Sustainability Managers Could Lead the Fourth Industrial Revolution

If you close your eyes, and imagine that a more sustainable world has come true, what do you see? Is it anything like what Andreas Kicherer, director of sustainability strategy at the chemical company BASF, sees? He recently shared this vision of such a future via the business sustainability platform I manage:

I see a five-year-old boy who cannot yet read but uses a tablet. The boy is wearing sneakers made of ocean plastic. He is behind the wheel of an autonomous electric car. The car’s 3D technology navigates to an empty spot in a parking garage. The boy plugs in the car’s two-way charger and the car feeds electricity back into the grid. Then he goes to a restaurant and orders a “bug burger” produced in a vertical farm and an apple juice in a biodegradable bottle—all served by an empathetic robot.

This future is achievable. But although some of the above-mentioned innovations are being piloted or are already on the market (such as vertical farming promoted by the Metro Group, or shoes created by adidas made of ocean waste), overall progress toward a more sustainable world remains slow. Digitalization can help. For example, it can accelerate the growth of the circular economy, which opposes the “take, make, waste” mode of production and instead focuses on recycling and reusing, as well as optimizing the use of available resources. But, of course, in turn, it creates new challenges, including potential job losses, ethical concerns, and data privacy and safety issues.

How can companies tackle these problems and take on the emerging responsibilities related to realizing a sustainable world? The good news is that, in many organizations, there’s already someone poised to lead the charge: sustainability managers. Traditionally, sustainability managers have focused on developing stakeholder and environmental strategies for companies, but they must now expand their influence to the fields of innovation and technology.

Specifically, it is time for sustainability managers to step up and take on challenges in four critical areas (see chart below).

New challenges and opportunities for the sustainability manager. (Image by Joanna Radeke)

1. Ethical issues: from big-data problem to big impact

Big data can help solve many of the social and environmental problems companies and consumers face; for example, they can help ensure better traceability of products across the supply chain. But a recent survey shows that a staggering 71 percent of consumers think companies use their data unethically. So handling big data presents both an opportunity and a huge responsibility.

Take companies that utilize health data. As Marc van Weede, global head of strategy and sustainability at the pension, insurance, and asset management company Aegon put it in one roundtable discussion: “Personal health data has become a way to develop products and encourage people to adopt healthier lifestyles. Once we are collecting 24/7 people’s cholesterol and blood pressure, what type of responsibility does that create if we actually see things [that] are not quite as they should be?”

Clearly, companies need to stay on top of guarding customers’ privacy, ensuring security, and anticipating ethical concerns. Sustainability managers are suited to shouldering this evolving responsibility, because they are—per their job description—open to the opinions and concerns of external stakeholders. To do so, they must work closely with digital teams and bring ethical issues to the table. Many if not most CEOs have digitalization on their agendas, so when a sustainability manager takes on this task, he or she is also well positioned to advance the sustainability agenda.

2. Workforce education: from losing jobs to gaining meaning

According to some estimates, 50 percent of jobs in Europe and the United States will be lost due to digitalization. Fast-paced technology developments mean that many employees need retrain continuously to stay proficient as their jobs evolve, or to learn new skills. Yet current education systems (including workforce development) are not prepared to meet such demands. According to May 2017 McKinsey Global Institute report, 60 percent of companies report they cannot find graduates with the right skills. At the same time, almost 40 percent of employees feel their jobs do not match their skills.

Sustainability managers of the future can help here as well, not only by making sure that employees receive programming or math skills training, but also by ensuring that employees are engaged at work. “The outcome we strive for,” said Philippe Forestier, executive vice president of global affairs and communities at Dassault Systèmes, “is the employee who is happy in his or her personal and family life and powerful at work.”

Ultimately, and ideally, sustainability managers can take the lead in helping their organizations partner with educators to shape curricula. And to give work meaning, they can encourage employees to rethink the purpose of the company and their individual roles. OSRAM, for example, now ventures beyond its traditional efficiency improvement goals to think more about its role in improving safety and nutrition. And adidas and Parley for the Oceans have both developed shoes made of ocean debris. As Philipp Meister, adidas’ director of strategy for social and environmental affairs, noted during a discussion, “Connecting recycling plastics with dying oceans really resonated with people and created an emotional link.”

3. Innovation: from mistakes to “best failures”

It is no longer enough for companies to improve their existing products. The appetite for new, better, more sustainable, and circular solutions is clear. For example, IKEA’s sales of sustainable products tripled in 2016, and Unilever in the same year reported 50 percent more growth from its sustainable brands relative to the other brands. Yet many large established companies find it difficult to innovate.

To encourage innovation, research shows that companies need to tolerate mistakes. Ernesto Ciorra, head of innovation and sustainability at the Italian multinational electricity and gas company Enel, believes it is up to sustainability managers to create this culture of tolerance. In that spirit, he introduced the My Best Failure initiative at Enel, where employees are rewarded for sharing mistakes they made when trying to improve and innovate.

And to help innovations succeed, says Florian Hoffman from The DO School, an international education-focused social enterprise, companies must pay close attention to implementation and ensure that a cross-section of departments and people participate (as needed). Sustainability managers are positioned to facilitate the necessary connections; in their daily jobs, they are already are in touch with people from across the business, including R&D, manufacturing, marketing, and sales departments.

With their unique vantage point, sustainability managers could also lobby effectively for more innovation breathing space for employees—made technically possible by digital advances. “If an employee is under constant stress to fulfill revenue figures, he or she will take the only decision which is there,” said Christoph Böhm, vice president for corporate strategy at SAP, in one roundtable discussion. “You need to have options to go left, right, or middle.”

4. Collaborative outreach: from isolated efforts to a “me-too” effect

Building on the theme of connection, research has shown that collaboration is one of the main ingredients of sustainable innovation. Yet only 47 percent of companies are engaged in sustainability collaborations with competitors, nongovernmental organizations, suppliers, or regulators.

As Peter Lacy, managing director for growth, strategy, and sustainability at Accenture Strategy, points out, companies have problems finding the collaborators they need to realize the advantages of the circular economy. “We are stuck at pilots and very rarely see the ecosystem of collaboration, making circular an entire value chain or an entire system like food or transport,” he said during a discussion.

Sustainability managers participate in convenings that facilitate dialogue between companies (for example, the World Business Council for Sustainable Development or even our peer-learning-driven Sustainable Business Roundtable), but they need to begin inviting their colleagues to engage as well. Doing so will raise awareness of sustainability throughout the company. “I am glad that ING did this great work on the circular economy, although they are our competitors,” said a banker during a roundtable discussion. “This created a me-too effect, and now our leadership gives more urgency to this topic.”

The fourth industrial revolution may be disrupting markets, but it is also creating very real opportunities to solve social problems through sustainability. Sustainability managers are well equipped to lead their organizations on the path toward this goal. If they are willing to take on new responsibilities, they will also advance their cause.

Read more stories by Joanna Radeke.