Corporate citizenship is ‘paradigm shift’ for business leaders
Elena Rittstieg, executive search consultant at Egon Zehnder, told the recent SIRM Forum: “Long gone are the days when shareholder value maximisation was the key goal of a company.”
She was referring to the need for the corporate sector to demonstrate its commitment to a sustainable future.
“There is a growing consensus that corporate leaders have a role to play in taking collective action that goes beyond their own business or industry. Corporate citizenship is a paradigm shift for business leaders,” said Rittstieg.
One significant consequence of this change is the need for companies to reframe their purpose to better reconcile and integrate people, planet and profit, she said.
This has pushed sustainability up the agenda at board level. Rittstieg said: “Sustainability is a key topic for boards everywhere, with sustainability committees becoming more common”.
She also noted that sustainability is no longer pigeonholed but is growing more embedded in the corporate DNA, with all board members now expected to have something to offer on the sustainability front.
Rittstieg did acknowledge there are some challenges involved in committing to this change. One example being shareholder attitudes – on the one hand they call for sustainability, on the other they want to make money.
Investing in the transition to net zero is a costly exercise based on a medium- to long-term perspective. This can clash with the more short-term goal of profit.
Rittstieg highlighted a number of ways whereby members of the c-suite can adapt successfully to this transition. They can “navigate the ecosystem”, which means knowing the different types of shareholder and actively networking with them, so that they understand why the company is doing what it is doing.
This leads to “creating and sustaining collective momentum”. Now is the time to show leadership by encouraging people to be sustainable and to create followers, encouraging learning and individual growth.
Rittstieg also recommended “achieving sustainable results” by embedding sustainability in performance management, and especially in the company’s products and services.
How are executives adapting to this situation? Rittstieg talked about a leadership spectrum ranging from the old-school bosses who find it hard to move away from the traditional mindset, to the transformers who openly embrace sustainability and are aware of the company’s footprint on society at large.
During the following question-and-answer session, the point was made that the corporate world is on a transition path and that the executives of tomorrow will see sustainability more as an established way of doing business.