The Visionary CEO’s Guide to Sustainability
Martin Brudermüller, CEO of chemicals company BASF, perfectly captured the challenge organizations face as they look to accelerate their sustainability transformation. “People like to keep repeating what they know how to do and what has proven to work. That’s what makes it so difficult to accelerate the pace,” Brudermüller has told Bain. “We need a shift in mentality, not only in our organization but in our whole ecosystem, in supply chains and partner companies.”
As the world recognizes the urgency of sustainability, and as environmental and social considerations become a driving force behind business transformation—alongside artificial intelligence, global supply chain disruption, and other factors—a simultaneous shift is underway in the talent landscape. The skills individuals need are changing. This includes both the hard skills required by sustainability-focused operations (by electrification, for example, or chemical recycling) and the softer skills almost every company will need (in areas like inclusion and complex stakeholder engagement).
Building a skills-based approach to talent management begins to create a workforce fit for a sustainable enterprise. But the true game changer is shifting the mindset that individuals and organizations have toward their talent and each other. Companies working toward a sustainable future must embrace an opportunity mindset, prudent risk-taking, and collaboration within and beyond the organization’s walls.
New skills for sustainability
The instinct of many CEOs is to prioritize external hiring to address all skill gaps, including sustainability skill gaps.
In an August 2023 Bain & Company survey of more than 4,700 people in nine major economies, 63% of respondents felt that different skills and behaviors would be required for their company to execute on its ESG ambition or strategy. Yet only 45% of nonmanagers said their employer offers the reskilling and upskilling opportunities that would enable internal mobility.
Another Bain survey found that a majority of business leaders—some 75%—believe they have not embedded sustainability well into their business. There are times when hiring new, experienced talent will be necessary to address that, but to increase workforce flexibility and capability over time, turning people over simply cannot be the primary approach. The magnitude of the skills change is too great and too broad-based, and the competition for scarce talent too great. Beyond an individual corporation, stable employment brings valuable economic and societal benefits, contributing to economic growth, supporting families, and strengthening communities.
A talent system that can effectively develop key hard and soft sustainability skills is:
- Built on a deep understanding of the people already in the building. New technology and AI for skills inferencing and skills management can be embedded thoughtfully in talent management to ensure people aren’t defined only by their current role or by what someone remembers about them.
- Focused on reskilling. By investing to upskill and develop existing employees, programs like IBM’s New-Collar initiative send a clear message to employees that the company values their contributions and is keen to support their career growth. These programs also ensure companies retain the ability to tap into the deep expertise and unique credibility of long-tenured employees to lead change.
- Flexible and inclusive. Sustainability skills are evolving quickly, and predicting future needs is next to impossible. Companies that can shift resources across pools of work or tap into flexible talent sources can better manage demand variability and more readily access skills outside their core expertise. When managed ethically, flexibility can provide employment opportunities and enhanced livelihoods for those who might not fit into traditional employment categories, such as parents who need flexible hours, people with disabilities, or those living in areas with fewer traditional job opportunities. An emphasis on building an inclusive work environment can help people from all backgrounds feel a stronger sense of belonging, allowing them to perform at the top of their capabilities.
Long-established approaches to talent planning—a headcount forecast by division and function with some growth allotment—no longer suffice. Businesses must shift to being talent makers as opposed to talent takers, and an inclusive, skills-based approach is required to make that happen.
The mindset imperative
Answers won’t be found in textbooks, from gurus, or from benchmarks; they will emerge from innovation, from testing and learning, and from pooling knowledge, experience, and expertise in ways we can’t totally plan for. It’s no longer enough to count on “knowing” what to do; we have to lean in to “learning” what to do. Making this shift is the essence of the mindset imperative.
At Bain, we are committed to cultivating a growth mindset in our team, and that is why we have partnered with 12 world-class universities across the globe, including MIT, HEC Paris, and Melbourne Business School, to upskill our employees on ESG. To date, our consultants have completed over 17,000 hours of ESG training through the program, which has deepened their capabilities while also reinforcing the importance of learning and collaboration.
Historically, leaders have been most comfortable delegating to and empowering people they trust are the most capable, often defined by domain expertise. Have a tricky supply chain sustainability problem? Get the best supply chain expert on it. But with skill sets changing as fast as they are, domain expertise has a shorter half-life. In addition to people who know supply chains, we need people who embrace innovation and are great learners.
Some leaders try to manage sustainability in the same way they oversee business as usual, and it doesn’t work. In fact, it’s more likely to stifle innovation, along with the critical trust and collaboration needed inside the organization and across the value chain. Building stronger, skills-based talent management will help a company remain competitive, but it’s not sufficient to accelerate the innovation and collaboration sustainability requires; leaders must believe their teams are capable of more, and they must actively communicate and demonstrate that trust to their teams.
Leaders should, first, place bets on people who are willing and capable of learning and then remove risk from the learning process by really embracing testing and learning (and failing) at speed, clearing roadblocks, celebrating progress over perfection, and stopping projects clearly when needed.
The CEO of a large, multinational consumer products company was giving out innovation awards. After the official program concluded, the CEO went up to the leader of the team that won the flagship innovation award to learn more about his experience. The team leader elaborated at length about the multitude of roadblocks that had gotten in the way and the unwavering level of personal determination it took to succeed. In essence, the team leader said that innovation happened despite the culture, not because of it.
This story of innovation adversity is not unique. Leaders must create better conditions and shape culture for sustainability to succeed. Beyond launching teams with clear missions and shared goals, leaders need to shift their own mindsets and behaviors. They must get fundamentally comfortable with not knowing and excited by what the organization is learning and how that’s being used. This shifts how they engage with people and how they spend their time.
Becoming a great employer
Despite almost every CEO saying they have a talent problem, few companies have defined what it means to be a great employer. In our recent survey, 44% of respondents said it is easier to find a better opportunity outside of their company than in it. The time has come to redefine what it means to be a great employer. CEOs need to believe in the potential of their people, give them opportunity, and enable innovation. Companies that wait for the right talent to arrive in order to make progress on sustainability risk making none.
Are you displaying these five critical behaviors of sustainability leaders?
1. Authentic relationships. To create trust and support risk-taking, leaders must invest time up front in deeply understanding what matters both to employees and to ecosystem partners. Strong relationships and inclusive leadership practices make it possible to challenge ideas and push thinking. They are the foundation for developing new solutions.
Question: For the most important change you are leading, how deeply connected are you to the team developing the solution? And to the leaders who scale it in operations?
2. Curiosity. Seeking new information and being open to trying new solutions is a core aspect of all innovation, sustainability included. Leaders who display this trait don’t assume they have the answers; they collaboratively develop hypotheses and then test them.
Question: What new solutions are you testing right now?
3. Persuadability. To gain speed, leaders must be willing to change their mind when presented with new information. The vast majority of decisions can be easily changed without significant consequences, so there’s little downside in making decisions quickly, but leaders must be open to changing their mind when they are wrong.
Question: When was the last time that, given new information, you openly changed your position in front of your team?
4. Delegation. Even when it feels a bit risky, leaders must be able to delegate to their operational direct reports, freeing themselves to work on hard problems and remove roadblocks for teams devising new solutions. Leaders who do this well don’t wait for people to be ready; they make them ready by giving them opportunity. They trust them.
Question: In your last business review, sales meeting, or other operational milestone, could someone on your team have taken a bigger role? Do you have your successor ready? Are you spending enough time on changing your business vs. running it?
5. Enterprise-first. Leaders focused on accelerating toward big goals treat resources as an enterprise asset even when it hurts their own teams. A leader may lose an A-level player or operating budget to a higher priority yet remain resilient and positive. This feels least risky when working for a loyal employer, and companies that are filled with these types of leaders benefit from the way resources moving quickly to their best use unleashes progress.
Question: The last time someone wanted to move a resource from your team, how did you respond?