Promoting sustainability within business presents considerable challenges, however, the opportunities to make a long-term impact on society are equally significant

The need for sustainability has become urgent in recent years with the very existence of our planet facing growing threats. Businesses across the globe have started critically examining the environmental footprint left by their operations. Sustainable leadership has emerged as a direct response to these environmental challenges that organizations now face.

Leadership for sustainability is not merely about complying with environmental regulations. Rather, sustainable leadership is a management approach that meaningfully integrates environmental, social, and governance (ESG) considerations into every aspect of a firm’s operations. It guides firms to minimize their negative environmental impact while maximizing positive contributions to society through responsible business practices.

The main role of a sustainable leader is to inspire others in the organization to see the long-term benefits of sustainability. As a sustainable leader, it is essential to develop a clear vision that prioritizes long-term sustainability and growth over short-term profits. This vision must actively involve all stakeholders—employees, suppliers, customers, and others—to ensure collective participation and alignment in driving sustainable success. The Worn Wear initiative by the outdoor clothing retail company Patagonia is a good example of how customers can be involved in sustainability efforts. The initiative encourages the customers to reuse and recycle the outdoor gears, instead of purchasing new products from the company, thereby reducing waste and promoting a circular economy.

Sustainable leaders must lead by example, consistently aligning their actions with the values they promote. For example, leaders advocating waste reduction should invest in energy-efficient technologies, select eco-friendly suppliers, use reusable containers, and reduce printed materials by using digital communication. Companies like Zara which has committed to becoming a zero-waste company, have introduced initiatives like clothing recycling programs where customers can bring old clothes to the stores for recycling, elimination of single-use plastics from packaging, and increased sustainable materials in their collections. Ikea’s significant investment in renewable energy, including solar panels for its stores, reduced long-term operating costs and strengthened its eco-friendly brand image. Such initiatives are likely to attract customers and investors who prioritize ethical business practices. By modelling stated values, leaders help build a culture where sustainability gets ingrained in daily routines, thereby encouraging every stakeholder to contribute towards it. Sustainable leadership also involves building a responsible organization that prioritizes employee well-being, fair compensation, labor rights, and diversity. Furthermore, sustainable leaders contribute to community well-being through corporate social responsibility (CSR) initiatives like skill development, local sourcing, and environmental conservation.

Sustainable leadership, while beneficial, has its challenges. One notable example is Unilever, which scaled back its ESG commitments after facing pressure from shareholders concerned about the impact on profitability. It is essential for leaders to not prioritize sustainability at the expense of financial stability. The initial cost of green initiatives and their long-term effects must be carefully considered to ensure alignment with both ethical goals and shareholder expectations. Balancing sustainability and financial returns is crucial for maintaining investor confidence and ensuring long-term business viability.

Sustainable leaders need to realize that setting ESG goals alone will not help, unless the progress of the goals is measured and communicated to the stakeholders. The Securities and Exchange Board of India (SEBI) has mandated the Business Responsibility and Sustainability Report (BRSR) for the top 1,000 listed companies, emphasizing transparency in ESG performance. Leading Indian companies are setting benchmarks in sustainability, such as Tata Group’s significant investments in wind and solar power, Infosys’ integration of green building designs and renewable energy, Mahindra Group’s focus on sustainable automotive and real estate practices (net-zero energy projects), Hindustan Unilever’s initiatives in water conservation and sustainable sourcing, and ITC Limited’s efforts in sustainable farming, water conservation and social programs. Integrating ESG Key Performance Indicators (KPIs) helps Indian companies manage environmental risks, enhance social equity, and ensure strong governance, which is also vital for the organization’s long-term growth, building trust with stakeholders, enhancing brand reputation, and reducing regulatory risks.

Promoting sustainability within business presents considerable challenges, however, the opportunities to make a long-term impact on society are equally significant.

Byline: Ranjitha Ajay, Associate Professor Great Lakes Institute of Management and Neethu Mohammed, Faculty- FLAME University