also to boost morale while keeping the wheels of the business moving.
Those who could work remotely were sent home. No one was fired. The company also offered credit flexibility to the network of consultants and representatives, with payment terms and additional emergency funds. Employees, franchisees, consultants, and representatives also had access to telemedicine, mental health resources, and grief support, and have been encouraged to maintain connections with their colleagues, friends, and family.
The move was good not just for the Natura community but also for business overall. Sales volume increased to the point where Natura had to repurpose a vacant warehouse into a distribution center.
5. Long-term activation
At times, being a sustainable leader is a bit like being the architect of a great cathedral: you have to accept the fact that you will never get to see some of your greatest designs reach fruition. Sustainability is a long game, and the winners are those who think not just in terms of 5 to 10 years ahead, but generations ahead.
This takes more than vision. You need the courage and grit to push ahead with your plans in the face of resistance from those care more about short-term profit than lofty goals, which may take decades to pay off.
But it is also about empowering the next generation of leaders—the C-suite of tomorrow. For example, since taking the helm at Heineken NV, Dolf van der Brink, the company’s chairman of the executive board and CEO, has actively sought to spot rising sustainability stars and catapult them into positions of leadership and responsibility. The company launched an annual sustainability contest, open to any employee in Mexico under the age of 30.
Dolf believed that the contest would be a good way to identify the next generation of sustainable leaders while also gaining insights on potential sustainability practices and innovations from executive and management-track employees with direct experience at all levels of the supply chain. At first, his colleagues in senior management, who were neutral on the subject, chuckled at the thought of some ill-conceived, feel-good experiments that would likely never be implemented. But year after year, “we were inundated,” Dolf told me. And not only were many of the ideas good, they were practicable, having been carefully mapped out in ways that could easily be implemented throughout Heineken Mexico’s supply chain.
In other words, empowering these bright young sparks could be one of your most powerful, most lasting legacies as a leader.
We now face a once-in-a-generation opportunity to step up and help solve the pressing challenges in our societies and economies. That may feel like an unattainable goal, but it can be done. And it starts with you.
You don’t need to be a born believer. Many of the sustainable leaders we spoke to were awoken to the opportunities of sustainability throughout their career. As long as you are ready and willing to open yourself up to learning and challenge what you think you know, you can hone and develop the skills you need to lead for people, planet and profit.