Impact
Diversity and Inclusion Drive Sustainability: Here’s How

Diversity and Inclusion Drive Sustainability: Here’s How

| By Jennifer Kuklenski |

Diversity and inclusion are key drivers of organizational sustainability initiatives.

What do diversity and inclusion have to do with sustainability?

This important question too often gets overlooked by organizational leaders focused on the environmental aspects of sustainability. As I discussed in another 3P Insights impact article, when people hear the word sustainability, they usually think of environmental or ecological issues. But the environment is just one part of sustainability.

The concept of sustainability consists of three “pillars.” Organizations that successfully implement sustainability initiatives demonstrate equal commitment to and balance between:

  1. Improving the welfare of employees and the surrounding community
  2. Improving an organization’s environmental footprint
  3. Meeting economic and financial goals

These pillars are often referred to as the triple bottom line, or the three “P’s” of sustainability: people, planet, and profit (this inspired our name at 3P Insights).

The three pillars of sustainability are people planet profit
© 3P Insights

Diversity and inclusion (D&I) add value to all three pillars of sustainability, helping an organization achieve their goals in a way that minimizes their negative social, environmental, and economic impacts. Let’s take a closer look at each.

People

As discussed by Priyanka Banerjee for Inklusiiv, the first pillar of sustainability – people – is one of the most underestimated and even neglected pieces of sustainable strategy. The social bottom line considers the impact an organization has on its key stakeholders, including employees, customers, suppliers, investors (or donors), the local community, and the communities that support its entire value chain.

How do D&I add value to the social bottom line?

Inclusive cultures empower people to be themselves.

When an employee can bring their whole self to work, sharing their personality, uniqueness, and vulnerabilities, they are more motivated, satisfied, and happy. This is important since recent research suggests that over 80% of employees may be unhappy at work. Empowering employees to be themselves also helps organizations build transparency, allowing people at all levels of the organization to share difficulties and challenges that may be blocking their sustainability goals.

Inclusion enables opportunity.

Equity ensures that everyone has access to the same opportunities. Some practitioners treat equity as separate from diversity and inclusion, but I treat equity as an essential part of diversity and inclusion. Achieving equity may include programs that help people from historically underrepresented groups realize their professional goals. Aside from helping prevent discrimination, people who possess equitable access to opportunities are more empowered to make a positive social impact.

Diversity leads to better decision making.

Professor Scott Page wrote a compelling book called The Difference, in which he shows that diversity actually leads to better problem solving because people from different backgrounds bring with them different perspectives and heuristic tools. Other research suggests that people may even think more critically about a problem when they are a part of a diverse team trying to solve it because they expect (and mentally prepare) to defend their ideas. D&I is therefore a powerful tool for avoiding groupthink.

When people are brainstorming solutions in an inclusive culture, better decisions are made. Page’s research shows that time and again, regardless of the difficulty of the problem, diverse teams find better solutions than a team of even the “best and brightest.” In this way, having a diverse team of qualified professionals is actually better than having a team of the most highly qualified individuals who are all quite similar.

Planet

The environmental bottom line considers the efforts an organization makes in terms of reducing their carbon footprint, waste, water usage, packaging and the overall negative impact on the natural world, including plant and animal habitats.  

How do D&I add value to the environmental bottom line?

Diverse teams are more innovative.

Creativity and innovation are important in nearly all areas of organizational development, especially advertising, product or service design, process improvement, and quality control (see Creating the Multicultural Organization by Taylor Cox Jr. for more on this). Several studies provide evidence that workplaces composed of employees with different life experiences, social identities, cultural backgrounds, language abilities, education levels, and training are positively associated with idea generation.

For example, a recent study from McKinsey and Company found that ethnic and gender diverse companies are 20% more innovative and diverse teams are 35% more likely to outperform teams of similar individuals. Environmental efforts will require big changes, like rethinking product design, modifying supply chains, and changing behaviors within the workplace. Bold idea generation will be an important part of addressing the anticipated effects of environmental variation and climate change.  

Diverse organizations are more flexible.

To address the environmental challenges of the future, organizations must become more adaptable, flexible, and nimble. According to the cognitive diversity hypothesis, cultural differences between group or organizational members helps develop multiple perspectives.

As explained by Myrtle Bell, exposure to situations that regularly require people to consider perspectives from others with different cultural, linguistic, or experiential backgrounds may help develop their abilities to be flexible and open to new ideas, experiences, and processes. This mental flexibility will be central to the organizational changes required to successfully implement sustainability initiatives.

Inclusive organizations build cultural intelligence.

Cooperation and collaboration across diverse groups is key for tackling climate change. Adaptation efforts will require an unprecedented level of partnerships between business, nonprofit organizations, civic organizations, public agencies, and global NGOs. Leaders in sustainable development need higher cultural intelligence to not only manage diversity, but also manage and prioritize a range of stakeholders interests across communities, regions, and countries.

Prosperity

The economic pillar, which we often refer to as profit or prosperity in the triple bottom line framework, is probably the most misunderstood sustainability pillar. This pillar is not just about being profitable. It considers the entire economic impact an organization makes through employment, innovation, wealth creation, and philanthropy. In this sense, the economic pillar considers economic development and prosperity, as opposed to just economic and financial growth.

How do D&I add value to the economic bottom line?

Diversity increases access to new markets.

As I discuss in my book, Diversity and Organizational Development, an important consequence of globalization is that consumer markets, like workplaces, are becoming incredibly diverse. A workforce made up of people from different cultural, ethnic, geographic, and socioeconomic backgrounds is better equipped to meet the increasingly diverse needs of their customer base. In this way, diversity helps organizations access new or emerging markets.

A diverse workforce can also help organizations identify and better communicate with underserved markets that may be interested in their products and services, but may not have equal access to them.

Inclusion leads to better corporate governance.

Inclusion has also been linked to improved corporate governance. As mentioned above, inclusive teams are better able to avoid groupthink because organizations with diverse leadership have more decenters. There are more people at the leadership table challenging each other’s ideas and perspectives. Inclusion also helps build empathy, which is cited as one of the most important traits for inclusive leadership.

Additionally, research shows that organizations with culturally diverse boards of directors make notably higher profits than organizations with homogenous boards. Some estimates suggest this profit differential may be as much as 43% higher in organizations with diverse boards. 

Inclusion helps attract and retain better talent.

The most talented employees avoid organizations that discriminate. Even employees from historically privileged groups prefer to work for organizations that treat everyone with respect, dignity, and fairness. According to Bell, productivity is lower among all employees when discrimination is present in the workplace, even among employees who experience no discrimination. Organizations that become known for their inclusive cultures attract and retain top talent, which improves their economic bottom line.

The Bottom Line for Managers?

The necessity for responsible sustainability management in all sectors of our economy – local and global – has never been higher. Leaders need to remember that people are the ones who carry out sustainability initiatives. Organizations that fail to realize the central role that diversity and inclusion play in sustainable development may ultimately be overlooked and left behind.

3P INSIGHTS is a consulting firm that offers training, speaking and support services to help organizations attract and retain diverse talent, create inclusive workplaces, become better environmental stewards, and improve their overall social, environmental, and economic impact.

Please share this article with your networks!