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OPINION – Leadership in Corporate Sustainability

Macau Business | February 2021

In today’s dynamic world, a growing number of companies has become aware of the vital connection between Corporate Social Responsibility (CSR) and corporate image. Alongside increasing social and environmental consciousness, companies behaving as “good corporate citizens” and operating in a socially responsible manner may alter perceptions and social expectations.

Nareen Wong

Executive Council Member

Macau Institute for Corporate Social Responsibility in Greater China (MICSRGC)

In order to demonstrate their “good corporate citizen” image to the public, most companies strive to balance the environmental, social, economic, and ethical objectives in line with their CSR practices and stakeholders’ values. However, the extent of CSR formulation and implementation is very much related to the issues of leadership value and strategic choices. Leadership value can be seen as an important indication of a company’s willingness and motivation to perform ethical actions, implement a particular set of CSR practices, create sustainable strategies, and fulfill responsibilities to stakeholders. Wise leaders who make appropriate socially responsible decisions and maintain corporate sustainable development can contribute to a profound change in social perception and therefore enhance corporate image.

While integrating sustainability initiatives into the business operations, leaders are more likely to embody individual traits, visions, skills, knowledge and organizational roles.

Considering pressing environmental, social and economic challenges, the term “sustainable leadership” has been widely discussed in the area of corporate sustainability. According to Visser and Courtice from the University of Cambridge, “sustainable leaders” are defined as individuals who plan and inspire people to act collectively and offer betterment to the society in which they live. Rather than merely considering short term profits, sustainable leaders are those who prioritize long term sustainability goals in line with the environmental, social and economic imperatives.

Sustainable leaders and CEOs have some essential traits in common. It is believed that a sustainable leader typically adopts more enlightened and innovative management approaches and expresses keen interest in environmental and social commitments. In this scenario, sustainable leaders prioritize the interests of all stakeholder groups rather than seek to personally gain from their position. Sustainable leaders never blithely ignore stakeholders’ opinions, which in turn stimulates conversations and enhances stakeholder engagement. They are willing to listen to diverse opinions and facilitate meaningful dialogue with different stakeholders (e.g., employees, customers, government bodies, NGOs, suppliers), so as to have stakeholders provide some early alarming signals and identify new business opportunities which contribute to the success of the company.  

Taking a company toward sustainability involves a group of leaders, who not only devotes conscious and continuing effort to balance the environmental, social, economic, and ethical objectives in line with stakeholders’ values, but at the same time promotes innovation and expresses willingness to absorb new technologies and knowledge in a fast-moving world. As released by Corporate Knights and Boston Consulting Group, some of the reputable sustainable corporations (e.g., Alphabet, Cisco, Siemens, Adidas) appear in the top rankings of the most innovative companies in 2020. Concerning the depletion of natural resources, global warming, air pollution, and wider social issues, a company embarking on the path of sustainability need to have leaders to promote sustainability value and create shifts toward social, environmental and sustainability-oriented innovation. It is undoubtedly that sustainable leaders play critical roles in painting a clear picture of the “destination” and figure out the strategic direction toward corporate sustainability. Leadership is not merely “management”; it is about getting people inspired and to work collaboratively. An essential step in reaching the “destination” is to infuse the right people with a passion for sustainability to work together and brainstorm ideas on one hand, and on the other, to put those new ideas and knowledge into widely used sustainable practices.  

There is a strong symbiotic relationship between leadership and CSR governance. CSR governance is a vital tool to monitor the implementation of sustainable practices and fully integrate CSR issues into core business strategies for long term environmental and social commitment. For instance, my prior research demonstrates that sustainable leaders taking the enlightened management approach, i.e., displaying an unprejudiced attitude toward new ideas, utilizing two-way communication, and taking the values of other stakeholders can, through the establishment of a CSR steering committee, regularly review the implementation of CSR practices and respond to issues that are important to strategic planning and daily business operations. 

Today companies can decide whether to take a more enlightened and innovative approach toward sustainability, or to adhere to the traditional hierarchical one in which employees simply obey instructions and directions of their superiors. Although companies make choices for themselves, it is believed that leaders who are capable of encouraging employees to reach out from their comfort zones and think outside the box can navigate unpredictable environmental and social complexities. The crucial role that leaders play in supporting effective CSR governance is not only through creating a workplace that embraces innovation, but also through integrating long term sustainability goals with those of the society into their operations. Leaders who incorporate sustainability into business strategy and practice will in time naturally drive the company to be a “good corporate citizen” across industry and society.