Beware the Dilution of Sustainability…
During her leadership campaign in the summer, PM Theresa May promised to shake up corporate governance. She would give workers a place on company boards and make shareholders’ votes on executive pay binding – all things her party blocked during the coalition years of 2010-2015. But when the proposals were published yesterday, they had been watered down to a level of toothlessness.
This reminded me of a diagram which someone sent me recently (I understand it was produced by Bain&Co, but I don’t have further details of the source). It shows that Sustainability projects have a much better failure rate than other projects, but suffer from an extremely high level of dilution – in fact very few succeed without some kind of compromise.
I would love to know the exact reasons for this. Some may be difficult to overcome such as immature technology and/or supply chains (although that can be sorted out), but I suspect much of it comes down to nervousness by decision makers, tiptoeing their way through unfamiliar territory.
My solution to the latter problem is to make sure those decision makers are involved in developing the proposals. Psychology has shown that when people are presented with a change, they exaggerate the risks and play down the benefits, but when they generate the change idea themselves, that flips to overestimating benefits and playing down risks. I have had a boardroom bump up Sustainability targets by taking this approach – the complete opposite of the pattern shown by that diagram.