Sustainable business leaders required to attract investors

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EmmanuelZhuwao..analyst

LEADERSHIP plays a pivotal role in our society, from the heads of families to national leadership.Certainly, the role of sustainable leadership is undeniable. This era of unprecedented economic, environmental, social and governance impacts and pressures demands sustainable leadership for managing impending sustainability threats we face in Zimbabwe.

This article focusses on aspects of sustainable leadership in building a case for the kind of board members and chief executive officers (CEOs) that companies and organisations in Zimbabwe should have.

We are living in an era in continuous flux. Transnational issues such as climate change, ecological footprint, pressure on natural and food resources, corruption and human rights can no longer be addressed by political institutions alone.

Private sector companies are expected to take responsibility for the ways in which their activities impact their customers, employees, wider society and the natural environment — while seeking to maximise profits. Given the complexity of these risks, are business leaders in Zimbabwe prepared to take companies through these storms?

Sustainable leadership can be defined in various ways. Georgie Bishop from Thrive Global defines a sustainable leader as someone committed to protecting and sustaining the societal resources we all depend on. The Cambridge Institute for Sustainability Leadership (CISL) at the University of Cambridge outlines sustainable leadership as those behaviours, practices and systems that create enduring value for all stakeholders of organisations, including investors, the environment, other species, future generations and the community. Russel and Reynolds, a management consulting firm, describes sustainable leadership as leadership that looks beyond the immediate short-term gains to see the role an organisation plays in a larger context.

Fundamentally, sustainable leaders deliver long-term results through the use of strategies that look beyond the short-term gains, while accommodating the present and future stakeholder needs.

According to research by Russel and Reynolds, talent requirements for sustainable enterprises include competencies and behaviours.

Sustainable leaders are comparable to honey bees, whose collaborative nature adds value throughout the eco-chain. D’Amato, et al. 2009 suggest that implementing corporate sustainability should be anchored by the company’s vision: operationalising corporate social responsibility (CSR); top management support; engaging diverse stakeholders; empowering and developing stakeholders; communicating with stakeholders; measuring performance; and setting ethical standards.

Sustainable leaders must meet requisite competencies necessary for leadership and perform sustainable management practices such as creating and communicating a vision, leading teams, developing people, making decisions and delivering results.

However, sustainable leadership requires a new understanding of these competencies. The competencies characteristic to sustainable leaders fall into three categories, namely: sustainability mind-set, systems thinking relationship building.Accordingly, sustainability mind-set refers to a strong interior sense of purpose combined with a long-term orientation and an inherent motivation to meet the triple bottom line.

Systems thinking encompasses the intellectual flexibility to see the bigger picture, as well as to appreciate the details—and to shift perspective between competing interests in order to develop a strategy that inspires all stakeholders. Relationship building includes understanding of people across cultures; an advocate of diversity; and the building of productive, long-term relationships with key stakeholders.

While these characteristics are essential for sustainable leaders, effectiveness of leaders will require the support of board members and other stakeholders. However, research has shown that there is a relationship between sustainability and corporate governance.

Corporate governance is most often viewed as both the structure and relationships which determine corporate direction and performance. The board of directors is central to corporate governance.

How a company is governed influences how it relates with its stakeholders, managed, and ultimately whether it succeeds or fails. According to Leblanc (2015), “companies do not fail: boards do”.

The ability of an organisation to succeed depends on the boards and executives’ understanding of the concept of corporate sustainability. Corporate governance frameworks largely depend on the regulatory, institutional and ethical business environment prevailing. Good corporate governance practices in any country cannot be developed without appropriate public policy, or adequate legal and regulatory framework which influence sustainable leadership values.

In South Africa, the King IV Code of Corporate Governance was developed to provide best international practise on corporate governance. The governance code advocates good corporate citizenship, stakeholder inclusivity and contribution to sustainable development by organisations. By adopting the King IV code, boards can be empowered to clearly understand the role of their organisation in society through embedding sustainability and sustainable development in their business value chain. This code has contributed to investor confidence in South Africa unlike in Zimbabwe with ZimCode.

In United Kingdom, the Corporate Governance Code emphasises the need for leadership to build and maintain relationships with stakeholders as a significant component of sustainable leadership as defined above.

According to the code, “Companies do not exist in isolation. To succeed in the long term, directors and the companies they lead need to build and maintain successful relationships with a wide range of stakeholders”, FRC (2016). So far, it is important to point out that there is a relationship between leadership and sustainability by organisations.

The relationship between sustainability and leadership is noticeable in sustainability standards such as the Global Reporting Initiatives (GRI).

The following are some of the handpicked disclosures relating to sustainable leadership: setting committees responsible for decision making on economic, environmental and social topics as part of the governance structure; appoint executive-level person(s) with responsibility for sustainability; promote board consultations with stakeholders on environmental, social and economic topics; encourage the consideration of expertise and experience relating to economic environmental and social topics in the nomination and selection of board members; evaluating board performance with respect to sustainability. These disclosure requirements provides the foundation for sustainable leadership in any organisation which may not be evidenced in many companies in Zimbabwe.

In Zimbabwe, there are a number of instruments for driving sustainable leadership, even though little evidence can be seen in many companies.

The Zimbabwe National Code on Corporate Governance provides requirements for sustainability reporting to enable stakeholders to make informed decisions on the company’s activities. It further goes to say that disclosures should be holistic and guided by the triple bottom line approach of profit, people and planet. The code requires disclosures using the GRI Standards and Integrated Reporting Framework. As for public listed companies in Zimbabwe, Section 399 of Statutory Instrument 134 of 2019 makes the board responsible for sustainability.

In this regard, the chairman is expected to disclose how sustainability has contributed to the company and the strategy for addressing sustainability issues.
This requirement emphasises the need for sustainable leadership. However, demonstrating sustainable leadership is still a myth in many companies in Zimbabwe unlike countries like South Africa, Kenya, Rwanda, Morocco, Egypt and Mauritius.

In conclusion, Zimbabwean companies need a new calibre of sustainable leaders. One that does not wait for external pressure and stakeholder outcry for business operations to be sensitive to sustainability and society.

In today’s world with easy access to information and news, it is very easy for businesses to lose trust with stakeholders and more-so investors. Global sustainability standards covers issues such as human rights violations, anti-corruption, child labour and climate change which many international investors are sensitive to and use it as benchmark for evaluating the quality of leadership before investing in a company or country.

In essence, these are aspect many executives and board members in many companies in Zimbabwe fall short. Today’s leaders in high performing global companies such as Unilever, ING Bank, Philip and Safaricom, to name a few, are defined by sustainable leadership.

To end, there is a Greek proverb which says “A society grows great when old men plant trees whose shade they know they shall never sit in”.
This is a call for sustainable leadership in Zimbabwe.

Zhuwao is a sustainability and climate consultant with the Institute for Sustainability Africa, an independent think-tank and research institute.

These weekly New Perspectives articles are co-ordinated by Lovemore Kadenge, immediate past-president of the Zimbabwe Economics Society — kadenge.zes@gmail.com and mobile: +263 772 382 852.

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