The Case for Top-Down
While I was at an energy industry conference recently I was asked the question, “Do you believe that it is better to have a bottom-up or a top-down approach for sustainability?” I answered immediately, “Top-down.” But I would not have answered this way even a year ago. What changed?
I’ve always been of the mind that any kind of sustainability activity in an enterprise is good; whether there is leader sponsorship for sustainability or not. Individuals can and should elect to embed sustainability in every decision and activity they do. However, after more than a decade working in the energy industry, I’ve come to realize that these individual efforts fail to yield the sustained performance benefit that an executive led mandate can offer.
figure from: Making Sustainability Stick, Kevin Wilhelm
I like this sustainability journey chart very much because it combines two things I’m very passionate about; sustainability and managing change. Looking at the blue arrow of change I can attest to the countless number of efforts I’ve initiated that fall into the columns marked Phase I, II and III. Looking across the bottom three rows, type of change, dominant characteristics and financial drivers, I think the chart accurately portrays potential benefits of each kind of effort.
In the current business climate that prizes agility and short term results over transformation and long term benefit it is hard to argue in today’s change-saturated environments that we need to think about breakthroughs and system change. However, the countervailing forces of innovation and disruption demands that business think both long and short term, with agility and transformation in mind.
Individuals can be quite agile, given the license to be. But without overarching goals, agility is random and unsustainable. This is where top-down leadership in sustainability comes into play and where transformation needs to reside. It is easy to understand why companies like to stick to fundamentals and will only occasionally step into the engagement and value creation arena. It is usually triggered by market conditions.
The brown curve representing Environmental and Social Negatives is an interesting one. Individual efforts “fly under the radar.” As more people get involved, activities receive public scrutiny and skepticism, exposing companies to prevailing negative societal sentiments. In today’s charged environment, the oil and gas industry is often vilified. Efforts are discounted “as too little, too late” until the point that public sentiment shifts as industry commitment to sustainability is extended, evolves and is self-evident. The public is looking for the industry’s commitment to sustainability, which today at best, is patchy in the developed world and challenged in the developing world.
In a recent paper* we looked at the enablers for the evolution of sustainability strategies. Phase III in journey chart is the period when companies often make comprehensive changes in strategy, process and measurement. Companies in phase III are confronted by a host of organizational challenges especially if original assumptions around process, measurement and strategy have not been evolving with company maturity.
Sustainability Maturity Model – SPE17 HSSE-184447 • Performance Framework for Evolving Sustainability Strategies • Flora Moon & Sophie Theys
Measurement of sustainability performance is challenging in most companies because enterprise systems across various functions and departments don’t talk to each other and are in need of reconfiguration. Few processes are in place to facilitate the interaction of people in the enterprise who can provide the pieces that comprise the system level view that sustainability measurement requires. As challenging as phase III is, the move from phase III to IV is herculean and cannot be accomplished without top-level commitment. This is the area where many of our energy clients will focus in the next few years.
Sustainability efforts can be complex, long term programs or simple and project based to allow companies to grow capability and processes. In any scenario, an enterprise roadmap is needed to align efforts. Most importantly, leader sponsorship is a prerequisite for lasting, sustainable performance.
Please get in touch if you’d like to dive deeper into performance and sustainability.