How sustainability issues are rapidly changing the business landscape

This article on Peter Bakker’s keynote at the Orchestrating Winning Performance (OWP) liVe program was originally published on 25 June 2020 by IMD.

Long gone are the days when sustainability was a nice-to-have, says Peter Bakker who believes that companies have the capacity to heal the world but is unsure whether they will react quickly enough.

In an interconnected world with huge vulnerabilities as epitomized by the pandemic, the sustainability agenda has become inseparable from overall company strategy, says Peter Bakker, President & CEO of the World Business Council for Sustainable Development (WBCSD).

Speaking in his keynote address at OWP liVe he said, “The sustainability agenda is no longer ‘let’s change the world’. Sustainability will become the crucial driver of the competitivity of your company.” That, he said, is going to be the reason to get on board.

He urged companies to integrate sustainability into the cost of capital calculations in order to see an acceleration towards a more sustainable world.

Business as usual is over and, with it, sustainability as usual

For too long, a common complaint when it comes to sustainability was “if only the CEO got it”. Leaders must now decouple the sustainability agenda from the figure of the inspired leader and frame it in terms of how the cost of capital will drive lower if you are more sustainable.

Trust in leadership and business was eroding before COVID-19. But add to this the way the pandemic has put a spotlight: (a) the way we stress nature, which in turn “jumps its disease upon us” and (b) the way that health, environmental and inequality issues are so very intertwined.

This paradigm has big implications for the future of business leadership.

In leaders’ hands for the taking

In a sobering message to business leaders, Bakker warned: “If you do not lead, we will all fail. In the past, if you could read a balance sheet you would make an OK leader. Today, you need to understand the environmental pressures. A much broader set of skills is going to be required.”

In acting, the order of events is to fix your company, then your industry and then the world by standing on a stage and talking about it all. But before all of that, he urged leaders to start with their own choices. Do you really need to take that flight?

Bakker, former CFO and CEO of global transport and logistics firm TNT, insists that time is of the essence. “I am optimistic about businesses’ ability to adapt to the new reality. My doubt is whether we can do it fast enough,” he says.

But it is an exciting time to be a leader, and the task is to find the untrodden path toward a sustainable world. This, he said, is where it gets exciting.