Sustainability has now entered the agenda of corporate leaders, not only as an ethical choice and corporate social responsibility, but also for business needs, primarily to respond to investors, who are increasingly attentive to the UN's international SDGs standards.
On September 25, 2015, the United Nations approved the 2030 Agenda for Sustainable Development and its related 17 Sustainable Development Goals (SDGs), broken down into 169 Targets to be achieved by 2030.
Not only for investors, but also to engage with increasingly demanding and attentive consumers, and – last but not least – to comply with an increasingly stringent regulatory framework.
Directive 2014/95/EU requires EU member states to introduce a new obligation regarding the disclosure of non-financial information and information on diversity.
What was previously a voluntary disclosure requirement is now becoming an obligation, starting from the financial statements as of December 31, 2017, following the enactment of Legislative Decree No. 254/2016. From the 2017 financial statements, a wide range of companies will be required to publish a "non-financial" statement concerning environmental, social, employee-related matters, human rights, and the fight against both active and passive corruption.
The impact of sustainability on business processes
Last year, the case of the Arjuna Capital fund, which asked Citibank to disclose the gender pay gap within the group in order to approve its financial statements, made headlines in major economic newspapers.
In everyday life, the term "palm oil-free" is now commonly seen on consumer products: a term that carries with it an expensive repositioning of many consumer goods, following the environmental impact disclosure of its production two years ago.
There are increasing examples of lawyers or small entrepreneurs who lost a contract with a large company because it did not meet the company's new "non-financial" requirements.
The attention towards the environmental and social impact of one's business indeed implies that a large company must extend this focus to all its supply chain partners as well.
Sustainability is progressively becoming "viral" and crossing the boundaries between the "internal" and "external" aspects of the business reality: the redefinition of the business model has an impact on processes and products, but also on organizational models and brand image.
The 3 "P"s of Elkington
A progressive but integral change that, in summary, touches on the three "P"s theorized in the triple bottom line model by Elkington:
- profit,
- planet,
- people.
A model that first and foremost requires a revision of the business model.
Profit
In order not to fail and remain profitable, the company must accept the challenge of economic sustainability, which requires building a virtuous development path not only for the business but also for the correct environmental and social approach.
An approach that, in the long run, can also lead to a revision of the ultimate goal, no longer centered solely on economic profit but on a much deeper concept of shared well-being (P of "Profit").
If the "what" of the business changes, the "how" must also change, meaning the processes and products: a revision with strong technical and technological foundations that must lead to the optimization of the environmental impacts of production processes and products from a life cycle assessment perspective – that is, throughout the entire life cycle and thus across the entire supply chain – which not only analyzes business impacts but also environmental and social ones.
Planet
And no longer just from a linear perspective – from production to sale or disposal – but from a circular perspective (P of "Planet"). Finally, but no less importantly, the introduction of a social purpose: the company is no longer a "monad," a self-contained production unit, but an entity that integrates and interacts with the territory. This leads to the inclusion in the company's mission and values of the goal of achieving a shared general well-being among all public and private stakeholders with whom it interacts (P of "People").
People
How do these gradual but profound transformations of the company impact the role and function of human resources managers?
Forcing them to be "agile" in responding to this change in order to support the business and meet the new expectations of employees, as well as suppliers and customers.
The "agile" culture – which in English means flexible, fast, lean, and transversal – originates from the Agile Manifesto published in 2011 in the IT sector and contrasts with the waterfall model and other traditional development models. It proposes a less structured approach focused on the goal of delivering to the customer in short, frequent intervals (early delivery/frequent delivery), with much more complex and adaptive data analysis and monitoring software.
Applied to human resources, this means rethinking the employee journey, the entire life cycle of employees within the company, from the moment they are hired to when they stay with the company, leveraging the immense opportunities that digital and new technologies can offer.
Innovations are therefore applied from the moment of searching and selecting new resources, with the use of artificial intelligence and chatbots during the profile analysis phase.
AGILE team management
But the entire human resources management process is revised with an approach known as human centered design: a network-based organization is preferred over a hierarchical structure, control is replaced by the concept of empowerment, and structured planning is replaced by the focus on experience.
Among the practices promoted by Agile methods are the formation of small, cross-functional, self-organizing development teams, iterative and incremental development, adaptive planning, and the direct and continuous involvement of both employees and clients in the development process.
In all these cases, the HR function is no longer linear, with a decision-maker – the company head or department head – and an employee counterpart, nor unilateral; instead, it is called upon to co-design solutions from a 360° perspective and plays the role of trainer and agent of change to facilitate the introduction and use of new solutions and services.
A real challenge, a cultural change that will allow "human resources" to regain its full meaning.
