Challenge of embedding Sustainability in

Organizations: The role of HRM and Leadership

Group 8, BM-C, Batch of 2015-17
Raghu Gorrela (B15160) | Rahul Verma (B15161) | Ranjith Reddy (B15162)
Riya Kumbhani (B15163) | Robin Singla (B15164)

INTRODUCTION
In the last decade, the importance of sustainability
in any part of business in any industry has
increased. Sustainability needs to move from being
an add-on to a way of life at the firm such that
companies can balance their social, financial and
environmental risks and obligations. While
companies have begun identifying the need to
ingrain sustainability into the organisation, most
business leaders still do not have a clear idea on
how to go about doing so.

THE CULTURE OF SUSTAINABILITY

When talking about sustainability in business we
mean managing the triple bottom line such that
decision making takes into account not only profits
but also people and the planet along with social
and environmental risks and obligations. In this
sense, corporate reporting takes into account the
environmental and social impact of the firms
operations.
But a culture of sustainability is more than just the
corporate report and the face value of the initiative.
It is one in which all the members of the
organization share the spirit and the passion for the
cause of balancing profitability with environmental
accountability and social well being. Such a
culture constantly strives to improve the lives of
stakeholders while successfully carrying out its
operations over the long term.

WHAT
SUSTAINABILITY
INITIATIVES?

DIFFERENTIATES
FROM
OTHER

Most organizational change initiatives are largely

confined to the boundaries of the organization. In
contrast, sustainability is part of a broader societal

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agenda that extends beyond the organization. The

motivation for a sustainability change initiative
can often be driven by external forces and, at
times, the benefits may not appear to directly
enhance value. In cases where the change is
motivated internally, the change may be initiated
because one or more organizational members
deem it to be the right thing to do. This often
means that organizations embarking on a
sustainability journey must be willing to engage in
significant inter-organizational collaboration.
Lastly, and perhaps most importantly, transitions
to sustainability may involve the need for
paradigm-breaking business models or approaches.

CHALLENGES IN IMPLEMENTING
SUSTAINABILITY IN ORGANISATION
CULTURE
While the importance of moving toward
sustainability is increasingly felt in boardroom
meetings, companies find it difficult to drive
sustainability in their organisation. Some of the
obstacles which prevent organizations from
implementing sustainable business practices
include lack of leadership support, difficult to
measure return on sustainability investment and
limited understanding and involvement of
sustainability across levels.
We have identified five pillars along which
changes can be brought about so as to affect the
culture of the organisation. These are Strategy,
Structure, Processes, Metrics and People.

STRATEGY
Many corporations have initially resisted the idea
of sustainability and many others defined their
scope very narrowly, concentrating their efforts in

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

CSR. But they have since realised that by making

sustainability central to business strategy. This
has elevated the need for HR to be integral to
influence strategy instead of playing purely
supportive roles. In spite of popularity of these
ideas, few companies have been able to leverage
their core competencies to bring about change
within and outside the company.
Let us take a look at GEs Ecomagination strategy,
which was adopted in 2005 with the vision that
Resource efficiency makes economic sense. Green
is green. By aligning the company strategy itself
in such a manner and through training and regular
employee engagement, GE was able to grow a
distinct workforce culture of sustainability. In the
last decade, GE has made tremendous progress in
implementing green and efficient designs to
achieve and even go beyond the 2005 goals for
2010. The sheer size of GE and their strong client
base have been a heavy influence in transforming
customer industries like Aviation, Renewable
energy and Health.

ECOMAGINATION -HR perspective:

Ecomagination began in 2005 with a 3 goal
agenda to double GEs clean tech R&D investment
to 1.5 Billion USD, increase revenues from these
technologies to 20 Billion USD and reduce
greenhouse gas (GHG) emissions by 1 percent
within the next 5-6 years. By 2010, GE had not
just managed to achieve these targets but raised
expectations, with 5 Billion USD pumped into
Clean R&D investment, revenues from
ecomagination touching 85 Billion USD-four
times the target, reduction in GHG emissions by
22 percent and 30 percent reduction in water use.
Here, we take a look at how HR practices and
Employee engagement have influenced and in turn
were influenced by Ecomagination.
Open Innovation: GE has laid emphasis on
working with partners, whether they be customers
or transport and energy companies. GE has more
than 50,000 technologists working around the
world encouraging global innovations in areas of
energy efficiency, renewable/clean energy and
seawater desalination. GE has been successfully

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able to encourage open innovation by hosting six

global open innovation challenges till 2014.GE
Ecomagination open innovation challenges
included
challenges
in
innovation
like
improvements to waste heat management and
steam production efficiency in Canadian oil fields.
Water Reduction3: Scarcity of freshwater for
operations forced GE to rethink its strategies to
concentrate on localities as they realised that water
management is highly location based requiring
newer technologies and customised integrated
strategies. For instance the up gradation of waste
water treatment facility at Bangalore has reduced
the per capita consumption at the research centre
by almost 50% in 2014 from base year 2006.

HealthAhead- HEALTHYMAGINATION
GE has invested heavily in health globally and
believes in leading by example. The HealthAhead
program,
under
the
global
HEALTHYMAGINATION portfolio, partners
with employees and their families to ensure safety
at the workplace and promote overall health. The
program has already reached around positively
impacted two thirds of the GE employees.
Environmental, Health and Safety (EHS) program
targets safety at the workplace by better controls
and monitoring. Due to these efforts, the number
of incidents of injury and illness has reduced by
37% by 2013 from the 2003 base year.

STRUCTURE
Structure determines where decision-making and
authority lie within the organization. By means of
a formal organisational structure we put in place a
framework that allows the culture of sustainability
to flourish. We use structure to identify key
personals and champions of the cause. Developing
a culture that supports sustainability requires long
term efforts, as it involves redesigning of formal
and informal processes and routines. Typically,
sustainability structure in organisation has evolved
gradually over three stages. These are Centralised
Structure, Integrated Structure, and Embedded
Structure.

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

Centralized
Structure:
In
this
stage,
organisational vision for sustainability begins to
emerge. This stage is led by one person or some
groups of leaders as it is challenging for entire
company to implement a new initiative. As initial
efforts start showing some results, both employees
and executives take notice of it.
Integrated Structure: In this stage, sustainability
efforts spread across an organization. One leader
give way to sustainability group and leadership
develops throughout divisions of the company.
Targets are set against measureable goals. Initial
elements of tying compensation to sustainable
performance are visible.
Embedded Structure: This is the final stage
where idea of sustainability is embedded deep in
the companys culture. Companys mission is
synonyms with sustainability mission. Multiple
long term goals are created, which are traced
against performance metrics. The results are
measured, and reported. Specific oversight
committees are common.
For example, BASF has created elaborate
structures to promote sustainable business
activities. At the top is the Corporate Sustainability
Board (CSB). It is BASFs central steering
committee which is mandated to monitor the
implementation of the sustainability strategy. It
defines organisation wide sustainability goals and
approves
corporate
position
papers
on
sustainability topics.

Sustainability Committees such as Cross-Regional

steering
committees
and
cross-functional
divisional teams identify focus areas in the
regions, practical challenges and propose relevant
projects. The Sustainability Strategy Team
provides consulting services to assess business
opportunities and risks. It provides support to CSB
on evaluation of products and processes, and
development of strategies of different business
units.

METRICS
Employees/labour form a major chunk of any
organisation, hence it is imperative on the part of
organisation to encourage employees by
incentivising them or setting metrics of
performance which would motivate them to take
the sustainable path in everything they do. The
performance will be compared against the standard
metrics and through this an evaluation by the firm
and also of the firm will be done. These metrics
are used to keep the morale of organizational
employees up and also to encourage them to do
better.
Coupled with role descriptions, organizations need
to ensure that employees will know how their
sustainability performance will be measured.
Accountability mechanisms need to be fair and
effective to maintain ongoing improvement.
Employees are more engaged in the sustainability
agenda if they see how it is directly related to their
job.

Board of Executive
Directors of BASF
Corporate
Sustainability Board

Sustainability Core Team

Sustainability Advisory
Council

Sustainability Strategy Team

Figure 1: BASF Sustainability Structure

Similarly, Sustainability Advisory Council is an

external independent body. Its purpose is to
provide external unbiased perspective to the CSB
members. Sustainability Core Team supports CSB
in implementing decisions taken by CSB. It also
supervises sustainability performance measures.

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PROCESSES
A companys processes may be thought of as its
character since it is the processes that define how
the company achieves its goals. Successful
businesses have processes that distinguish them
from the competition. Thus it is but obvious that if
a company were to take up any new initiative it
would have to be incorporated in the processes of
the company to make the initiative a success.

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

Sustainability initiatives taken up by businesses

are no different. Any business, which successfully
wants to perform well on its sustainability
initiatives, needs to start by designing or tuning its
processes to fit the requirements of the initiatives.
To illustrate the point, we will take the example of
Ceasars Entertainment, the company which owns
and runs the globally popular Caesars Palace Hotel
and Casino. The Company started Code Green,
an internally motivated sustainability initiative that
was the brainchild of the CEO, Gary Loveman and
a few other executives.
Code Green was started in the year 2007. In the
wake of the slowdown, as the company was
struggling with reduced revenues and had to cut
down on in its workforce and employee benefit
schemes, a few employees across the multiple
locations of the company were taking initiatives to
lower costs by cutting down on energy and water
consumption, recycling etc. This was noticed by
Loveman and other executives and that was the
start of Code Green. Owing to this initiative,
within 5 years time, Caesars Entertainment
reduced its carbon footprint by 10% and energy
consumption was down by 20% per square feet.
Being in the casino business is considered to be a
bit controversial by some. Implementing this
initiative helped the company build the image of a
being a better corporate citizen. This also helped in
boosting the morale of the employees.
Initially, implementing the Code Green was
chaotic since there was ambiguity regarding what
needed to be done. There was no common baseline
for starting, no unanimous understanding of
Sustainability. The process was started by laying
down broad goals which were to reduce energy
and water consumption and to achieve these by
keeping the customers and employees engaged.
Soon after starting the executives involved with
Code Green understood that it was difficult to
tackle all the issues at once and that Code Green
had to be an all-encompassing umbrella program
that would require the cooperative working of
people from all domains of the business from
marketing, operations, profit-centric people to

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environmentally conscious people everyone had

to be on board to make this initiative a success.
It is essential that the employees feel motivated to
carry on therefore the initial goals should be lowhanging fruit. Attainment of these objectives
would boost the morale of the employees. This
would lead to a domino effect as gradually higher
standards can be set. Caesars Entertainment used a
visual calendar which enlisted monthly goals and
what needed to be done to achieve them. The goals
were put up cyclically so the next time the same
goal appeared on the calendar it was to build up on
the work done previously. To monitor progress,
Ceasars Entertainment worked on developing a
scorecard which would monitor the progress at an
employee as well as a departmental level. This
helped instil a spirit of healthy competition
between different employees and departments to
outperform each other on the Code Green
initiatives. So much so that the company did not
require a monetary incentive to keep the
employees engaged since the belief that no one
likes to be at the bottom worked. To ensure peer to
peer learning, information sharing, best practices
and communication the company also built a web
portal. Communication was encouraged so that the
best of bottom-up and top-down approach could be
achieved. It was essential that the people at the
bottom and the people at the top conveyed to each
other, what was working and what was not. The
company encouraged external publicity of
different properties to share their initiatives and
achievements. This brought positive word-ofmouth and boosted employee morale.
Thus the valuable process related pointers are:
(1) Have a clear and common definition of
Sustainability which fits your business.
(2) Start by defining broad goals
(3) Ensure customer and employee engagement.
If the customers are satisfied and employees are
happy they would ultimately lead to higher
payoffs.

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

(4) Prioritize and break the required initiatives

into bite-sized pieces, short term objectives so
that it is easily manageable and easier to
understand for the people. However, the objectives
need to be constantly updated.
(5) Participation of all departments or internal
audience is a must to ensure the initiative takes off.
(6) Use clearly defined objective Metrics to
quantify the achievement of objectives. It not only
helps in promoting healthy competition but also
helps in judging the performance of various
employees/departments
and
thus
enables
management to identify the laggards.
(7) Gamification helps in keeping employees
engaged and encourages people to perform better
lest they be among the worst performers.
(8) Communication is important. Free
communication ensures that the both the
management and the employees at even the lowest
rung convey to each other what works well and
what doesnt.
(9) Periodic review of goals is important to avoid
complacence. Also the goals should be progressive
yet realistic, tougher but achievable. This is
important to ensure that the feeling of cynicism
towards the sustainability initiatives doesnt creep
in.
(10) Interaction with outside bodies encourages
employees since it makes them believe that they
are doing meaningful work and are being
appreciated for it.

PEOPLE:
While motivating the workforce there are twin
forces of fulfilling existing requirements and
innovating for future practices that come into play.
That is where the conversation of could do with
the backdrop of innovation comes in which
involves experimentation and learning.
There are two ways a company can choose to
convey the same to its workforce through formal

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and informal means. Informal procedures are

primarily aimed at affecting the values of people
as well as the norms of society by establishing and
reinforcing ways of doing things that align social
practices with the sustainability journey of the
company. Through the formal approach the
company uses rules, systems and procedures to
guide behaviour.
Practices should be ingrained at every stage of the
employee life-cycle which includes Recruitment,
Procedures and Compensation, Training and
Development and Leadership and Succession
Planning.

a. Recruitment
A critical aspect of sustainability is the ability to
attract and retain the right talent to carry forward
the vision into the future. Additionally, with the
advent of social media, talent is becoming
increasingly conscious of the impact of
organizations on the environment and society at
large. Therefore, right talent identifies with
organisations with sustainable business practices.
For example, Aveda Corporation attracts and
identifies talent which is good at their core job as
well as at incorporating environmental mission in
their day to day jobs responsibilities. In their
online job application, Aveda explicitly
communicated its requirement for people
committed for environment sustainability. It asks
job applicants to be environmentally sensitive in
preparation of their application materials. For new
hires, companys Earth and Community Care
Team conducts orientation and education
programs. New hires are provided copies of
companys Green Ingredients policy and
Sustainability policy. Employees are expected to
abide by these policies.

b. Performance and Compensation

An organization or an institution can take up as
noble or as big a sustainability initiative as it
desires but the initiative would not be successful
till the internal stakeholders are not convinced and
hence not motivated to carry it to the desired

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

outcome. To succeed in its sustainability

initiatives, it is imperative that the progress of the
organization is constantly monitored, which is
basically the aggregate of the performance of the
individuals. This may be achieved by:

finish last. Caesars Entertainment Corp. is one

such company which just uses a scorecard to have
a comparative performance scale for sustainability
but does not link it to compensation.

Training and Development

i.

Clearly defining what Sustainability

means to the organization
ii.
Lucidly drafting what the organizations
sustainability goals are
iii.
Breaking down the organizations
sustainability goals into small bite sized
pieces which might serve as sustainability
objectives for individual employees levels
iv.
Stating how the company wants to achieve
the sustainability objectives
v.
Constantly reviewing how the necessary
work is going on and suggesting changes
and improvements if any
vi.
Ultimately, gauging how did one
(individual, department, organization)
perform, the learning and the setting new
more ambitious goals.
Although it is hard to gauge and quantify efforts
put in sustainable initiatives by employees, it is
essential. Only when a company has some
common denominator can it judge its overall
performance and progress towards sustainable
initiatives. It also helps in creating a healthy
atmosphere of competitiveness and facilitates peer
to peer learning.
People respond to incentives and material
incentive particularly monetary compensation is
the simplest tool in the hands of the management
of an organization to influence the decision
making process of its employees. However,
leaders of organizations and even academicians
who are experts at the subject are divided on the
subject. One group thinks monetary compensation
linked to performance is the right way to
encourage employees to perform better on the
sustainability front. Intel, American Express, SAP
labs are some companies which link compensation
to sustainability performance. The other school of
thought argues that sustainability in its own right is
motivation enough and if metrics are used properly
and a healthy climate of competition is nurtured
within the organization, employees would work
hard because of the simple fact that no one likes to

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Employees expect to increase their knowledge and

skills while working for an organization. The HR
function can play a key role in identifying skill
gaps, if any, in the organization and devise training
programs that can impart necessary skills. Often,
career goals are the end toward which an
individuals effort is directed. Sustainable
organizations need to understand individual career
goals. The HR function helps in bringing clarity
around individual career goals and in developing
appropriate career management frameworks to
fulfil these goals. Furthermore, from a system
perspective, HR must ensure that employeeaspired roles and pace of growth are calibrated
with an organizations capacity to provide the
same.

d. Leadership
Forward-thinking business leaders understand the
importance of sustainable business practices for
the long-term future of the organization and
society. It is the leadership that drives change in an
organization by establishing direction, aligning
appropriate resources and inspiring through
example. Leaders act as champions by taking up
and supporting the cause of sustainability in the
organization.
HR can evaluate the existing competency
framework to check its appropriateness and
incorporate the critical leadership competencies to
drive and implement sustainable business
practices. Identifying appropriate successors for
key leadership roles to drive the business strategy
and the sustainability agenda is another important
facet. This can be done by evaluating the readiness
of each leader through assessment of the personrole fit around sustainability dimensions and
competencies.

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

Paul Polman: The Champion of Sustainability:

Paul Polman was made the Chief Executive
Officer of Unilever, consumer goods giant in the
world. Since then he made several bold decisions
related to sustainability. Unilever pledged to
reduce its environmental footprint to half by 2020
and it is a challenge for them as they also target to
double their business size and operations at the
same time. He announced a ten year Unilever
Sustainable Living Plan and also pledged that all
its raw materials procurement will done in a
sustainable way by their target year , by making
their supply chain management eco-friendly
implying that he would want to make a positive
impact on the health and wellbeing of more than
billion people around the world. The Unilever
Sustainable Living Plan is guided by three primary
goals: improving the health and well-being, reduce
environmental damage, and enhance livelihoods.
These goals were supported by fundamental
commitments such as water and energy
conservation, reduction in GHGs, waste
management, and Sustainable sourcing of raw
materials, etc. by monitoring the environmental,
economic, and social performances of its
operations and supply chain management. It is not
that easy to realize their target when more than two
billion people across the globe use Uniliver goods
every day. Paul Polman has taken numerous steps
keeping in mind the long term objectives of the
firm to achieve their target such as not announcing
the earnings guidance and stopping releasing
quarterly reports. He went a step further by
suggesting investors to put their money in other
companies if they do not believe in the idea of
sustainable development which is the long term
value creation equitable model. These initiates
made the share price of Unilever go down by 8
percent. Through his actions, he has disappointed
the investors as these would impact the financials
in the short term, but was successful in becoming
the face of sustainable business practices and the
global sustainable business leader. Unilever has
collaborated with NGOs, Other Companies,
Governments and people around the world to make

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this happen. This year they partnered with

movements like Live Earth and Global Citizen to
create awareness related to the issues of
sustainable development and thereby wanted to lay
foundation for the COP21 which will be held in
Paris.
Paul Polman has taken the corporate leadership
which is supposed to be focused to profits to next
level by talking about courage of looking things in
long term perspective. He also says that leaders
should do what they think is right rather than
focusing on the productivity and profitability of
the firms in the short term. Uniliver has taken its
corporate responsibility to global stage by taking
the lead on climate change and campaigning for
prices on carbon by working closely with the
United Nations Convention on Climate Change
and wants to make the COP21 successful. All
these things would not have been possible, had it
been not for Paul Polman. One needs to have
courage to take this path when all the business
houses are not investing much into this. But as he
says, it is about long term view of the organisation.
In 2009, of the total procurement of raw materials,
only 10 % were from sustainable sources, although
it was the highest amongst all the comparable
companies. They were also ranked number one in
the Dow Jones Sustainability Index. As of now,
almost 60% of their raw material is from
sustainable sources. And Paul says that they have
to go a long way to achieve their 100 % target by
2020. We can also comment that to become 10 %
sustainably sourced, it took more than a century
for them, whereas the 60 % is achieved in less than
5 years of time. The vision of Paul did not stop
there, now he wants all the operations of Unilever
have green energy. They also have achieved the
rare feet of having zero waste in all its factories.
Since 2008, it also has reduced the CO2 emission
through energy consumption by more than 37 %
while the reduction through water consumption is
around 32 percent. Out of the sustainable raw
material sourcing, more than 55 % is done through
sustainable agriculture practices. Unilever has also
focused on bringing innovation into products
which require less water, thereby reduced water
consumption on consumer side as well. It has

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

reduced the waste related to the disposal of its

products by 12 % compared to the level of 2010.
Though he initially believed that achieving their
targets is not very easy by 2020, but hoped that
these would bring about a change in the attitude of
people which can make the peoples behaviour
more sensitive to environment. This attitude
change did not happen overnight, he has to make
all the stakeholders a part of the organisation goal.
The employees need to couple the productivity
part and sustainability. Only then the change
would bring the desired result. Traditionally, going
sustainable way implies that, comprising on the
profitability or productivity. Paul has been
successful in achieving this as the company has
grown by 30 % since then. Under his leadership,
Down Jones Sustainability index named Uniliver

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as the leader in the food, Beverage and Tobacco

sectors. He also believes that by making the
sustainability a part of its organisation strategy,
Uniliver could attract talent who are sensitive to
the environmental issues. Unilever have also
created young Social entrepreneurs award, where
people across all the divisions would participate in
making their supply chain and operations better
and sustainable. All these have made him the
torchbearer of sustainability amongst the giant
companies. Paul is also the chairman of World
Business Council of Sustainable Development. He
received numerous awards for his contribution
such as UNEP Champion of Earth, Guardian
Sustainable Leader Award, Champion of global
Change Award, Award for Responsible
Capitalism, European Business Leader for the year
2012,
to
name
a
few.

Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

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Challenge of embedding Sustainability in Organizations: The role of HRM and Leadership

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Leadership

Challenge of embedding Sustainability in Organizations: The role of HRM and