The Sustainable Business Transformation Playbook ft. Julia Binder & Knut Haanaes (IMD)

If you are listening to this podcast, there is a strong chance that you are working in (or deeply care about) sustainable business practices. There is also a strong chance that you, like many of us - myself included! - can sometimes feel like things are changing so rapidly that we don’t necessarily know where to turn, and find ourselves wishing for a guide/playbook. Well, our next two guests have answered the call.

Professors Julia Binder and Knut Haanaes co-edited the new book “Leading the Sustainable Business Transformation: A Playbook from IMD”. In it they bring together renowned IMD thought leaders to offer action-orientated, practical support to business leaders ready to move beyond understanding why sustainability is essential to tackling the critical question of how to achieve it.

Julia is Professor of Sustainable Innovation and Business Transformation at the Institute for Management Development (IMD) and Director of the IMD Center for Sustainable and Inclusive Business. She is co-author of “The Circular Business Revolution” and director of the program “Creating Value in the Circular Economy”. With over a decade devoted to sustainability research and teaching, she actively supports business leaders in driving meaningful change to address global challenges and was a Thinkers50 ‘top 30 thinkers to watch’ in 2023.

Knut is IMD Professor of Strategy, Lundin Chair Professor of Sustainability and co-director of two programs: Leading Sustainable Business Transformation and Sustainability from the Boardroom. His TED Talk ‘Two reasons companies fail - and how to avoid them’ has attracted over 2.3M views. Knut was the driving force behind the creation of the Business Schools for Climate Leadership alliance and was previously a Senior Partner in BCG and Dean of the Global Leadership Institute at the World Economic Forum between 2018 and 2020. 

In this episode, we dive deep into the work from their book “Leading the Sustainable Business Transformation: A Playbook from IMD”. We tackle the evolving regulatory landscape, the politicization of ESG, the role of technology, the critical balance of short term vs long term sustainability strategies, and hear about a few companies that are truly getting it right!

Get ready for a thought-provoking conversation on how businesses can navigate complexity, embrace innovation, and lead with impact. Let’s get started! 

*

[Host: Lauren Scott] For many of us working in the sustainability space, I think oftentimes we get this feeling that we're almost trying to build the plane as we're flying it. I know that many of us have thought, 'I wish there was some sort of playbook or guidance that we could have along the way to help us with this transformation.' This is why I'm so excited to have our next two guests because they've actually authored such a playbook to help us with this transformation. With that, I would like to welcome both Julia and Knut. 

[Guest 1: Julia Binder] Lauren, it is a please to be here. 

[Guest 2: Knut Haanaes] It's great to be here, Lauren. Thank you.

I would love to maybe start at a very basic level, which is, there are so many different terms being thrown around in this space, and I would just love to understand one that you dive into in your book, which is the difference between sustainability and ESG, because I think we're often conflating the two, and I would love to know your approach to that differentiation.

I think it's a great question, Lauren, because this is one of those questions that we also tried to address in many of our sessions with executives. We have come to a time where ESG has become the buzzword for almost everything, to collapse almost all sustainability activities under one umbrella. The Chief Sustainability Officer suddenly becomes also the head of ESG, and so on. I think it created more confusion than it added value.

When we talk about the differentiation, one thing that is very important is that ESG has never been put in place to talk about the impact an organization has on the planet or society. Oftentimes, we think that ESG is about doing good when, in reality, ESG was a concept that came from the investor world. This was all about how do ESG issues—environmental, social, and governance issues—potentially affect the financial value of the firms that we're investing in. It's very much this difference between inside out and outside in. ESG is all about how do these issues potentially affect our value, our financial value, and it's a risk management framework.

I think it's a very valid one, and as a business leader, you want to understand what those risks are. We see that with increasing climate weather events, increasing DEI issues, and so on that these topics become business-relevant. As a business leader or as an investor, you want to understand how well am I prepared to address these issues, and for that reason, I think ESG is very valid.

What the problem and the shortcoming is that we see nowadays is that we tend to equate it, and this is where a lot of this feeling that everything around sustainability in ESG is just greenwashing comes from because if you look at an ESG portfolio and you have tobacco firms in there, and you have the big oil and gas companies in there, actually Exxon Mobil is one of the top ESG performers, you may at least wonder how is it possible that one of the companies that contribute a lot to the problems that we're seeing is now on top of the list of ESG performing companies. I think this is where the differentiation very much matters.

Both concepts have validity and both concepts are important, but we need to understand what we're talking about for this feeling of greenwashing and everybody just trying to appear more sustainable than they are to fade away. 

You touched on that lightly, but I feel like a lot of companies, and I've definitely been in boardrooms where they're having these conversations, it feels like we're treating the topic as risk avoidance more than anything else, and you're seeing leaders, not bad people, but maybe they only really take note of the broader term of sustainability when they get more maybe to the ESG side, which is they're trying to avoid a penalty or they're just trying to follow basic compliance, but in your book, you're also challenging businesses to not just think about it as a risk but to think about it as an opportunity. It's a big shift for leaders to do that. Can you help us walk through maybe what that would look like for a business and a leader? 

I think what you're asking is a really important question. Lauren, is this only about the risks, or is there an upside? Then our perspective is it's both. There's definitely something about managing the risks; some of them are long-term risks, but are short term, so we need to manage them. Then there's something around seeing the opportunities.

First of all, if we take a long-term perspective, the opportunities are huge. Right? If we think about the infrastructures we will build, if we think about how we will address the energy transition, etc., they're huge big long-term opportunities, but I think there are opportunities in the short term as well. I mean, there are definitely cost-related opportunities. There's definitely something happening on the consumer side. If we can choose, we have to choose things that actually are more efficient or more responsible, etc., and there's definitely an opportunity on employees as well, and this is global. People want to work in companies that are part of the solution, not part of the problem. And in that regard, I think it's good for us to think about both, managing the risks—that's the downside—and looking for the opportunities. Many of the consulting firms, BCD is one, have looked at what are the biggest sources of innovation today, and sustainability comes out on top. So it is a real great, super interesting source of new innovations, and maybe that's the way to think about it. You know.

I love that, being a positive spark for innovation. I think that is definitely what we're seeing in all these different emerging industries as well. In the background of all of this, there's certainly a lot of polarization and perhaps even, well, actually certainly politicization around maybe more the term ESG than possibly sustainability. But in doing your work and your research, did you see if there are any successful mechanisms with which we can almost reach across the aisle and show that this is an opportunity for all of us and it's not one versus the other? 

Yeah, I like this question a lot, Lauren, because I think what you say is absolutely right. Oftentimes, it's more an allergy to these three letters or even the term sustainability, where many feel it's woke or something that is unrelated to business where, in reality, it's at the heart of business because if we don't get access to resources, we don't have a resilient business, then we have a problem, right? So, and this is something that most business leaders understand.

So I think one tool that I like to use a lot is framing and reframing because I think it's very important that we stop coming and trying to push this agenda from our lens, which might be for some of us, and I could imagine that this is true for some of your listeners as well. We're very idealistic about this. We want to do better. We want to save the planet, but if we come with that agenda and try to have the same story and the same kind of ambition, motivation, and push that to everyone, we may not be heard. And I think this is where it's very important to start understanding what is it that my counterpart, that I'm trying to convince, that I'm trying to get on board of this agenda, what are they worried about, right? If it's the CFO, how can we save cost in sustainability? There are important cost savings if I optimize resource use, there is an important cost saving in that, right? So if I'm talking about marketing, Kud already mentioned it, then there is a positioning issue, there's a differentiation issue. If I talk to R&D, there's innovation potential and so on and so on. So I think we need to make a very conscious effort to make this topic more relatable to the world view of the respective people that you're talking to. And I think oftentimes, we are still living too much in our sustainability bubble. We think that everybody cares as much, and we think that everybody has as much knowledge as some of us have, and I think we just need to understand where is it that we can basically really relate it to the pain points, to the problems, and to the interests of our counterpart, and the topic is very thankful with this regard because we can really almost find something in for everyone. But we need to make this conscious effort to say, instead of just saying, 'Let's put some money in here to save the world,' how could it benefit our business? Right? How could it be an impetus for innovation? How can it help us to save costs? How can it help us to make the business more resilient and so on and so on. 

And many of our listeners are probably in that innovation space, and they're working for businesses that are at the intersection of sustainability and technology. What kind of role do you think technology plays in all of this because you, on one hand, you have certain parties who are saying, 'Probably, technology is going to be at the heart of finding solutions to address resiliency and sustainability,' and then there are other groups who are valid in their claims that are saying, 'Yes, but a lot of the solutions right now with technology, for example, generative AI, different mining practices, are putting so much pressure on our resources.' So how do businesses hold these two truths at the same time, and is there a way to kind of move forward with that technology lens?

So at least my perspective is technology is going to be a major unlock on this one, and it's a little bit difficult to imagine it if we just think about the world as it is today because then we become a little bit incremental in terms of, 'Okay, we know what we have, we know how to pull the different levers,' etc., but we don't know what we don't have. So another way to think about it is to just move far out and say, 'Okay, we're 2100, let's assume we have the energy transition in some way under control, we have developed much more circular business models.' So in a way, we've done something, and then if we look back and ask ourselves, 'How did that happen?' Well, it happened largely because of technology, AI, new renewables technologies, new ways of creating, you know, efficient logistics, supply chain systems, etc. So my perspective is technology is a big, big positive lever, but short term, it of course also means use of energy, lots of focus on developing the new solutions, etc. But that's because we think of the world in very kind of incremental terms. I am a big believer in stepping to the future and looking back and asking, 'How did all of this happen?' Because it will... you know, it will... we just don't know exactly how fast.

And maybe just to add to that, Lauren, I think it's somewhat a double-edged sword. So when you say, 'Some say this, some say that,' I think both are right. Both camps have... there is some truth to both of this. There's some truth to both camps, but I think, in the end, there's a question, and we see it with Microsoft and others that their energy consumption went through the roof, right? 30% increase since we introduced generative AI, water consumption, particularly in water-scarce areas to cool down all these servers. It takes a massive environmental burden. There are big social questions that are unresolved, right? How many of these jobs will AI take? So there are very valid concerns when it comes to technology. I'm personally like Knut in that I am a big believer that technology can help us to achieve a lot of our sustainability... let's say ambitions. It will help us to accelerate, but we should be mindful of the downside, and we should balance that much more carefully. And I think where I would be just more cautious is that oftentimes, we have those that think that technology is a silver bullet. And this is where I think when we look at sustainability, we are talking about a very complex problem, and technology is a linear solution. And this is what we often tried, and trying to solve a very complex problem with a linear solution means that basically we create a lot of side effects, negative side effects, and I think this is where we just need to be very mindful. Having said that, I'm very much a believer that it will help us to accelerate a lot of our sustainability goals, and it will be a key enabler, and a lot of the technological solutions that we need to achieve our sustainability goals are already there. So it's a question of how do we now really feed them into the systems because what it requires at the end of the day is more than just technology, consumer changes, political changes, and so on. So for me, it's one part of the solution puzzle piece. 

I completely agree that the technology landscape is just changing so fast, and I love the idea of shifting from incremental to more that longer view. Another area that's changing so fast is the regulatory landscape, and if we put our hat back on as a business leader, it can be very overwhelming of staying on top of all the different changes, especially if you're an international company. Did you see anything in the research for your book that helps kind of bring leaders along with these changes, either staying on top of the regulations or just approaches to how to think about this non-stop level of change from a regulatory standpoint that could impact the business?

I think we have seen a lot of the regulators stepping up quite forcefully, and I think it's interesting, and I think it's what many of us have called for a long time, and now we see that it really overburdens companies. If you look at Europe, the CSRD, the Corporate Sustainable Reporting Directive, where many international companies are affected by as well, but if you look at European companies, they really feel that they're now at a clear disadvantage, and I think we may need to find some balance here. I think regulation is important. Regulation has an important role to set the framework conditions right, but we also need to understand that if we don't approach sustainability more as like a strategic competitive advantage and opportunity, then just reporting will not get us there because it means that I report data, but it doesn't mean I fundamentally change.

And if you look at the other extreme, then you see China that really seizes the massive strategic opportunity in venturing a lot of these fields without being really pushed by regulation. Maybe by subsidies, right? Quite the opposite. Regulatory kind of incentive, and here you see that they really see the potential of these markets that are currently evolving. So when you ask me for solutions, it's obviously difficult, but you mentioned technology before. There are now a lot of AI solutions that actually help you to write and generate these reports and to also align it with the different reporting standards, and if you ask me how does this will develop, I think we'll see alignment, right? We see that ISSB is looking for international alignment of these different standards, and if we look back, we had in the past a situation where we did not agree on how to report on economic performance globally, right? So today, it's completely unimaginable, but it took some time to align and say, 'These are the numbers we report. This is how we evaluate success.' And I think we'll have the exact same with ESG or sustainability where we're just in a much more immature kind of context where these standards will need to develop, we need to align, and this is maybe much more difficult today where this topic is so politicized, and we see a lot of geopolitical tensions anyway that it's much more difficult to agree, but I think this is where we'll eventually end up.

But I'm wondering, and this is... I mean, an open question, how much regulation is enough, and how much regulation do we need, and what is the perfect kind of level of regulation, and I'm not sure that any of the countries have cracked it yet. 

Yes, CSRD is certainly... I'd say the pressure test for many of us right now, of just seeing, and you know, with sustainability teams, and it's... I think it's also part of the natural first wave of setting something up, that it feels a lot harder until the wheels are in motion, but certainly, I think it's all hands on deck from sustainability teams just to report, and then they're not actually doing the work, so it is a big problem.

And that is a big problem, right? Because this is where we then don't approach sustainability strategically anymore but really as a tick the box exercise, not because we want to, but because we simply do not have hundreds of people that just collect the data for these reports, and this obviously has pushed a lot of the strategic ambitions in the background, which I think is very unfortunate. 

I'd be very interested. I hadn't heard of anybody really talking about the use of AI to help generate some of this information more quickly for the reports, and I love that angle. I am curious as well, when you're doing the research, and maybe you can't name-drop any of the companies, maybe more generally, on an industry level, but did you see any companies doing this transformation really well that those of us in the space can look to as positive examples?

Yeah, I think there are companies who do it well, and just I want to build a little bit on Julia, and then I don't think I can mention names, but I can at least talk about some of the companies. Okay, but I just wanted to build on you, Julia, because you talked about, and Lauren, you mentioned as well, CSRD, Europe, super complicated, and I agree. But if you go back 10 years, the challenge we had on sustainability was we have no standards. We had so many different rating agencies, we had so many different ways of reporting, there were rankings all over the place, etc. Now we're getting towards standards. CSRD is very complex, my personal expectation is that we will see an alignment, and it has to become more pragmatic, so in a way, if we think of it through the lens of learning, we will get there. If we think of it through the lens of how much effort is required today, it's a bit depressing to be honest, but from a learning perspective, there is something happening, and is definitely, I think, there's room for an alignment, and I expect that has to happen, to be honest.

And then there's the companies. I think there's like a mix here. The companies that I see doing this well, first of all, they're very clear on what they have to do and what they don't have to do, and then they're very clear on what they have to do now and what they can do later, so they don't think of this as a kind of massive thing, but they kind of do it very targeted, and then they are very clear on what they have to have primary data to do and what they can do through simulations and, you know, more software, etc., just to make it as compacted as possible. The companies that I see not doing it well are trying to do everything at once. It becomes really overwhelming, even if you're smart about it, right? So if you try to do everything at once, it is simply too much, and that's why companies have to be zoom in on what they have to do now and that they where they have to get primary data, and then really focus on that.

And in this area, I think also trying to be the most clever one is not necessarily the best strategy. It's good to kind of see what others do, learn, be pragmatic about it, and that's... I think those are the companies that do that are the ones that I think see getting through it well and learning and developing, and many others are just putting their hands over their head for good reasons and saying, 'This is too much.'

And maybe just to add, Lauren, I think we will be publishing a new report on sustainable business transformation and what are the companies that are particularly successful on the 10th of January, and maybe to already just give you some insights there, we find three transformation accelerators. So those companies that go beyond let's say the tick the box, must-win battles in sustainability are those that manage to really approach it from an innovation lens, from aligning it with their digital technology strategy, and that leveraged their ecosystem very well, and here, I think three good examples we highlight in this report as well is from an innovation standpoint, Decathlon is actually doing a great job. They're really approaching it from how can we move all our business more towards circular, and whether this is product as a service, whether this is more recycling, whether this is second-hand markets, and so on, so Decathlon is a great example here. They're very strategically approaching this topic.

Siemens, on the topic of how do we align our digital strategy with the sustainability strategy and how do we see digital as an enabler of sustainability and vice versa, and then ecosystem, maybe a company that is not so well known, but actually interesting player is Villa, a Finnish marine company. They're in the B2B space, and they really, really leverage their ecosystems to help other companies to decarbonize, so they see themselves as, let's say, a support of the decarbonization efforts of others, and they really leverage the ecosystem extremely well because, as we know, sustainability is not a single company game. So I think those companies that really manage to build up these superior ecosystems are the ones that will win in a sustainable future.

And I love that you bring up the topic of circularity because, Julia, you're very well known in the space for circularity. So I would love to pick your brain a little bit further on that. I'm starting to see it's always interesting to observe leaders and what buzzword they're starting to insert into their sustainability talk track, and I'm starting to see circularity slowly start being woven in, and I'm not totally convinced that all totally understand it. However, it's interesting because I think at the end of the day, when you actually get into circularity, everybody understands it because it's so at the root of our legacy economy. So maybe to level set first, can you help us better understand the concept of circularity in the context of business, and then any tips for our leaders who are listening right now who have heard the word, they know they need to incorporate it, but they're not quite sure where to get started?

And I think I mean, you know, I love the topic a lot, and I love that you're saying that more and more actually use it in their strategies because I think what we've been seeing is that very few have been really looking into circularity in the past, which I think is very interesting because there are studies that show when we talk about climate change, 50% is energy, but 50% is resource usage, and we almost exclusively talk about climate as energy, which I think again, it's a very important part of this, but if I want to go to net zero as many companies have claimed that they want to, we need to talk about resource usage as well, and this is where the circular economy comes in. And maybe one important misconception, the one that I tried to clarify always at the beginning, is that the circular economy is so much more than recycling. Actually, recycling should be the last resort, right? So, um, when we talk about the circular economy, this is really about fundamentally rethinking how we use products, how we consume products, how we produce products. It's fundamentally a design question. If you think about this, 80% of a product's environmental footprint are determined at the design stage. 80%, so the choices I make at that stage determine almost everything that follows, and yet designers are very rarely part of the sustainability discussions. They're not trained in this, they're not incentivized, so I think if you ask me how should we approach it, it really starts with design.

Look at your design of the products. If I don't make them easy to disassemble, easy to reassemble, easy to reuse, then basically all efforts will fall apart because then a lot of the criticism of the circ economy is that it's so energy intensive to get the materials back, but the reason for this is not the circular economy, the reason for this is how we design products, that we glue everything together, that we use a lot of different materials, right? So plastic is a very thankful material to recycle, but if mix all kinds of different plastics, it becomes virtually impossible to recycle. So, and again, don't see circular economy just as recycling. This should be the very, very last attempt after all the other attempts have failed, and what we do in our work on circular economy is really showing the business model opportunities, and they range from how do we optimize resource use, they range all the way up to more regenerative design, but for me, the end goal is in really servitization, how do we move from ownership to access, how can we actually access the service of a product, and do we all need to own everything? For some products, we may, and some of these might be important to us, but for many others, we might be very happy that others offer a service. I give you example, I don't need to own a washing machine. I'm happy if I get clean clothes. It just needs to be very convenient, and it needs to make a sense from a cost perspective, but do I need to have this massive machine there? Do I need to operate it? I'm happy not to, right? So actually, a lot of these models can actually add customer convenience, and I think this is what makes it so interesting because oftentimes when we talk about sustainability, we forget that there're still a consumer or a customer, and this is something if we want to be successful. We cannot put customer needs last; they need to be first still. This doesn't change in a sustainable context. We still want to address customer pain points. We just do it in a much more smart way of how we use these resources, and actually then it becomes a big business case because in an economy where we're increasingly seeing geopolitical conflict as we just mentioned, I want to de-risk my supply chains as well, and this is one of the best ways to do so.

And it comes back to that idea that sustainability can really be the catalyst for so much innovation for those new services, those new businesses as well.

And Knut, you're well known for a TED Talk that you gave on looking at businesses from the exploitation versus exploration approach. For our listeners who are not part of the millions who watch your TED Talk, would you mind explaining a little bit the difference between those two concepts, but then specifically, do you feel like there's a sustainability lens that we can apply to that approach that you've shared? 

Yeah, thank you for asking, and I'll start with the sustainability lens and then I'll use that to explain hopefully a little bit the concept as well.

If we take energy, we need the energy we produce today. Some of lots of it is fossil; increasingly, there's renewables, etc., so we need to do the things we do today. The world can't live only on the renewables, but then we also know that we have to change, so we have to become renewable more and over time, we have to be fully renewable, right? That's how it is. So short term is doing what we do today, long term is changing, and that's the trade-off, and we would just be super naive if we thought that we could live without doing a balance between the things we do today and then gradually creating the things we need for tomorrow, and that's fundamentally a sustainability topic. Sustainability is not about just, you know, as we talked about, the energy use or recycling, etc., sustainability is about surviving and succeeding in the long term, and the way to survive and succeed in the long term is really to renew ourselves, taking into account the things we're good at in the short term.

And I think it's a good thing to think about because we can't just do more of the same. We can't just do new things. We have to find the balance, and the world is in that kind of balance right now. We're trying to figure out the path to a future which will be somewhat different, knowing that we have to do all the things we do today as well because the world without energy is a terrible world. 

It's all clicking in so well because yesterday, I was at a conference, and I was speaking to somebody, and we were talking about how Texas is now a leader in renewable energy, and he was so shocked, but it sounds like they're probably just embracing this approach.

That's right, that's how it is, and I think we have to be realistic here, and energy is just one part of this, but an energy transition takes us a starting point that we, we like energy. We just have to address the externalities of it as it relates to climate, so over time, we have to shift it, but we can't shift it without having energy in the meantime, and that's... I think the ones who understand this the best are actually the energy companies, right? Mhm. How fast do we have to move this? This is the monkey on our shoulders, right? Are we doing it fast enough? Do we have the right incentives? Is there enough competition to get there? Do we have to stimulate and regulate, etc.? But I think we have to start by recognizing that this is a balance between the short term and the longer term, that's the fundament, I would say. And that is the fundament of sustainability as well, you know. 

And I think the Texas example is great, Lauren, because it basically really shows you don't have to be in sustainability for just motivation or intentions, good intentions, but you can't be there for simply economic good reasons, right? Texas is clearly not doing it because they want to push the sustainability agenda; they do it because it makes economic sense because they have the capabilities, because they have the sun, and so on, so they do it because it makes a lot of strategic sense, and I think this is where often times these efforts will be more sustainable because it's not just about intentions, it's also about what makes economic sense, and these models might be in the long run just much more superior because you get much easier buy-in from important stakeholders.

Yeah, and it just to build on what you're saying, Julia, and I fully agree, and Texas is kind of an interesting example, but I think we're in a new phase on sustainability. We used to be about getting started, learning, seeing different solutions, developing technologies, etc. Now, I think we're in a phase of making money on sustainability. The companies that are not able to short or longer term make money on sustainability won't do it. They won't really build business around it, and that's kind of what we need, you know.

Yeah, so that's where, and if we think about it that way, a lot of the noise goes away. A lot of the woke, a lot of the distractions, a lot of the good intentions that actually don't help companies or societies, they just disappear, I think. 

And I think what you see for the more mature companies is exactly that, those that are much more mature in their sustainability thinking, they move away from these isolated sustainability initiatives that they run just for the sake of showing it off in some reports or in some websites, but these are the ones that say, 'Okay, we run initiatives, but we have a killer scale approach where if this doesn't show business potential, we kill the initiative, and those that we're serious about because they can really differentiate us and they can be a profit driver as well, those are the ones that we scale.'

And I think this is where I see a lot of the companies are still very much in this initiative mindset. They approach sustainability not strategic enough because initiatives cost money, right? And this is what, what Knut just mentioned as long as I am in this initiative mindset, I'll just subsidize it, but none of this is made for scale, not for from an impact perspective but also not from a profitability or growth driver. Those companies that really see it differently, that like Decathlon, I mentioned before, they really say these initiatives need to pay off. I invest in those, and for us, circularity, in their case, is a profitability and growth driver next to being a driver of achieving our climate targets, but I think this is a very different mindset than just to say, 'Okay, because we, the CSR mindset that we had in the past, we do this because we're a good citizen.' No, you do this because it needs to make business sense because otherwise, it's the first initiative that will be cut if things don't go super well.

Thank you both. This has been so interesting, and I would love just maybe towards the end of this conversation to go more on a personal angle for both of you. You've been really successful in getting the message out there and dedicating part of your career to sustainability, if not all of your career to sustainability. What made you want to transition into the space? Was it from childhood that this is an area that you were interested in, or was it a moment in time throughout your career that you decided to pivot over?

So, for me, it was actually when I was studying business with a focus on marketing, which I studied more out of... yeah, I think I like to do communication, but I don't know really what to do in life. When I was close to finishing my studies, and I felt like everything I do has absolutely no meaning, so I called my dad, and I said, 'Look, I'm going to study medicine.' And he said, 'Clearly, you're not going to study medicine after we just paid your studies around the world for the last 5 years,' and I said, 'Clearly, I'm going to study medicine because this is for me the most obvious thing where I can actually positively contribute instead of selling more underwear or coffee capsules.'

And he said something very meaningful. It took a while because I hated him for some days, but then he said, 'Try to use the tools that you've acquired in your studies to have the meaning that you're looking for,' and this is where I had come across this topic of sustainability, but suddenly it made sense to say, 'Why is this such a niche topic in the business world? Why is this still this okay, only the left-wing activists with b-stock will actually touch this topic? How can we bring it out of that niche and make it more relevant?' is actually where we will need a lot of communication, where we will need a lot of marketing and positioning, and use piece, and so on, and this is where then transition did my PhD afterward with a focus on sustainable startups, which I felt were they were just much more advanced and kind of really coming up with companies that are completely balanced on environmental, social, and economic considerations, and then later on, and this is now cumulating here at IMD, to really say, 'Okay, what does it mean for companies to transform if they realize that maybe our current business models are not aging very well? So how do we get out of this, and what can we learn also from startups in that space?' And this is where I'm keeping myself busy nowadays.

Super. So I'm going to start with the cliche, okay, which is, uh, of course, uh, North America, Canada, cliche, Wayne Gretzky, the, 'This way we can like it or not, we can kind of uh, dispute it, but the puck is going this way.' It, the change has to happen for nature-driven reasons, so I think there's like a very big trend, and can we can have an impact on that trend? There will be great businesses built on that trend, so that's kind of the big picture. And then personally, I think sustainability is a great place to combine head, heart, hands—head, the strategic; heart, the right thing to do. I mean, not only, you know, morally the right thing to do but from a business perspective as well; hands, being how do we not only talk about it but create real actions as well, and that's why I think sustainability is meaningful, and it's fun, and it's inspiring, and uh, maybe there I would say that, you know, I used to work in sustainability when nobody gave it attention, now with a backlash, hey, a backlash is a lot better than no attention.

The backlash is actually, in my opinion, a big opportunity. There's attention; people are discussing it. People who don't like it are on the willing to engage around it, etc., that's a good thing in many ways. We're just learning, and it's fun to be part of that learning, and I think in many ways, we can be very optimistic as well.

And I would also love to ask you if you could go back to, I guess for Julia, is that specific moment, speaking with your father, and Knut maybe more generally, but if you could go back to that start of your time in sustainability, is there one piece of advice that you would give to that younger version of yourself before they embark on the sustainability journey?

Oh, wow, the piece of advice I would give to myself would be, uh, talk to people who don't agree because the challenge of sustainability, and it's almost bigger than in any other area, is that we're a little bit in this bubble. We talk to the people who agree, but most of the people that need to kind of embrace it and see opportunities, etc., they don't necessarily agree, so I think I would spend more time talking to those who don't agree or have real questions, and maybe a little bit less to those who already agree because they're moving anyway.

It's funny, Knut, because I would say the opposite for me. I would say spend less time and arguing with people that cannot be convinced for whatever reason, yeah, and try actually to use your time more wisely because I think I have been at the beginning much more on this, 'How do I convince those that need to be converted?' rather than trying to really show the path, and I think this is where best cases tend to get a lot of attention, right? So nowadays, I'm just working and enjoy working with companies that have these lighthouse projects that show that it works, that we can combine economic performance and environmental impact. I spent a lot of time on this, 'How do I get those on board that block everything away?' And I think there's maybe a conundrum almost like those are very difficult to convert, obviously, in a sustainability space, these are the ones we really want to approach most, but this is where we spend a lot of time, and I wonder, 'What how much can we achieve there?' And I think I would rather spend more time on the middle to show them and help them to create more of these projects that serve as lighthouse internally and externally because I felt I have spent too much time on trying to convince some that don't want to be convinced and block everything away.

I think we need both; we need success examples, we need role models, we need those who really get it, show us the way, but I think we also need the all the innovation, new solutions coming out of real discussions and not just agreements, but I like that success stories are really important too.

And maybe, Lauren really just last, this reframing, I would do that early on. I would do the reframing early on, trying to connect to their world view much better instead of trying to convince, trying to see how does it relate to their objectives, to their pain points, and help them to either de-risk that or help them how this helps them to achieve their goals. I think is a very, very powerful way to get the message across.

Absolutely. It sounds like it humanizes it a lot more, and it's less theoretical and more speaking with as opposed to speaking to somebody else. 

I think a colleague of ours, he always said, 'It's not about that we lead the change, right, we inspire the change because if we lead the change, we're just trying to this one-man show, and I can do this, but it's about how do I inspire others to be part of this change as well?' And I think this is where inspiration looks differently for different people, and this means that we need to really have this ability to zoom up and say, 'For me, this is an inspiration to say I want to change the world, but for others, it may not, right? So how do I better relate to their world view so that they can also embark on this agenda maybe less from this doctrine kind of, 'You need to do it.''

On the topic of inspiration, I have no doubt that our listeners are inspired by everything you've shared today, and would love to continue that by accessing your book and learning more about your work. Is there a specific place where you would direct them towards to find out more? 

We have a landing page at IMD, so if you google the book and IMD, they will get also a little let's say glimpse into the book and everything, so I think it's a good place to start.

Well, thank you both so much for joining me. We do like to end every episode with the same question, and I cannot wait to hear your responses, which is, 'What do you think it will take for businesses and leaders to be resilient going forward?'

Oh, wow, I can understand you're asking that at the end; that's a tough one, but well, for me, when I think about this topic, one thing that comes to mind, which is, 'Are we able to do what we have to do before we have to?' And I think the challenge to many of these things is moving before we have to, and good leaders do because we don't need to have all the, you know, catastrophes and all the crises, etc., before we move in the right directions, and I think if we think about it that way, avoiding crisis by moving proactively, then I think we'll do the right thing from a business perspective as well, so that's the way I think about it, it's trying to take the long view.

For me, it might be obvious, Lauren, but I think for me, it's really those companies that manage to shift towards much more circular practices are the ones that will increase their resilience because if we look at what are some of the big, let's say, risks for business continuity nowadays is that I don't know how where to get my resources from or that costs go through the roof or that there resource shortages, right? So these are important questions when we talk about business continuity, and I think this is where circularity comes in. If I'm not just selling off every product, if I manage to keep these products and I own the materials, and I see that materials and resources actually have a lot of value and so does waste, then suddenly I can very much increase the resilience of my business by saying, 'How do I keep these resources much more in my hands and in cycles?' And I think this is for me the biggest driver of resilience for the future, and those companies that manage to get that, and if you're much more an extractive business, then it's more about regeneration, right? So regenerative agriculture, regenerative mining, and so on, so how do I just have a different, let's say, relation with the resources that I use because I think we're coming from a place of abundance and we'll just use whatever there is, and we will enter a very different phase, and this is where we need to fundamentally rethink how we use resources.

Well, thank you both so much for today's conversation as well as taking the time to put together this playbook. As I mentioned at the start, I think this is probably something that so many of us in the space have been looking for, so thank you for all of the work that went into this as well. 

Thank you, Lauren, and thank you for great questions. 

Thank you, Lauren.