The glaring sustainability opportunity: ecosystem leadership must overcome excuses

The Situation: Our systems are not good enough to address sustainability. Too many of the most influential firms use this as an excuse for not moving first and bringing their ecosystems with them. There is a glaring opportunity in all industries and ecosystems for organizations and coalitions to set the standard by reinventing business models and loudly disclosing their transition plans. These leaders must show their ecosystems—including competitors and regulators—that addressing the entire global sustainability context is not only competitive… but that it is by far the best environmental, social, and financial option now and for the coming decades.

“Yes. But it has to be JP Morgan.” That was the response of the head of disclosure at a major US bank. Broadly, we discussed how realistic it was for a leading organization within their ecosystem to move first, build and disclose a transition plan that aligns with the global sustainability context, and pull the rest of the ecosystem along with it. In such a regulated and risk-averse space like financial services (FS), we pondered whether one firm can move before a high level of collaboration and alignment has already happened throughout the ecosystem, between its major competitors and regulators, to make the commercial model work (see a separate take on FS spheres of influence on sustainability). This debate is raging in every industry. It often causes the idea of sustainability leadership for an organization to fall at an early hurdle. Too many think that the commercial models aren’t there yet. But the business and moral cases for leading on sustainability are becoming ever clearer. We desperately need to overcome the excuses. Even more so, we need the most influential firms in their ecosystems to realize the opportunity.

The leaders of the coming decades will be clear on addressing their internal, client, and ecosystem sustainability

Organizations must meticulously detail how they can and will address the entire global sustainability context on the three key fronts in Exhibit 1. Our separate report breaks down this context across ecosystems and throughout organizations. The global sustainability context involves avoiding further and more disastrous cliff-edge climate change, improving everyone’s lives, and generally moving toward the kind of world we want to live in. But it is also the biggest business opportunity of all time. The case has been made, and it keeps being made.

Exhibit 1: The three core spheres of addressing sustainability for organizations

Source: HFS Research, 2022

Leadership by collaboration and transparent plans will further prove that sustainability is the right strategic and moral decision

FCLT (Focusing Capital on the Long Term) is a progressive coalition aiming to reshape the commercials of sustainability. In 2016, CPP Investments and McKinsey teamed with BlackRock, Dow, and Tata Sons as an independent non-profit to support sustainability through actionable research and tools.

JP Morgan has publicly outlined its Climate Compass methodology: another multi-partner and sector approach to re-plumbing the global financial system.

There must be collective ambition and cooperation by business and government to tackle climate change.

– Jamie Dimon, Chairman and Chief Executive Officer, JPMorgan Chase

We need coalitions like FCLT and ecosystem giants like JP Morgan to make sustainability work, prove the commercial case, highlight the risk of not acting, and set the bar for others to follow. Those organizations not engaging their entire ecosystems won’t be the ones to change the system: Supply chains, technology and services partners, regulators, governments, academia, NGOs, and many others must be in the conversation.

Regarding competitor collaboration—regardless of your industry or business model—be clear in the impactful areas you can work together for sustainability but that you don’t compete on.

Too many companies are playing not to lose—rather than playing to win. You won’t get fired for missing ambitious targets. Disclose them. Have them audited. Bring others along with you.

– Former F100 CEO and NGO leader

I’d add to the above that if you do get fired, you were probably in the wrong place. We need the right people and the right organizations in the right rooms.

Leaders during COVID showed that empathy, vulnerability, and trust are beyond critical. That led to quicker adaptation to disruption due to trust across their ecosystems.

$12 trillion and 400 million jobs is a frequently cited opportunity that could result from addressing the sustainable development goals (SDGs), as put forward by the Business and Sustainable Development Commission. But you don’t have to solve all SDGs as one company: they are interdependent—so focus on what is most material for you while keeping the whole context in mind.

Unilever’s Sustainable Living Plan is another well-used example. Top line, bottom line, talent acquisition and retention, and concrete sustainability factors were all realized by putting the SDGs and purpose behind everything it did.

A joint study by BCG and the WEF nailed a host of business and sustainability benefits across talent, financing, profit margins, regulatory risks, and more—as well as a 50% carbon savings coming at zero cost. Broadly, that echoes often-cited numbers in the 60%-70% region that can be addressed with the technologies and processes we currently have. The BCG and WEF also echo the glaring opportunity across industries to move first and raise the bar—from which lots will follow—outlined here by an e-mobility leader:

We can de-risk the whole conversation—for consumer and business customers—in part, through our marketing, physical presence, and brand power—despite the level of distrust in our industry as a whole.

– Head of electric mobility at a global energy major

Finally, one massive consulting, technology, and services firm said it needs regulation change—including a carbon tax—despite having a CEO who works with global networks, governments, and the largest companies. To summarize the conversation: “We’re doing everything, and it’s not enough.” There’s the same glaring opportunity for the consulting, technology, and services industry, given its position at the center of every global ecosystem.

The Bottom Line: Policymaking will not move fast enough. Businesses must see that the opportunity and responsibility of sustainability is in their hands

Outdated ideas still hold too many businesses back from triggering the change we need. Referring back to Exhibit 1, we need every organization, especially those with the most influence, to find a new level of focus for and collaboration around their internal sustainability, how they can help their clients address sustainability, and how they can lead their ecosystems to align under the global context that will not only dominate the coming decades but will also separate the leaders and organizations leaving a legacy and a world we want to live in.