Sustainable Business Leadership

Sustainable Leadership

2011-01-23T18:42:00.000+01:00

Increasing complexities of a new economy influenced by factors such as climate change, globalization, increasing expectations regarding responsible business practices and the global financial crisis, automatically give rise to the need for sustainable leadership. The classical skill set for leadership of course remains very important, but within that skill set we need to look for the specific skills which need to be focused on to promote sustainability efforts. This would provide us with a relevant set of leadership skills which must be applied when dealing with situations, which require immense immediate attention, perhaps unlike the ones which we have been answering to before. Sustainable leadership therefore is to be specifically designed to target much complex issues, with innumerous variables, and which have to be taken care of in a very limited timeframe.

Why Sustainable?

2011-01-23T18:38:00.000+01:00

“It is a common defect in men not to consider in good weather the possibility of a tempest.”

Keeping in mind this shortcoming of man, very well put by Niccolo Machiavelli, the need for sustainability arises due to the following reasons.

Environmental:

Dramatic climate changes over the past decades and spine-tingling predictions from ecologists, geologists, and climate experts are no less than a warning. These are a shout out to all, to work on sustaining an environment which supports the human specie. This also means keeping as much biodiversity as possible. Our effect on the environment is neither ignorable nor excusable, and now we must take steps to correct our ways. Emissions from our industries and all other activities together are having a big impact on the earth’s atmosphere and on its resources that we have for ages taken for granted. If we want to survive as a specie, drastic measures need to be taken in our emission practices and natural resource exploitation to stop this threat of global warming and extreme climate change, which if not in our lives, will drastically affect the future generations.

Economic:

Based on the shareholder theory, exclusive focus on increasing shareholder value, irresponsible business practices, and resulting financial crisis over the years, have led us to realize the need of economic sustainability. Economic sustainability would incorporate not only sustainable management accounting solutions with focus on sustainable vision development, internal decision making, and authority sharing, based on stakeholder involvement, but also transparent and perhaps new methods of reporting supported by sustainable financial accounting, measuring both quantitative and qualitative data.

Social:

Providing solutions to problems addressing the rising issues of human rights, labor rights and corporate governance is the key goal for social sustainability. Including the above issues, corporations need to consider the social impact of their being, and how they may help the communities in which their products or services are employed as improving those communities ultimately helps them with achieving their own goal more effectively.

Introduction

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To start off, a fair introduction of the terms ‘sustainability’ and ‘sustainable development’ is crucial, as however popular buzzwords they may be today the essence of these terms is sometimes forgotten. The word ‘sustain’ means to hold up, to give support to, and to bear the weight of. The derivation of ‘sustainability’, from the above, proclaims how the concept of sustainability would essentially be based on holding up and supporting ourselves. This, which may have been the case so far, is not enough to continue the way we have, for numerous economic, environmental and social reasons. With increasing globalization trends over the decades and increased inter-dependence of nations, sustainable development is no longer a question at an individual or even national level, but a need to be managed globally. The Brundtland Commission Report, “Our Common Future”, takes a step further from realizing the need of sustainable development as common globally, to recognizing this need through time. To do this it provides the most famous definition of sustainability as follows:

“Sustainable Development is development that meets the needs of the present without compromising ability of future generations to meet their own needs.”

These definitions provide us with the premise of social responsibility, and of bearing the burden not only for ourselves but for others around us and even for those after our lifetimes; the future generations. Sustainability therefore, as a philosophy, preaches morality. These origins of the idea of sustainability really matter as they give it moral substance, conceptual precision and strategic power. Sustainable leadership, therefore, begins with a strong and unswerving sense of moral purpose. Inner conviction, unshakable faith, and a driving hopeful sense of purpose that stretches far beyond the self are the inalienable elements of moral character that truly sustain people during times of overwhelming challenges. 1 (Andy Hargreaves, ‘Sustainable Leadership’). Sustainability no doubt is an overwhelming challenge for the human race.

Motivation

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The motivation of this blog is to discuss and highlight important aspects of sustainability in a leadership context. The background to this is provided by Master Degree classes in Sustainable Business Leadership at Lund University, Sweden. The reflections currently relate to and are based on learning of six core business courses, namely,

Global Economy,

Management Accounting,

Financial Accounting,

Marketing,

Strategy, and

Corporate Finance,

in the light of which an argument is made for focused promotion of a specific group of leadership skills which are necessary for sustainable improvement, at all levels of society.