In recent years, the world has witnessed an unprecedented shift towards sustainability and environmental consciousness due to climate-related phenomena like increasing floods, fires, and extreme weather conditions, the increased awareness of the problems related to the use of plastic and its pollution, and the fact that the world was hit by the Covid19 pandemic, highlighting the interconnectedness of the world.
While governments and global leaders are struggling to agree, for example, on the levels of CO2 emission reductions, we see companies taking the lead in driving the green transition and setting carbon neutrality and other sustainability targets. Also, new ESG regulations will have a broad sustainability impact. The green transition, coupled with ideas about a circular economy, social responsibility, the availability of AI and sophisticated data analytics, and consumer and employee preferences, are some of the forces transforming traditional forms of conducting and leading business and the economy.
The main trends of the paradigm shift
The paradigm shift, coupled with the green transition, sustainability and emergence of AI that is now occurring in business, could be described with the following shifts:
|01||From linear to circular: rethinking value creation
The transition from a linear to a circular economy involves rethinking value creation through resource efficiency, waste reduction, and closed-loop systems, incorporating sustainable practices and innovative models. This entails redesigning products, adopting sustainable production practices, and embracing innovative business models prioritising longevity, repairability, and recycling.
|02||Sustainability as a core business strategy
The paradigm shift emphasises integrating sustainability into core business strategies, recognising its importance for long-term success and resilience. Sustainable leaders rethink value propositions, supply chains, and stakeholder relationships, integrating environmental and social impacts into their decision-making processes.
|03||Stakeholder-oriented leadership: beyond shareholder primacy
Stakeholder-oriented leadership challenges shareholder primacy, prioritising transparency, accountability, and ethical practices. Leaders must balance interests of employees, customers, communities, and the environment, fostering sustainable collaborations and balancing social and environmental impacts.
|04||Systems thinking and collaborative solutions
Leaders must adopt systems thinking to understand the interdependencies between economic, social, and environmental systems, seek collaborative solutions, engage diverse stakeholders, and form partnerships to drive sustainable change at a broader level.
|05||Innovation and technological advancements enabling sustainability
Emerging technologies like AI, IoT, and blockchain can revolutionise leadership in the green transition, enhancing decision-making, optimising resource usage, facilitate transparency and traceability in supply chains, identify sustainable opportunities, manage product lifecycles, and track progress towards sustainability goals. Leaders must ethically deploy AI, addressing privacy, bias, and algorithmic transparency to gain a competitive advantage in the sustainable business landscape.
No alternative to sustainability
The Nordic economy is experiencing significant shifts, with industries like the forest industry focusing on sustainability as a core strategy and closed-loop systems, maximising the use of renewable resources, re-inventing recyclable packaging and other new product innovations to replace plastics. Polluting industries like metal, mining, and energy are adopting electric vehicles and renewable energy.
Stakeholder-oriented leadership and systems thinking are also gaining traction, and we have already seen the trend to collaborate in ecosystems for a while. It has always been so that those who understand how to leverage new technology strategically will gain an advantage. Many technological advancements can support the move towards more sustainable business.
With global environmental consciousness increasing, multinational corporations must adopt green transitions and sustainability to stay competitive. Today, there are enough alternatives for consumers and employees to choose from and enough successful examples for companies to benchmark with and learn from that there are no excuses. Saving the planet is no longer an activist cause – it is becoming mainstream, and companies not on board will face decline.
What leaders and executives need to do to survive the shift and thrive
There are many dimensions for corporate leaders, executives and board members to consider in this paradigm shift. It also requires an understanding of the geopolitics and macroeconomics of the world.
"It is not only about understanding and adapting to different trends but fundamentally changing the modus operandi, including the logic of making business, creating customer value, considering and including various stakeholders, and leading and inspiring people."
All this entails a need for leaders and executives to understand the interconnectedness of their business with the environment and society around them and how to drive change and innovation towards a circular economy together with different stakeholders in larger ecosystems.
Visionary leadership, collaboration, communication, dialogue and facilitation skills, ability to utilise AI and new technologies, leading and inspiring people with purpose rather than power, and ability to consider the broader impact of one's decisions are some of the competence leaders should start to foster to survive this shift and drive positive environmental and social impact while securing long-term success.
More than anything, the transition requires courage - courageous leaders who are ready to lead in uncertainty and rise again after a hit, leaders with thick skin and deep empathy.
This blog post used AI to explore the nature of this paradigm shift and its implications for business and leadership, coupled with personal reflections and insights from discussions with industry and sustainability experts.
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About the author
Pernilla Gripenberg Ph.D. has twenty years of experience of business education from MBA to executive levels in a variety of areas in management and leadership. She has extensive experience in co-designing some of the most ground-breaking and innovative leadership development programmes together with Hanken & SSE’s clients. As programme director and workshop facilitator with a positive and engaging approach she has been highly appreciated by clients and participants. Her recent focus has been on self and people leadership grounded in positive psychology and neuroscience: self-leadership and personal efficiency, leading for top performance, change leadership, and communication and presentation skills. Another area she is passionate about is organisational culture and cross-cultural communication.