Today’s business leaders need to keep pace with the increasing demand for responsible and sustainable management. That was a key takeaway for attendees at AGSM @ UNSW Business School’s 2021 Professional Forum.
With organisations facing shifting internal and external stakeholder priorities, speakers at Responsible Management in an Accelerating World noted that focusing on and adapting to these new demands is vital to business survival.
“Environmental sustainability, a social licence to operate, ESG – all of these terms capture a similar idea, which is that a business is not separate from the society in which it operates,” said Professor Nick Wailes, Senior Deputy Dean and Director of AGSM @ UNSW Business School, in his opening address.
Organisations used to be defined by the quality of their product or service. But stakeholders from all sides – from investors and suppliers, to customers, to current and prospective employees – are now focusing more on ESG factors. And it’s causing businesses to change how they operate and practice responsible management.
“As responsible leaders, you need to be able to manage returns to shareholders with the benefits of stakeholders,” said Professor Wailes. “Managing responsibly, creating profit, but also creating benefit, is the key challenge in today’s society.”
So how do companies balance economic growth with these ethical responsibilities?
During the Forum, we heard from AGSM alumni, UNSW academics, and leaders from the corporate, for-purpose, government and start-up sectors. They spoke on the growing importance of building ESG and sustainability into your business, why responsible management is crucial and what such management looks like in today’s accelerating business world.
Here’s what we learned.
From consumers to key sources of capital and everywhere in between, people are asking more of today’s business leaders.
“There’s been a shift in sentiment,” said Nicole Sparshott, Unilever ANZ CEO and T2 Global CEO, during her conversation with Professor Wailes.
“We’re actually now seeing people make real choices at the point of sale around products that have been purposefully crafted with sustainability or ESG at the heart of how they come to the market. It’s creating the impetus for companies to really step up in this area, or they’ll get left behind.”
But it’s not just consumers who are influencing businesses to change how they operate.
Frances Atkins, Co-Founder of Givvable, (AGSM MBAE 2019), said pressure from a variety of stakeholders is helping drive change.
“We talk about investors, we talk about consumers and customers, from employees as well, but then you also have the backdrop of regulations that are driving behaviours,” she said during the How Sustainable is Your Business Model? panel.
“And then you also have contractual counterparty requirements – one customer requiring their counterparty to do something along these lines, otherwise they won’t do business. So, the pressure is filtering through, and I think it’s driving real change in this area.”
Balancing profit with purpose
With more and more stakeholders looking at business through an ESG lens, organisations must now work to balance objectives that can sometimes be seen as competing with one another.
Nicole said Unilever is always looking to tick two boxes: Is it good for business, and is it good for society?
“When the teams say something is good for business, but we haven't quite ticked the box on society and planet, then we encourage them to go back and work a little bit harder,” she said. “If we say it’s good for society, but it's not good for business, well, that's not good enough either because we're not an NGO.
“That beautiful, sweet spot is where we want to be, and that's the role that I think corporates can take.”
During the How Sustainable is Your Business Model panel discussion, Penny Joseph, Head of Resilience and Climate Change Adaption at Sydney Water, (AGSM MBAE 2019), corroborated this by saying balancing the needs of customers and the business is a hurdle many responsible managers continually face.
“I think the challenge comes when you're trying to do the extra things you want to – where you see the social good is – and you try to see how much money you can invest in those services, particularly when some of the benefits might not be experienced by you. And yet you could still argue, and rightly so, that you're providing a public benefit by providing those services.”
Responsible Management is a team effort
Companies are parts of the societies in which they operate. But they are also parts of larger business ecosystems. Getting business partners on the same page – and finding inspiration, motivation, and guidance from them – is an important aspect of responsible management, said Nicole.
“We're not an island – we work deliberately with suppliers who have made similar ESG commitments to the ones we've made. It’s important to surround yourself with an ecosystem coalition of the willing and able. There's plenty of expertise in NGOs, in other industries and companies – there’s a bucket load of generosity out there as well.
“One of the biggest learnings we've had is to set the ambition high, even when you don't always know how you're going to get there, and then get the right people to help you operationalise that ambition.”
Being able to bring others on the responsible management journey – both internally and externally, within the business world – is vital to making that operationalisation a reality.
“Humans are the answer,” Jeroen Boersma, Head of Research and Innovation at Brighte, Advisor at Vow and AGSM Adjunct Faculty, said during the How Sustainable is Your Business Model panel discussion.
“It's our ability to be open-minded, collaborate, rally other people, whether they are our colleagues, our governments or other businesses together behind the same goals – that will be the key.”
Building a more responsible future
Nicole said both inside and outside the office, younger people are playing a huge role in shaping the future of business behaviour.
“What I love about the younger generation is they have strong conviction in this area,” she said.
“They've got some really clear views on what constitutes a good business. They're prepared to vote with their feet, with their voices, with their wallets. They're making choices differently to the way an older generation perhaps made choices around their careers, and I think they're also bringing new ideas to the table.”
And AGSM, with its new Responsible Management curriculum, is preparing the next generation of business leaders to act more responsibly.
“Our new curriculum in Responsible Management is a whole program approach to teaching environmental, social and economic sustainability in our MBA programs,” said Associate Professor Michele Roberts, AGSM Academic Director, in her closing remarks.
“We have embedded sustainability, ethics, equality, diversity and inclusion throughout our whole program, rigorously and systematically, to train students in how to address these issues.”
To watch the on-demand recording of the AGSM 2021 Professional Forum: Responsible Management in an Accelerating World, click here.
To learn more about AGSM @ UNSW Business School’s redesigned MBA program, click here.