CEO speaks: The New Leadership Code: Sustainability at the Core
Corporate history is filled with examples of once-powerful companies that collapsed due to the relentless pursuit of profit at the cost of ethics and sustainability. Enron, once a giant in the energy industry, serves as a cautionary tale of what happens when a company crosses ethical lines. In the early 2000s, Enron’s leadership engaged in fraudulent accounting practices to hide mounting debt and losses, driven by the pressure to maintain sky-high stock prices. The result was not just the company’s collapse but also a crisis of confidence that sent shockwaves through the corporate world. Lehman Brothers, a titan of Wall Street, similarly imploded during the 2008 financial crisis, brought down by unchecked risk-taking and a single-minded focus on profits.
Closer home, the collapse of Jet Airways and Kingfisher echoes the same story of unsustainable leadership. Jet Airways, once a leader in the Indian aviation sector, was grounded due to massive debt, mismanagement, and an inability to adapt to changing market conditions. Satyam Computers, once one of India’s leading IT services companies, collapsed in 2009 due to one of the largest corporate frauds in the country’s history. Founder Ramalinga Raju admitted to inflating the company’s profits and assets by over $1 billion. The massive accounting fraud led to a loss of investor trust, a sharp drop in share value, and the company’s eventual sale to Tech Mahindra. Satyam’s fall underscores the importance of corporate transparency and ethical governance.
On the other hand, The Tata Group is a standout example, consistently balancing profit with purpose. Known for its strong ethical values, Tata prioritises the well-being of its employees, customers, and society at large. Under the visionary leadership of Ratan Tata and subsequent leaders, the group has focused on long-term value creation, social responsibility, and environmental sustainability. Tata’s commitment to ethical business practices, philanthropy, and innovation has earned it global respect, making it a model for responsible corporate governance. Its focus on community welfare, such as through the Tata Trusts, exemplifies leadership with purpose.
In today’s increasingly interconnected and ethically conscious world, leadership is being redefined. As companies face increasing scrutiny on their impact on society at large, “Sustainable Leadership” is gaining increasing prominence across the world. At its core, it’s the ability of leaders to drive financial performance while maintaining ethical integrity and considering the well-being of all stakeholders, including employees, customers, communities, and the environment. Today, the more important question isn’t merely how much profit a company can generate, but whether that profit is achieved responsibly and sustainably!
For many CXOs, the pressure to satisfy quarterly earnings reports and maintain stock market favour often leads to a narrow, profit-centric focus. In their drive to meet the expectations of shareholders and analysts, they may lose sight of the company’s core values and long-term vision. This shortsightedness can trigger a downward spiral that damages not only the company’s reputation but also its long-term sustainability.
So, what does sustainable leadership look like in practice? It starts with a simple but powerful shift in focus: from shareholders to stakeholders. While profit is essential for survival, it cannot be the sole metric of success. Sustainable leaders take into account the impact of their decisions on all stakeholders—employees, customers, the environment, and society at large. They recognise that a company’s success in the long run is inextricably linked to the well-being of the communities it serves and the environment it operates within. This means adopting a long-term mindset where success is measured not just by financial returns but by the value the company creates for all its stakeholders. In many ways, this holistic approach ensures that the company is more resilient to market fluctuations, regulatory changes, and shifting customer preferences.
When leadership focuses exclusively on profits, it often fosters a toxic culture, both within the company and in its external relationships. Cutting corners, compromising on ethics, or disregarding the societal impact of business operations may yield short-term financial gains, but they undermine trust, loyalty, and the company’s long-term viability. Leaders must therefore ensure that ethical lines are never crossed, no matter how tempting it may be to do so in the name of profit.
For example, in today’s world, environmental sustainability is no longer a “nice-to-have” but a business imperative. Companies that ignore the environmental impact of their operations face increasing backlash, both from consumers and regulators. Sustainability-conscious customers are now choosing brands that align with their values, and governments are cracking down on corporate practices that harm the planet. From carbon footprints to waste management, businesses must now factor in their ecological impact—or risk facing financial penalties, reputational damage, and a loss of customer loyalty.
CXOs must also embrace transparency and ethical decision-making processes. In the digital age, where information spreads at lightning speed and social media holds leaders accountable in real time, maintaining trust through transparency is critical. Any deviation from ethical behaviour—whether it’s a data privacy breach, environmental misconduct, or labour exploitation—can be exposed instantly and devastate the company’s reputation. This means leaders need to foster a culture where ethical behaviour is not just encouraged but ingrained in the organisation’s DNA.
Building this culture starts at the top. Sustainable leadership requires clear and consistent communication from CXOs, setting the tone for the entire organisation. It’s not enough to simply craft a mission statement that emphasises sustainability; leaders must walk the talk. This means integrating ethical considerations into every business decision and ensuring that employees at all levels are aligned with the company’s core values. Ethical lapses often occur when employees feel pressured to deliver results at any cost, and it is the responsibility of leadership to create an environment where such behaviour is not only discouraged but impossible!
As technology continues to evolve at breakneck speed, the risk of crossing ethical boundaries has never been greater. From artificial intelligence and data privacy concerns to automation and job displacement, leaders must be vigilant about the potential consequences of technological advancements. Just because something is possible doesn’t mean it is ethical or sustainable. CXOs must be cautious and thoughtful in navigating this digital age, ensuring that innovation serves the greater good rather than undermining societal trust.
Sustainable leadership is about striking the right balance between profit and purpose. While profitability remains crucial, CXOs must commit to leading with purpose, ensuring that all stakeholders benefit from the company’s success. Only then can businesses hope to build lasting legacies that withstand the test of time. Sustainable leadership is not just an option—it is a necessity for any company looking to thrive in the 21st century!
The author is the Group CEO of Techno India Group, a visionary and an educator. Beyond his corporate role, he is also a mentor who guides students towards resilience and self-discovery
