Sustainability and the importance of working knowledge

I have the pleasure of teaching professionals around the world on issues related to sustainability and benefit greatly from hearing their conversations, questions, and reflections. One observation is that sustainability, if viewed as a knowledge domain, is lower in maturity than many other areas of business that have been subject to discovery, innovation, and refinement for more than a century. Not only are new challenges and opportunities emerging, but the practices, regulatory boundaries, and competitive landscapes are rapidly evolving.

A client recently asked me to teach a strong, foundational sustainability program for all their staff. They want to accelerate their sustainability strategy and requested inclusion of key international agreements on sustainability and climate change. I pointed out that there have been over 250 multilateral environmental agreements since 1970 that are still in force, so we needed to discuss how to prioritize the topics relevant to their business operations. At a basic level, there are four key agreements related to the UN Global Compact and others such as the 1992 Framework Conventions on climate and biodiversity, the Paris Accords, and the recent 2023 Kunming-Montreal biodiversity agreement that could all be relevant. Beyond that, many industry-specific requirements are driven by the geographies where a business operates. Is it better to spend time on the Paris Accords or the European Sustainability Reporting Standards (ESRS) and the related Corporate Sustainability Reporting Directive (CSRD) that cover climate change, biodiversity, and human rights in detail?

When presenting sustainability information, the question often becomes: how will this knowledge lead to changes in on-the-job behavior? Will this accelerate change? Does everyone need to know this information? Even at the level of “awareness,” we need to consider how that knowledge will tie into both strategy and action.

Now it’s worth noting—I would enjoy preparing and teaching a program on all multilateral environmental agreements since the first Earth Day in 1970. I think that would be fun! However, I acknowledge that only a true sustainability enthusiast may want to attend, and I have yet to find a client who seeks that level of depth. Generally, it is more important to ask key questions about how a business operates and then link key knowledge to staff roles. For example, you may be a company based in Asia, but if you sell your products in Europe and are going to make sustainability claims, then understanding the newer EU Climate Law provisions on greenwashing and labeling may be a priority. In some cases, companies are required to establish a clear tie-in with a host country’s NDC reporting and commitments.

In general, I suggest clients focus on what I call “working knowledge.” What information does a person need to make better decisions? Who needs generalized working knowledge, and who needs specialized working knowledge? How does a change in your sustainability strategy affect what people do on the job? How do we expect or need behavior to change?

There are many parallels in recent history where individuals are asked to make decisions about issues where they have limited experience or training. Since the 1960s, the pace of innovation has often required senior leaders—typically with backgrounds in finance, marketing, or operations—to make investment decisions related to complex technologies that involve commitments of tens or hundreds of millions of dollars. When working in a low-maturity knowledge domain, few people have formal training in these issues, yet they are still tasked with making decisions. The key is to create a working knowledge model that prioritizes information that improves performance, emphasizes collaborative skills that leverage diverse perspectives, and commits to shared learning practices that build heuristics to evolve the knowledge base. I call this model a “C” profile.

Everyone still has a functional role, and the need for those skills doesn’t disappear. However, the context within which we apply functional skills changes because climate and sustainability issues expand our boundaries of accountability. Collaborative credibility becomes more important because of the need for better integration with partners and ecosystems, and leveraging diverse perspectives is a key best practice in low-maturity knowledge domains. To optimize business capability, it’s necessary to balance all three when developing talent.

If we go back to a simple request—“how do I provide my staff with educational programs that help accelerate our transition to a sustainable business?”—we need to walk through a series of questions to establish our new climate and sustainability boundaries. As we respond to each question, we can describe both the generalized knowledge that constitutes awareness and the specialized knowledge that accrues to certain functional roles or groups. Typical questions include:

• What is your legal status? This may obligate you to specific reporting requirements. For example, Benefit Company status or a commitment to its framework, even if not a formal legal status in your country, would be relevant.
• Company size? Small companies are often subject to different obligations than larger companies. Are you on the “sell side” or the “buy side” of a global supply chain? It changes what you need to address.
• Are you publicly listed? Your listing exchange may have both mandatory and voluntary ESG requirements. Although there are efforts to harmonize requirements globally, differences remain.

These initial questions about legal status, listing, or company size are often most relevant to general managers and compliance reporting roles. However, all staff benefit from understanding industry or regional challenges, your voluntary memberships, or partnerships, and your products, services, and competitive positioning.

• Where are your key locations and markets? Geographic positioning can establish requirements for your business as detailed in national plans or require meeting a range of business practices from labeling transparency to waste management to plastic usage.
• What industry do you operate in? For example, difficult-to-decarbonize industries may be subject to requirements obligating carbon allocation schemes and mandatory CO2 quotas.

While many items above suggest new compliance requirements, business strategy requires competitive differentiation. Helping your team understand how new requirements expand "boundary conditions" and create new business opportunities is a key part of their education.

• What are your sustainable products and services? Each may require full value chain assessments for carbon emissions or other sustainability issues.
• What membership organizations does your company belong to? Membership organizations, from industry-specific to role-based, may require adherence to certain goals or standards.
• How does your sustainability strategy or purpose create competitive advantages and unique selling propositions? This final question ties into business purpose and is key in managing the transition from a legacy to a sustainable business strategy.

Developing a working knowledge model for a publicly listed multinational corporation with multiple business lines in dozens of countries will be much different from one for a small or medium enterprise. Regardless of organizational design, each person can examine how working knowledge affects their role.

As sustainability becomes more embedded, it shifts from experimentation to developing new mental models that enable ongoing sustainable innovation.