In a world where businesses account for almost 18% of all carbon emissions and global temperatures are set to rise by two degrees Celsius by 2050, it’s no surprise that sustainability concerns remain firmly at the top of the corporate agenda. According to a largescale survey, despite widespread cutbacks and growing economic uncertainty, 70% of organisations are increasing sustainability spending over the next 12 months. Business leaders must grapple with the challenges of securing the bottom line for their companies, whilst also doing their best to ensure the welfare of people, the planet, and the economy.
To delve into some of these issues and challenges, we spoke with Richard Eadie, Head of Sustainability and Corporate Strategy at Severn Trent, the water company responsible for supplying nearly five million households across the Midlands and Wales.
Leading The Charge For Sustainability
As an organisation responsible for protecting the very essence of life, it makes sense that Severn Trent places sustainability at the forefront of its business strategy. By 2025, the company is aiming to invest £1.2 billion in their sustainability ambitions, which range from helping to mitigate climate change to making a positive difference to the community. Richard explains, “The sustainability decisions we’re making are led by thinking how we’re still going to be here in 40 or 50 years’ time, not by what’s happening today and tomorrow. We’ve just redesigned our strategy for Severn Trent Plc, with the underlying principle of being ‘performance-driven, sustainability-led’. This combines our twin priorities: performing for our customers and stakeholders, while making decisions fit for a long term future.”
Businesses like Severn Trent are increasingly recognising the critical role they have to play not only in addressing complex environmental problems like climate change, but also in improving the world around us, socially and economically. For Richard, all these considerations are inextricably linked to wider business transformation. He explains, “Right now, the impact that every organisation has on the environment is shooting up the agenda not only for customers, but also for investors, stakeholders, and the government. All businesses must ask tough questions about whether they’re resilient enough to face the future. That might be, ‘What kind of business do I want to be in 20, 30, 40 years’ time?’ or, ‘How do I actually transform the organisation in order to be fit for that future that we are imagining?’ And it’s not just about being altruistic, it’s good business sense. You’re asking how you can make sure your business is resilient enough to continue performing for shareholders, paying its employees, and investing in the local community.”
The Knowing-Doing Gap
One of the major challenges businesses appear to face in relation to sustainability is what’s referred to as the ‘knowing-doing gap’: despite 90% of executives recognising the importance of embracing sustainable business practices, only 60% of companies make the leap to incorporating it fully into their strategy. For Richard, stats like this come as no surprise. He notes, “The questions that sustainability poses to an organisation are hard. They’re not familiar concerns like how to improve profit margins or generate more revenue. They’re uncomfortable, fundamental problems like, ‘How will we cope with 50% less resources in the future? How will we handle the widening poverty gap?’ It can almost become so insurmountable that it can seem like an impossible feat to incorporate such lofty challenges into traditional transformation programmes.”
Following on from the pandemic, much of the business world has been focused on putting out fires that feel much closer to home, from global political and economic uncertainty to increasing skills and talent shortages. For business leaders, this can make it difficult to blend short-term delivery with longer-term sustainability goals. As Richard explains, “It’s really tempting to be focused on what’s happening now or in the near future, rather than putting transformation efforts and resources into something that might come in five or 10 years’ time. However, that approach is short-sighted. The organisations we’ll see thrive in the coming years are those that are able to balance both.”
Learning And Growing Together
Although companies know they need to prioritise sustainability and feel a growing imperative for change, some struggle to translate that ambition into results. One of the challenges is knowing how to ensure sustainability becomes a priority across a business, rather than remaining the responsibility of a few. Richard notes, “How you set up sustainability transformation objectives within an organisation can have a big impact on how successful it is. Hand that responsibility to a small faction of people, and you run the risk of everyone else looking at them and saying, ‘They’re responsible for sustainability, I’ll carry on as I am.’ For us, it’s all about making sure it feels like everyone’s responsibility, and it’s a journey we’re all on together.”
Business leaders tasked with advancing sustainability in large, complex organisations such as Severn Trent often have a mandate that encompasses not only their own company, but external stakeholders, such as suppliers. This means that continually making the case for advancing a sustainability agenda to different audiences is a critical part of the job. Richard explains, “How we approach sustainability conversations within each facet of the business will be very different. An SME might not know where to start with conversations about carbon footprint, for example, so that’s when we’d be stepping into the role of mentor to spread knowledge and awareness. It also takes some brave decision making when you talk to your supply chain, because they also have to be prepared to come on the sustainability journey with you, and for you to learn and grow together.”
Finally, explains Richard, Severn Trent understands how important sustainability is for today’s consumers, and that making it a priority will be key to the organisation’s continued success: “As a monopoly organisation, people don’t get to choose us, but we hope they would if they could. A major aspect of that is continuing to invest in our local communities, and prioritising our planet and our future.”