Organizational culture: the missing link that can make or break your sustainability ambitions

In brief:

• A strong sustainability culture is a prerequisite for bringing about sustainable business transformation and operating within planetary boundaries.
• But if a company’s organizational culture is change-averse at its core, like so many are, its sustainability efforts are unlikely to be successful or do more than deliver minor improvements. 
• Resilience in the face of the environmental crisis means accepting change. If sustainability is to become a cornerstone of business, companies must embed an openness to change into their organizational cultures and business strategies. 
• When seeking to change organizational culture, leaders must first analyze and define the existing culture, and identify the key elements driving the failure of change initiatives.
• The C-suite must demonstrate that sustainability is a priority on par with financial success, operational efficiency, health and safety, etc. by cascading objectives throughout the organizations, providing training and upskilling, embedding sustainability into the decision-making process, and ensuring everyone in the organization understands how they can contribute to the organization’s sustainability agenda.

This is the first in a two-part series exploring the role of organizational culture in determining a company’s success or failure in delivering on its sustainability ambitions. Read part two.

As we stare down the barrel of an increasingly tight deadline to halve emissions by 2030, companies are picking up the pace to limit global warming to 1.5˚C. But many are quickly discovering that sustainability strategies and science-driven goals — even the most ambitious — aren’t enough on their own to bring about meaningful change.

Under-investment, siloed thinking, incrementalism, excessive caution and antiquated business practices and financial expectations — symptoms of change-averse cultures — are holding companies back. They’re symptoms of change-averse corporate cultures — and proof that when it comes to sustainable transformation, organizational culture matters — a lot. Company culture shapes behavior, informs processes and affects employee engagement.

If your organizational culture is at odds with what you’re trying to achieve, it’ll be impossible to deliver the level of change needed to future fit your business and operate within planetary boundaries.

A crash course on company culture

Culture is such a strong force that it can make even the savviest leaders feel powerless. Many ignore it altogether or accept it as something beyond their control and work around it. Its negative attributes are notoriously challenging to shift, and its positive attributes are frighteningly delicate. But what is it?

Organizational culture establishes and reinforces expectations about what’s valued in a company, and how things should be done. It describes the beliefs, values, expectations and behavioral norms that dictate what’s appreciated and how things should be done.

It was famously compared to an iceberg by Edward T. Hall in his book Beyond Culture, consisting of the seen and unseen. With a quick search, you’ll undoubtedly find hundreds of riffs on his concept. In essence, there’s what’s immediately observable (the surface culture), and there’s what’s experienced from within (the deep culture).

Unsurprisingly, the surface culture is the easiest to change. In most cases, you can just do it and move on. Changing deep culture is another story. It can be a long, arduous process. 

Consider a reorg where someone who’s a known expert on a particular process moves to an entirely different role. How long will this individual field questions in their former remit? Likely much longer than the allotted time of transition. Cultures have long memories and are change averse by nature; it’s only a question of degree.

It isn’t easy, but changing your culture for the better is possible — and it’s non-negotiable to deliver on sustainability ambitions.

What is a culture of sustainability, and what does it look like?

An organization’s sustainability culture is its peoples’ assumptions about the company’s goals, values, beliefs and expectations with regards to sustainability. Whether you realize it or not, your company already has one. How it manifests itself will depend on a variety of factors, from the attitudes of leadership to the presence (or lack thereof) of accountability mechanisms and how employees understand their roles in delivering driving transformation.

In a strong culture of sustainability, there is a collective belief that sustainability is an imperative and employees behave in ways that support it. 

• The company has a clear sustainability vision that permeates throughout the organization, and inspires and guides action, as well as goals, strategies and values that bring that vision to fruition.
• The existence of a clear vision, strategy and goals communicates to employees,  regardless of their role in the business, that sustainability is a priority on par with financial success, operational efficiency, health and safety, etc. — not an optional extra. That means it’s neither the first thing on the chopping block when times get tough nor is it the first thing to fall off the agenda to accommodate other objectives.
• As a top priority, sustainability is easily embedded in the decision-making process at every level, influencing everything from business strategy to KPIs and performance goals across the organization. 
• People across the organization are fully engaged and understand how they can contribute meaningfully to advancing the organization’s sustainability agenda.
• Sustainability is a key component of onboarding and learning and development.

In a weak culture of sustainability, it’s seen as unimportant or nonessential. 

• Senior managers might deny the existence of climate change.
• There’s no sustainability vision or strategy in place. 
• The sustainability team could be isolated, underfunded and generally misunderstood.
• There may be a lack of responsibility and capacity across teams to address sustainability issues.
• Employees don’t understand why sustainability matters to the business — and might not even know if there is a sustainability strategy in place.

Strong sustainability cultures create the conditions for transformation. Weak cultures of sustainability, on the other hand, keep businesses stuck in a state of status quo paralysis.

But what if the larger culture, in its most basic state, isn’t conducive to becoming a strong sustainability culture? If organizational cultures are slow to change, but the need for change is immediate, what then? 

It can be done, but will require deep introspection and comprehensive, disruptive action.

Transformation starts with transformative culture

“Culture eats strategy for breakfast,” the renowned management consultant Peter Drucker once declared. He had a point. When it comes to creating meaningful, lasting and necessary change, people are the determining factor of success.

Many organizations are resistant to change unless it seems unavoidable, which is why so many sustainability initiatives — even when they’re backed by an ambitious, science-backed strategy, the latest tools and a clear action plan — flounder or fail to deliver more than minor improvements. In business, reliability, process and routines are prized. Some level of change is accepted (to comply with new environmental regulations or avoid climate litigation, for example), but bold, transformational changes are highly controversial and often met with skepticism.

Approaching sustainability from a compliance-only perspective is less than ideal. The truth of the matter is that companies simply cannot do things the way they’ve always done in a changing — and increasingly unpredictable — environment; a static business approach simply won’t work in a dynamic system, in which change is the only certainty.

So, if sustainability is to become an intrinsic, permanent part of business, companies must first embed an openness to change into their organizational cultures and their business strategies. What’s more, they need to build up their internal capacity for change, for example through employee training.

If you set a priority, but don’t build an ecosystem across business functions to support that priority, it’s unlikely to succeed. For example, if you have a competitive culture where individual contribution is the key marker of success, don’t expect something that requires collaboration to succeed. Likewise, if financial objectives alone trigger rewards in performance management, non-financial objectives might not be taken seriously or might be seen merely as “nice to haves.”

Soul searching as a prerequisite for change management

Having an ideal is all well and good, but when seeking to change a culture, the existing culture must first be analyzed and defined honestly. Maybe your organization has cultural attributes that create a good head start. Or maybe your organization needs to break some long-held habits or beliefs? 

One issue that consistently trips leaders up is that the perception of their culture, and their actual culture, are often at odds. 

In some cases, leaders are putting too much faith in their own PR. More often though, leaders are too far removed to even have an inkling of how the sausage really gets made. These drivers manifest themselves in companies of all sizes. 

Leaders need to take particular care to keep sight of the fact that their perception and beliefs are fallible. It’s not easy. Though deploying a consultant to perform a cultural audit can get around this, it can also be gained by careful deliberation of an internal initiative that was previously tried and ultimately failed. The drivers of failure will often point to the reality of the culture. 

Take return to office policies. The pandemic drove remote work out of pure necessity, yet many companies are struggling to get their employees to reconvene or have given up altogether. Others are trying for hybrid models. Though the CEO may have fond memories of the strong in-office culture, the employees who were around prior to COVID-19 might see it differently.  Perhaps they remember constant interruptions, or an open office designed for collaboration filled mostly with people working in silence or the exact opposite, people on the phone with colleagues in other offices. 

These are all emblematic of the real company culture. So where did the CEO get things wrong? Was it wishful thinking? Was it a misinterpretation of the last time they walked the floors? Or was it really things like after-work events or other gatherings? It could be any of these things. The important point is that it simply isn’t so. 

Good leaders know the higher they climb, the harder day-to-day realities of their organizations are to come by and they plan accordingly.

It starts at the top but can’t be top-down

As a leader, when push comes to shove, is driving this outcome essential? If your answer is qualified in any way, some soul-searching as to why you lack conviction is in order. 

Recognize that you are only human and fear can be a powerful barrier to committing to change. Remember that if it’s not truly important to you, it’s not going to be important to anyone else in your organization. 

This is particularly true in areas of environmental sustainability. The root barrier to achieving more sustainable business practices is that companies are built to make money and that’s literally the bottom line. Executive compensation, if not performance reward programs enterprise-wide, is structured accordingly. 

Even if your executive compensation isn’t influenced by non-financial objectives, you have to approach it as if failure is not an option (frankly, it really isn’t) and broadcast that belief widely. 

There can be no doubt at any level of the organization that it truly matters to the CEO, or the rest of the C-suite for that matter. Passion can not only be intoxicating, it can be contagious. This has been central to building the cultures of most successful tech startups for the past 50 years.  

Whether that’s the hardest part is a matter of debate, but there’s far more to cultural change than the leader’s intent. Everyone in the organization needs to be in on the action. 

The most logical place to start is to cascade the objectives. From there it’s critical that there’s a collective understanding of the objective and why it matters. Create a model where employees of all levels and functions can contribute. 

When sustainability pervades all corners of the organization, people will know you mean business. 

Democratize the change

Just like any other initiative from DEI to professional standards, developing and mandating proper training on environmental sustainability topics is critical. People cannot be expected to exhibit new behaviors if they don’t understand the context or desired outcomes. 

Employees need to understand what sustainability is and how it might manifest in their particular role. With the training, each employee can contribute by identifying what’s in their power, and the factors that might stand in the way. 

Consider the fact that your organization is hard-wired to maintain the status quo at all costs. Once people find what works in their function, they are loath to revisit those practices without outside disruption. Also remember that people have very fixed notions of what it means to be successful in their roles. A procurement manager who has spent the entirety of their tenure in the organization looking for ways to save money is going to find sustainable sourcing challenging. Middle management needs to be empowered for maneuverability. 

Likewise, management needs to be realistic. If the procurement budget doesn’t flex to allow for some higher costs from sustainable sourcing, it’s just an idea that can’t be executed to its fullest. Hear such challenges not as obstinance, but as business challenges to solve. 

All levels of the organization need a mechanism for their concerns to be heard and addressed. Though the behavior might be cultural, the conditioning behind the behavior is systemic. All factors: financial, knowledge, reassurance, systems, policies, procedures all need to come together to support change. 

Lastly, employees need to feel good about driving that change. That means understanding the baseline both at an enterprise and where possible, a functional level. After that, they need to be fed a steady diet of reporting and public recognition of what went well. 

Just as culture isn’t composed of any one thing, the steps to shifting it to one that embraces change (rather than being where it goes to die) are equally multifaceted.