Clarke Murphy is a Board and CEO Leadership Advisor at Russell Reynolds Associates. This post is based on his Russell Reynolds memorandum. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here) by Lucian A. Bebchuk and Roberto Tallarita; Does Enlightened Shareholder Value add Value (discussed on the Forum here) and Stakeholder Capitalism in the Time of COVID (discussed on the Forum here) both by Lucian Bebchuk, Kobi Kastiel, Roberto Tallarita; and Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy—A Reply to Professor Rock (discussed on the Forum here) by Leo E. Strine, Jr.
Every year, we see large companies issue statements expressing their desire for sustainability. It’s easy to do, but turning words into effective action requires a distinct set of leadership skills that often come as a stretch or even an afterthought to many top executives.
1. Sometimes, sustainable leadership comes from a flash of inspiration
Many sustainable leaders have an “aha” moment that leads to a different mindset. Svein Tore Holsether, President and CEO of Yara International, heard his call to action on the streets of Paris. During a Redefiners episode, he described the profound impact of protesters outside the 2015 Paris Climate Conference on him and his company.
“Seeing the youth engagement, the demonstrations in front of the buildings, the fact that business was getting involved made a huge impression on me,” he told me. “I understood that everything I had thought about our strategy would change…I made the decision then that we need to think completely differently.” Svein’s global fertilizer company had always considered feeding the world its core purpose. His experience in Paris convinced him that Yara had to embed sustainability within that purpose.
And when sustainable leaders have experienced these redefining moments, they are not afraid to completely transform their business through sustainability. As Lynn Good, CEO of Duke Energy, who I interviewed for my book, told me: “Sustainability is not an adjunct; it’s not another initiative; it’s not something we keep track of on the side. Rather, it’s completely integrated with the company’s overall strategy, which is to be a leader in the clean energy transition.” And she’s done just that. As of 2021, the company had reduced CO2 emissions by 44%, sulfur dioxide emissions by 98%, and nitrogen oxide emissions by 83%.