Sustainability transformation in companies: a guide

When the business world talks about real change for a future worth living, it implies the sustainability transformation of companies. Many organisations are setting out on this path, adopting sustainability programmes, selling green products or planting entire forests. However, as in society as a whole, sustainable change will only succeed if we embed sustainability holistically. If it is both in the minds, hearts and hands of the people arrives.

We want to provide an overview of the specific steps that can be taken to initiate such a lasting sustainability transformation. We will look at these levels of structure, culture and the individual and describe the options for implementation.

Sustainability transformation or change management for sustainability?

Let us first look at the conceptual distinction: Sustainability transformation is understood as a long-term and organic change process of the company at various levels. The term change management for sustainability often implies a closed process. Concepts such as the Unfreeze-freeze model contribute to this view. Of course, the term change management can also be understood as an ongoing process. We use the term sustainability transformation to differentiate between the two.

Why sustainability transformation?

Some companies launch individual projects in order to tick off sustainability. Short-term profits are realised and then other issues become more important again. Examples of pioneers such as Vaude, Patagonia or Frosch show that sustainability must become a sustainable part of the company in order to achieve real added value for the company as well as the environment and society. This sustainable anchoring can be seen in the fact that it is embedded in all long-term dimensions of the company.

3 Dimensions of sustainability transformation in the company

Based on the new St. Gallen management model In simple terms, we differentiate between 3 dimensions in which sustainability is anchored. These are the structural, cultural and individual dimensions. This can also be applied to social sustainability transformation. Here too, sustainability transformation is understood as a process of change in the structures surrounding us, our culture and our individual patterns of thought and behaviour.

A) Structural dimension: strategy, processes, organisation

The structural dimension of the sustainability transformation includes, among other things:

• Sustainability strategies or sustainability programmes
• Sustainability management systems (in the broad sense) and processes and rules for sustainability
• Institutional anchoring in the company. Both in the form of dedicated positions and in the form of generally available time for the topic

In summary, this means that companies create facts that will shape the future steps of the organisation in the long term.

Sustainability strategies are essential for bringing sustainability into the organisation. Strategies set out the organisation's long-term goals and provide guidance on which measures should be prioritised. Without a sustainability strategy, most companies would fall short of their ambitious goals and allow their efforts to slowly fizzle out. In this article we explain how to develop sustainability strategies can be realised.

Sustainability management systems do not have to be bureaucratic monsters. What is meant is much more the processes for evaluation:

• whether the sustainability targets are achieved,
• how new requirements from customers, investors or regulators are incorporated into the strategy,
• who is responsible for implementation, who is responsible for monitoring and
• how the organisation is learning to become more sustainable year after year.

This definition of processes, rules and responsibilities is a necessary step for many companies in order to pursue a topic in the long term.

The Institutional anchoring of sustainability means that employees are given the task and the capacity to take care of sustainability. In particular, if one or more positions are created solely for sustainability (sustainability managers or officers), they will ensure that something is done about sustainability in the company. However, it also means giving other employees the capacity to work on the topic. This gives motivated employees in particular the chance to pursue their interests and make small and large steps happen.

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B) Cultural dimension: Identification and shared experiences

Unfortunately, structural anchoring alone is no guarantee of a genuine sustainability transformation in the company. The construct, i.e. the structural anchoring, must be filled with life. This is where the culture of sustainability comes into play first. The aim is to make sustainability part of the corporate culture.

The Systems theory for organisations by Niklas Luhmann culture in a company is also the sum and pattern of communication. According to the modern view, companies cannot shape this culture at will, but they can influence it. The aim is therefore to start communicating the topic of sustainability where communication already exists within the company. In this article we go into sustainability communication in more detail.

This communicative anchoring takes place via two levels of content:

• On the one hand, the topic Sustainability in general. What is meant is that this topic, which is also being discussed socially and economically, is reflected in communication.
• On the other hand the Sustainability process in the company. This means that employees see and experience how the organisation is developing. They have the feeling that they understand why what is being done and how they can contribute.

For the sake of simplicity, we will name 4 major tasks that cultural anchoring in the sustainability transformation entails.

4 Tasks of cultural anchoring

• The Taking employees on the journeyThe more intensively employees understand the process and see themselves as an important part of it, the better the implementation of measures and long-term development will work. This can be realised in all conceivable communication formats, from the intranet and consultation hours to workshops and ambassadors.
  Some organisations also give the process its own brand ("Example company goes green") and campaign. This can actually lead to great identification because the process is given a "face" for colleagues and they can talk about it.
  It can also mean developing your own sustainability vision. This can enable enormous identification because a motivating and tangible image of the future exists.
• Making sustainability a topic of conversationIn addition to targeted information and identification, culture forms organically when a topic is repeatedly discussed. This can happen in very different ways within the company. It is often important to create spaces for dialogue in the first place, e.g. through themed months, green bag sessions or simply initiating discussions in the building. In terms of content, the aim is to spread questions and information that stimulate dialogue. But clear formats such as dialogue rounds can also help here.
• Giving importance to sustainabilityNot only the quantity of communication plays a role, but also the quality. In companies, this is measured, among other things, by the fact that a topic is positioned as important. In the case of sustainability transformation, this already happens with the structural anchoring. Above all, however, it also becomes a communicative task for the board and management. Sustainability must be a matter for the boss in order to be considered relevant in the culture.
• Celebrating successes and overcoming challengesFinally, culture is formed from shared experiences. These experiences can be both challenging and purely positive. If a company engages intensively with sustainability, it will experience both these hurdles and the successes. It is then the task of sustainability communication to make these experiences visible. This means organising small and large events. From recognising particularly intensive project work on the intranet to open communication about current challenges and the joint celebration of achieved goals.

C) Individual dimension: motivation, knowledge, ability

The final dimension of sustainability transformation in companies is the individual. Even solid structures and a strong culture will lead to little change if employees are simply not capable of implementing the measures. In our view, employees need 3 aspects: Motivation, knowledge and empowerment. These dimensions therefore encompass both sustainability communication tasks and further training.

• MotivationAn important part of motivating colleagues has already been created with the culture of sustainability. However, it is also important to recognise the background, significance and consequences of the topic of sustainability. Ideally, this can be related to one's own life, everyday life and everyday work in order to recognise the significance for oneself.
• KnowledgeSustainability is a complex topic, which is why it is all the more important to impart basic knowledge. The better the employees understand the resource cycles, global dependencies or the fundamental sustainability strategies the better they can view their own work from a sustainability perspective. It is therefore important to convey the basics of sustainability as well as the specifics of the areas (regulation for the compliance team, circular design for product development). It is essential that companies create an exchange among themselves and thus networked learning.
• EmpowermentIf the knowledge is available, employees need the skills to implement it. There is no need to reinvent the wheel of sustainability, which is why it is worth providing colleagues with existing tools, best practices and work templates. But methodological training is also part of the repertoire.

Phases of the sustainability transformation

Now that we have presented the dimensions of sustainability transformation in detail, we would like to briefly outline the recommended steps for implementation. Basically, we can say that there is often a big and visible push in phase 1, which superficially involves all areas of the company. This push should then penetrate the deeper structures in phase 2 and encompass all three dimensions. In phase 3, the continuous transformation of the company is then planned ahead.

These phases can also be found in our support for sustainability transformation again.

1. create the basis

At the beginning, it often makes sense to initiate a project that achieves large and visible steps in the three dimensions.

Ideally, this first stage of the sustainability transformation should include a few clear phases:

• Initial analysisWhat sustainability measures have already been implemented? How do employees and management feel about sustainability? What is happening on the market, in regulation and in society in general? What strengths do we want to build on and what weaknesses do we want to consider?
• Start the process communicativelyInvolve employees and, if necessary, external parties in the process at an early stage, spark motivation and start cooperation.
• PositioningWork out where the organisation or company wants to position itself in the market or out of intrinsic motivation. This means, above all, what level of ambition the company has set itself.
• Materiality and strategy develop: The aim is to find out which sustainability issues are the most important for the company and what goals the company wants to set itself (read more in this article). The other structural anchors are also triggered.
• Thinking about external communication at an early stageFor most companies, sustainability efforts are particularly worthwhile when they tap into new target groups or markets. Of course, sustainability efforts can also be communicated.

2. create the mindset and the fine structures

After the first big leap, there is often a phase that seems to slow the process down. This perceived dry spell is important so that the organisation can prove to itself that it is serious about the sustainability transformation. The phase is characterised by various aspects that require their own approach:

• Resolving conflicts of interestOnce the low hanging fruit has been harvested, determination is needed to take the next steps. Sustainability goals often only come into conflict with economic goals, other strategies or even with themselves after 2 to 3 years. We recommend clear formats for resolving annual conflicts of objectives and interests, as well as open communication about them. Conflicts should be seen as a degree of maturity and not as a step backwards. If a company continuously masters these conflicts of interest, the actual profiling takes place.
• Patiently driving the culture forwardPatience is an important characteristic of any transformation. In particular, the "faces of the strategy", such as the management, must persistently continue to put sustainability issues on the agenda. Over time, the organisation learns that sustainability becomes just as much a part of decisions and discussions as profitability or employer attractiveness.
• Living and continuing structuresStructures such as responsibilities or processes tend to hollow out or fall asleep. Especially in the first few years, the company should endeavour to maintain these structures year after year. At the same time, you should always keep an eye on how you can improve them in order to live them effectively.

3. planning and anchoring the renewal in advance

Once the dry spell of the following years has been overcome and the sustainability transformation has penetrated the less conspicuous corners of the organisation, constant change follows. The organisation must continuously adapt, especially when it comes to the complex issue of sustainability. Structures and culture in particular will also have to adapt. We should not see this as a sign of a weak structure and culture, but as a necessary part of it. In this phase, we find very individualised formats, processes and communications for the continuous change process. This phase depends on employees internalising the topic for themselves individually and constantly reflecting critically on the organisation from a sustainability perspective. This can be actively encouraged, as shown by Patagonia, for example, where small-group philosophy workshops with employees in rural areas have led to the company being reorganised.

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Conclusion: Sustainability transformation enables long-term added value and never stops

It seems like a lofty goal to move an organisation into a permanent transformation. However, some company examples show that this is exactly what works. And they also show that this continuous transformation can realise the actual added value of sustainability. If a company manages to orientate its culture, employees and strategy towards continuous further development, then it swims in front of the wave instead of running behind it. Then it is pulling the biggest levers for the environment, society and its own business. With our Support for sustainability transformation we try to make our small contribution to this and support companies.