Rethinking the relationship between sustainability and value

A business that treats the community and the ecosystem it depends on as externalities isn't creating value in any durable sense. It's borrowing against a future it hasn't priced in. Where this gets genuinely difficult - and where I think a lot of well-meaning sustainability strategies comes unstuck - is when they collide with other people's far more immediate priorities.

The importance of aligning sustainability with value creation is something I recently discussed with Paul Lindley, Chancellor of the University of Reading and founder of Ella's Kitchen, on the Reading Ahead podcast. Together with ESG strategist and Reading alumna Amy Clarke, we got our teeth into why businesses often fail to centre sustainability in their practices, and why it's so important to maintain a value-based vision in spite of competing demands.

On the podcast, I shared a story about an executive on one of our MBA programmes whose visit to a community NGO gave him a different perspective on the impact of his business decisions and the positive difference he could make to society by embedding sustainability strategies into his value proposition.

I think about this example when people ask me why sustainability keeps sliding down the list of business priorities the moment things get difficult. The honest answer is that most businesses are set up to treat it as a separate issue: a standalone department, an extra layer of red tape, something that competes against cash flow, growth, talent, or quarterly targets. In that scenario, sustainability tends to lose, because it rarely produces an immediate, visible return in the way a cost-cutting decision does.

The businesses that get their sustainability strategy right, in my experience, are the ones that stop treating it as an add-on and start treating it as something that is embedded within the values and context of the business itself.

In today’s unpredictable landscape, strategies can’t be built solely on yesterday’s tried and tested approach of mission, vision, SWOT analysis and KPIs. These are perfectly reasonable tools when the ground isn't moving. But the ground is moving. Constantly and often unpredictably, and a model built for stability will always relegate anything that doesn't show up on this quarter's dashboard – sustainability included.

There's a concept from the researcher Dave Snowden, using a Welsh word, cynefin, which is essentially about understanding the nature of the complexity you're actually in before you decide how to respond to it. Businesses operating in complexity need to be making sense of their situation as they go, not applying a plan made in advance.

Sustainability fits naturally into that kind of thinking and will always lose as long as it's treated as a competing priority among several. It only starts creating value when it stops being a department, a scholarship, or a tick-box strategy slide, and becomes the logic on which the whole business runs.

For further discussion and debate around the link between sustainability and value, listen to the Reading Ahead podcast.