Four Steps to LEAD on Sustainability

According to new research from Bain & Company, nearly 70% of organizations in the Middle East and North Africa (MENA) say they have bold sustainability ambitions with clear targets, but only 3% are on track to achieve their sustainability goals.

According to the United Nations (UN), only 15% of Sustainable Development Goals are on track—and many are moving in reverse.

It’s time for organizations to take the LEAD and turn promises into action.

Sustainability issues are gaining momentum around the world, in part because they cause problems too great for governments and organizations to ignore. In the MENA region, climate-induced natural disasters and water scarcity are amplified by economic risks.

At the same time, the region urgently needs to diversify its economy, meet the energy needs of a growing population, create economic opportunities for its youth, and close persistent gender gaps.

If these environmental, social, and governance (ESG) challenges are too great to ignore, so are the opportunities.

MENA governments made collective agreements to prioritize sustainability by committing to the Paris Agreement, the UN’s 17 Sustainable Development Goals, and country-specific net-zero targets. Organizations, investors, and consumers have supported the transition toward sustainability and social responsibility as well.

Nearly two-thirds of investors take sustainability performance into account when they make investment decisions. Likewise, consumers have also adapted their behavior toward sustainability. About 85% of consumers have shifted their purchasing habits toward sustainability over the past five years.

It seems that everyone agrees: The region needs to balance economic growth with environmental care and social wellbeing. However, little is being done—97% of the MENA organizations that we surveyed are not on track to achieve their sustainability targets.

The region needs organizations to step up and lead this critical transformation. As economic drivers, they have substantial risks associated with sustainability—but possibly more to gain.

Pioneers in sustainability will see higher returns and more engagement from purpose-driven employees. Companies that embed sustainability into their business practices can grow faster, create viable new business models, and become more resilient.

Sustainability is not only necessary, it’s also a strategy to mitigate risk, enhance performance, and make balance sheets stronger.

However, despite the clear need for change (and public promises), few organizations have hit their sustainability targets.

Bain & Company studied organizations in 11 MENA countries to identify sustainability “Laggards” and “Leaders” and to learn how to close the performance gap. Based on our research, about 90% of organizations in the MENA region believe they need to change their core operating models to address sustainability. However, only 3% of organizations are on track to achieve their sustainability goals.

What’s stopping MENA organizations from hitting their sustainability goals—and achieving the business benefits that follow? In our research, organizations struggle to achieve their sustainability targets for four primary reasons:

  1. Perception: They view sustainability through a risk management lens, rather than a strategic or value-creating opportunity. In 40% of organizations, sustainability is not integrated into organizational strategy.
  2. Silos: Sustainability goals and responsibilities are separate from the execution and operational sides of the business. 80% of organizations say cross-functional collaboration is insufficient.
  3. Disconnects during goal setting: Sustainability ambitions are set at the top and fail to translate into executable missions. Fewer than 20% of organizations verify the feasibility of missions that are set from the top.
  4. Excessive caution: Because organizations are risk-averse, they don’t explore or invest in sustainable solutions. Only 55% of organizations think they are adaptable.

Across all these challenges, there is a common path forward. Organizations that achieve their sustainability goals L-E-A-D by taking four distinct actions:

  1. Link sustainability ambitions to corporate strategies: Sustainability becomes a core part of the business strategy and is managed in tandem with other corporate targets.
  2. Engage cross-functional teams: They remove boundaries and build organization-wide ownership for sustainable outcomes. They also develop skills and organizational structures to support sustainability.
  3. Activate achievable sustainability missions: Ideation is bi-directional, so sustainability missions are co-developed and then verified through bottom-up assessments.
  4. Drive innovation and rapidly scale sustainable business solutions: Leaders establish agile systems to accelerate, test, and scale sustainability solutions.

Organizations that take these essential steps can LEAD on sustainability and advance their ESG agendas. They transform their corporate cultures and operating models in meaningful ways to benefit shareholders and, more importantly, society overall.

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