5. How can companies keep their long-term sustainability agenda on track despite leadership changes?
CEO tenure is growing increasingly short. In 1979, the average tenure of a Fortune 500 CEO was eight years. In 2012, the average tenure is four years. The high turnover of senior leaders dramatically affects a company’s sustainability program, whose projects often have payback periods of many years or even decades. And new leaders can significantly affect a company’s strategy. Consider the case of Unilever CEO Paul Polman, who is a staunch supporter of sustainability. Polman abolished quarterly financial reporting and told hedge funds they weren’t welcome as investors. He committed to “decoupling” Unilever’s growth from its environmental footprint, doubling the company’s revenue by 2020 while simultaneously halving its environmental impact.
New leaders that don’t embrace the sustainability goals of previous leaders, however, may choose to eliminate CSR departments or senior sustainability jobs because they are perceived as cost centres. In this case, sustainability champions find themselves having to make the business case repeatedly to every new leader.
“We often see companies that get new leadership at head office. As a result, existing executives have to make the business case for sustainability all over again to the new CEO, or a Canadian company may be a sustainability leader domestically but struggle to extend their sustainability focus into their sister or parent organizations in other countries.”
“In our consulting role, we often see companies that get new leadership at head office. As a result, existing executives have to make the business case for sustainability all over again to the new CEO,” said Matt McCulloch of the Pembina Institute. “Or a Canadian company may be a sustainability leader domestically but struggle to extend their sustainability focus into their sister or parent organizations in other countries.”
Regardless of whether a new leader supports or dismisses sustainability, his or her arrival disrupts an organization’s current sustainability agenda. What can companies do to ensure their sustainability agenda persists despite leadership changes?
6. How should companies navigate issues regarding Aboriginal rights and entitlements?
Canadian companies lack clear direction regarding the responsibilities of companies or governments to Aboriginal communities. While legal precedents are being set in court challenges, public policy does not necessarily align with those legal decisions. Policy lags in establishing a mutually-beneficial framework on which companies and Aboriginal groups can engage.
“Working with First Nations and Metis communities that possess generations of wisdom about local ecosystems, we learn new things about forest stewardship we wouldn’t otherwise know.”
Many businesses experience very positive interactions with Aboriginal groups that produce benefits for both parties. For example, in 2001 Tembec was the first Canadian public company to commit to achieving FSC certification for all its direct managed forests. That certification involves ongoing consultations and positive collaborations with local First Nations communities: “Forestry is an applied science – you have to make decisions in the absence of full knowledge,” said Chris McDonell of Tembec. “Working with First Nations and Metis communities that possess generations of wisdom about local ecosystems, we learn new things about forest stewardship we wouldn’t otherwise know.”
But many companies are left to navigate the issue of Aboriginal rights and title alone. By building a clearer understanding of the Aboriginal perspective of sustainability, companies can build relationships with Aboriginal communities based on mutual respect and trust. Some organizations are adopting leading initiatives such as the Progressive Aboriginal Relations program – a voluntary assessment and certification program that helps Canadian businesses build progressive relationships with First Nations and Aboriginal businesses, communities and people. Such relationships are not only likely to lead to positive engagement within the Aboriginal community, they are also likely to reveal new approaches to sustainability and stakeholder engagement outside the Aboriginal community.