Sustainability as a driver of innovation: why ESG is more than just a reporting obligation

Dr. Reiner Czichos, an experienced expert in transformation, ideation, coaching and change management, contributes his extensive expertise in the field of sustainability and shares his thoughts on the far-reaching aspects of ESG.

In the following thoughts, I lament the fact that companies complain about ESG sustainability policy with all the reporting obligations and regulations and the bureaucracy it imposes. This is because ESG can actually trigger a surge in innovation. ESG gives innovation management a direction: Sustainability.

Without innovations (e.g. optimization of processes, technologies, roles/tasks, products/services, etc.), sustainability degenerates into compliance by hook or by crook and bureaucratic reporting with the risk of greenwashing figures. Genuine sustainability management is therefore always change and innovation management.

Genuine sustainability management is therefore always innovation and change management. This fact is often easily forgotten in discussions that are often not very sustainable. A sustainability manager is installed and he or she will manage the issue. Here it is important for me to make the following difference very clear: Installing a sustainability manager is child's play compared to installing sustainable thinking and action and therefore sustainable management. More than a play on words: Sustainability management requires sustainable management.

In many companies, the corporate and management culture must therefore change significantly. Sustainable sustainability management requires employees and managers to think in terms of processes rather than silos. The spirit of sustainability is more than a Sunday sermon and reducing energy consumption and copying costs and using environmentally friendly paper.

Sustainability spirit means changing the behavior of everyone (employees including managers). Sustainability management therefore requires change and innovation management.

It's not just about energy consumption, emissions, sustainable raw materials and the like. If companies really want to become more sustainable, this necessarily means Change!

Sustainability goals must be an integral part of corporate goals. Innovations in IT systems, processes, products and services, etc. are needed to achieve sustainable corporate goals. What's more, the corporate and management culture must be developed accordingly.

An integral concept for sustainability management is needed instead of "let's do a little (more) sustainability here, and there, but it doesn't (yet) work there.

And all of this can and will mean that many people may have to change their roles, tasks and "work tools". And that's not all: many/all of them will have to adapt their behavior. And everyone knows that many people find this difficult ... and it takes time ...

A particular challenge for many companies: The data collection maze. ESG reporting bureaucracy can be significantly simplified if the information and data systems that are actually necessary anyway are well thought out and function properly. If and as long as sustainability is only seen as data collection and reporting obligations, the opportunity for meaningful and valuable innovations is missed. Technical solutions can be found relatively quickly. However, it takes much longer to "reposition" people in the company from silo or territorial thinking to process thinking, away from "my data, your data".

In this flow of my thoughts, I only need a small hint that sustainability management actually pays off ... this has been calculated, proven and published often enough.

But there is something else that is often forgotten. With sustainable sustainability, companies can enhance and optimize their image among employees, customers, partners and suppliers and on the market. This requires sustainable sustainability branding, which ultimately also pays off in terms of profit.

Conclusion:

Innovation and change management has never been more important than now and in the future, not only to be able to report honestly on progress in the legally required sustainability reports, but also to make any progress at all in overcoming the crisis and at the same time maintain economic prosperity.

Innovation management has a concrete target image through ESG and sustainability goals: innovations not (only) to increase profit, but to achieve ESG goals ... and to become more efficient and effective in this way ... and thus generate more profit.

And finally, a small "tip" against the belief that the sole installation of a sustainability manager in a subordinate staff function solves all problems. People like to appoint a young, ambitious person who is new to the company (new brooms sweep well). However, this person is usually "a poor sausage" if he or she has no real "power base" and "only" has to demand more paperwork. The best chances of success exist if the management, together with marketing and IT, anchor the sustainability goals in the corporate goals and in the corporate strategy and a team of change agents or change coaches, including the sustainability manager, is installed whose charter it is to actively drive and support the upcoming innovations and changes together with all employees. Of course, these sustainability goals must then also be broken down and agreed in people's personal objectives (OKR = objectives and key results).