Companies are constantly expanding their sustainability reporting—voluntarily, but also because of regulations. In many cases, however, one central question is not answered adequately—that question is “why?”
More than a decade ago, when corporate ESG performance and corporate sustainability were still largely unnoticed, an idea caused people to increasingly question the way companies communicate: the Golden Circle, created by Simon Sinek.
At a TEDx conference, Simon Sinek revealed what makes some companies more successful than others: They know why they do what they do. According to Sinek, the “why” is at the center, followed by the questions “how” and “what”.
Convincing or not?
Let us consider the “why” of corporate sustainability and ESG. Just as a company does not appeal to its customers merely by focusing on the technical features of a product without explaining why it creates this product, sustainability communications in which the “why” remains unanswered are unconvincing.
So before a company publishes elaborate sustainability reports and establishes key performance indicators and materiality matrices, top management should have a mission and vision in the area of sustainability. The logical sequence is, therefore, “Why do we act sustainably?” followed by, “How do we act sustainably?” and, “What do we do concretely?”
Positive effects—inside and outside an organization
Only a clear sustainability strategy enables coherent and credible sustainability communications—not only externally, but also internally. Sinek’s example of the Wright Brothers—American aviation pioneers who achieved a milestone in aircraft development solely from their own resources—is a good analogy here. Those who are passionate about something attract highly motivated employees who put their heart and soul into their work.
Employee satisfaction (category “S,” for Social in ESG) is likely to be correspondingly high in a company with passionate leaders, and wages or fringe benefits in comparison to those of other potential employers will probably be of minor importance. It is no coincidence that Simon Sinek talked about “Action and Leadership” at the UN Global Compact Leaders Summit in 2016. There is a sustainability dimension to Sinek’s Golden Circle.
This leads to the question of whether addressing environmental, social, and governance aspects of business activities can be a booster of commercial success. Those who really understand why they do something communicate more successfully—and are heard by their stakeholders, customers included.
A rewarding journey
Certainly, there are activities for which a sustainability vision and mission will be difficult to find. We would expect companies whose products are antithetical to ESG concerns to struggle to find a meaningful answer to the question “Why do we act sustainably?”.
However, most companies will be able to examine the core of what they do to find the key theme for their sustainability strategy and communication. It is about more than avoiding significant harm — it requires finding the positive environmental, social, and governance contributions in a business model. We can only recommend this journey.