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05.07.2022 06:56:25
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01.02.2022Leadership Development

Can L&D live up to the diversity, inclusion and sustainability goals of modern organisations?

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Diversity, inclusion and sustainability fall under the social responsibility umbrella of businesses today. Organisations, the world over, are being scrutinised as to their policies and actions when it comes to all these elements of Corporate Social Responsibility (CSR). But how easy is it for leaders to robustly meet CSR goals, and bring about effective change?

CSR – what it is and why it’s so important

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, companies can be conscious of the kind of impact they are having on all aspects of society, particularly at economic, social, and environmental levels.

A socially responsible leader

Socially responsible leaders understand that their actions and decisions affect a wide variety of stakeholders in their organisation, as well as their wider community and beyond. These leaders make it their mission to take a wider view of:

  • the organisation’s purpose
  • how it contributes to today’s environmental and social challenges
  • how they ensure their team is inclusive and diverse

Unfortunately, not all leaders are as forward thinking when it comes to being socially responsible. They lack the foresight to realise that shareholder value is driven by managing their business for the benefit of all stakeholders, including the communities in which it does business, as well as the investors, associates, clients, supplier partners and employees.

At CLP, if we find leaders are resistant to adopting CSR within their organisation, we help them to challenge their own internal “data” about the importance of CSR. We find they are often intimidated by younger members of their team who place a higher value on these issues, and we show them how to expand and change their mindset to add CSR awareness to their agenda.

But why should a company focus on implementing effective inclusion, diversity and sustainability goals?

Inclusion & Diversity (I&D) makes a company more profitable

There is no doubt, when looking at recent reports, that the business case for embedding effective inclusion and diversity policies within a company is stronger than ever.

Diversity wins, McKinsey’s third report investigating the business case for diversity, shows that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time.

The more diverse a company can become, the more likely than ever (according to the McKinsey report) they will outperform less diverse peers on profitability. The report found the companies that made impressive gains in diversity, particularly in executive teams, have adopted systematic, business-led approaches to their inclusion and diversity policies.

Profitability & gender:

  • The 2019 analysis found that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile—up from 21 percent in 2017 and 15 percent in 2014
  • Companies with more than 30 percent of women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all
  • A substantial differential likelihood of outperformance—48 percent—separates the most from the least gender-diverse companies

Profitability & ethnicity:

In the case of ethnic and cultural diversity, the business-case findings are as equally compelling.

  • In 2019, top-quartile companies outperformed those in the fourth one by 36 percent in profitability, slightly up from 33 percent in 2017 and 35 percent in 2014
  • The likelihood of outperformance continues to be higher for diversity in ethnicity than for gender

Has COVID-19 had an impact?

The McKinsey research predates the outbreak of the global pandemic, but they believe their findings remain highly relevant.

In fact, in the time of any crisis, inclusion and diversity matter more than ever. As the above figures show, I&D is a powerful enabler of business performance. Companies who have a diverse set of talents and individuals can include multiple perspectives when it comes to tackling any crisis.

If a company deprioritises I&D during a crisis, it will feel the effect on its bottom line in the future.

How to prioritise I&D

Businesses have know for decades that diversity is important when it comes to their product portfolio but we’re only coming to realise that diversity affects our human resources in the same way. To implement an effective I&D approach to any business, two factors are critical:

  • a systematic business-led approach with evidenced-based targets, and core-business leadership accountability
  • bold action on inclusion which includes fairness and transparency, openness, zero tolerance on microaggressions and unequivocal support for multivariate diversity

How to prioritise Sustainability

When a company is looking at their CSR goals for sustainability there are a number of questions they can ask themselves:

  • How are we addressing climate change?
  • What are we doing to drive down energy and water consumption costs?
  • Do we have an understanding of our supply chain risks associated with human rights abuses or environmental damage?
  • What are we doing beyond paying taxes to support the communities in which we do business?

Sustainability within an organisation will be more widely adopted if everyone sees sustainability as a fundamental part of their job. Everyone’s “grain of sand” counts here and individual leaders have a huge influence on the travel choices of their team, the use of business materials, the selection of community-based activities, etc. If leaders can make their teams understand that making the right choices when it comes to sustainability is not only wise but also easy to do, it will take hold for the long term.

Unconscious bias

Any leader who wants to cultivate a robust and long-lasting CSR programme will need to consider whether their decisions are being affected by their unconscious bias. This is applicable for how we run our day-to-day business, as well as how we recruit and develop talent.

Bias is a natural inclination of our minds and neuroscience shows up to 99% of our thoughts can be unconscious. Unfortunately, bias can lead to false assumptions about ourselves and others that can have a negative impact on our relationships and performance.

That is why we created our Leadership and Development course, Biased, to help leaders and organisations identify these biases and provide tools to mitigate them. For more details on Biased please click on the following link:

Expanding the mindset

At CLP we draw on a vast array of change management expertise and always recommend Behavioural Change or Change Support if there needs to be a shift in mindset.

To help adopt CSR within an organisation we recommend our Change Support training with a top-down communication approach which delivers the message that the organisation sees a need to be involved in CSR. We first support this, for example, with roadshow workshops focused on Behavioural Change which centre on re-thinking their company values to better reflect CSR and, then, with bottom-up change workshops to better enable every level to be aware of what CSR means in their everyday role.

Our SHAPE programme can be used to help organisations re-think their learning needs to better reflect their new CSR values. As SHAPE helps create a learning landscape that reacts proactively to any changing business environment, it will support organisations as they build their new CSR mandate.

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