Climate Leadership: Determining and agreeing on the right path towards sustainability

Business executives and team leaders agree that sustainability takes priority over shareholder value, but determining and agreeing on the solutions is the challenge. A survey of present and future leaders indicates that businesses must transform, and this requires making difficult decisions, including impacting short-term success to enable future growth.

At a time when concerns are mounting about sustainability and resource consumption, it’s no surprise that today’s leaders are prioritising these issues. Studies on the leaders of tomorrow alongside senior executives emphasise a shared sense of urgency towards resource depletion, but both groups differ in their approach to tackling these issues. While both existing and future leaders agree that sustainability should be a priority, the groups have different perspectives on who should be accountable, whether technology is the solution and whether responsibilities should be passed on to younger managers.

Resource depletion represents a global challenge

All leaders agree that the scarcity of natural resources is a major global challenge. The latest report indicates an overwhelming consensus across all age groups, even if it means slowing down economic growth in the short term. Of the future leaders and senior executives, over 80% and 72% believe that protecting natural resources is critical, even if it intermittently hinders economic progress.
This transformation in mindset is significant. For years, business growth has been a priority over other factors, but today’s leader recognises that long-term sustainability must take precedence over short-term financial gains.

One of the most critical findings from the report is the call for businesses to adapt their goals. Many younger leaders believe businesses must prioritise social and environmental values over shareholder profits. In total, 88% of future leaders believe shareholder value is still considered a priority over the social and environmental impacts of their business. 83% believe that they should rebalance their goals and prioritise sustainability. This way of thinking resonates with many of today’s leaders, suggesting there is a growing recognition that businesses cannot primarily focus on profits at the expense of our planet. There is, however, some resistance from other leaders, with 32% of senior leaders remaining focused on shareholder values.

Who needs to drive change?

While both generations agree on the urgency, they diverge when considering personal responsibility. A large percentage of the young leaders of tomorrow (63%) argue that executives should be accountable for their company’s sustainability goals, suggesting that bonuses and rewards should be tied more closely to environmental outcomes than to financial performance. In comparison, only 32 per cent of senior executives agree with this approach, highlighting a gap in how the two generations view accountability in leadership.

Another difference between the two generations lies in their views on the ability of technology to solve the scarcity problem. The leaders of tomorrow are much more sceptical that solutions to tackle natural resource scarcity will be found in time to avoid a collapse of global systems. Furthermore, results indicate that the leaders of tomorrow are much less optimistic about technology’s ability to overcome the Earth’s limited natural resources than the older generation of leaders are.

Transforming business models

Both types of business leaders agree on the need to adapt their strategies in response to resource scarcity. The majority of future leaders and existing senior executives believe natural resource scarcity is a critical driver for sustainable transformation, encouraging businesses to innovate and create new ways of working. Business leaders are exploring sustainable models to reduce resource consumption and tackle long-term environmental impacts. More efforts are needed, and future leaders have called for a complete rethink of how businesses operate.

Bridging the leadership gap

Despite the consensus on strategy adaption, the report also suggests a rising tension between the differences between leadership responses. According to the report, the leaders of tomorrow are looking to take on more responsibility, but a reluctance from existing leaders to share this approach. If businesses are going to succeed in managing the transition towards a more sustainable future, they must bridge this gap and determine ways to collaborate across different leadership groups.

Moving forward

The report emphasises a call to action and that acknowledging the challenges is not enough. Leaders must take action and look beyond sustainability. Businesses must make difficult decisions that likely will impact short-term benefits but enable long-term progress. We must transform companies by taking an innovative approach and a willingness to adapt. Senior leaders must recognise the younger generation and create a path towards the future that enables sustainability and economic growth.