Table Of Contents
Abstract
The difficulties of integrating corporate sustainability in strategy and operations have been discussed for decades. Addressing the silos within and between key stakeholder groups can be a useful start for better anchoring corporate sustainability in day-to-day business practices. Companies that overcome internal and external silo tendencies can improve social and environmental performance, reduce risks of greenwashing, and benefit from strengthened stakeholder relationships.
Introduction: Corporate Sustainability Integration (and lack hereof)
For decades, scholars and practitioners have stressed the importance of integrating corporate sustainability in the company’s business model, strategy, and operations (Hengst, Jarzabkowski, Hoegl, & Muethel, 2020; Nguyen & Kanbach, 2023; Osagie, Wesselink, & Blok, 2016). Corporate sustainability needs to be integrated rather than decoupled (Collier & Esteban, 2007), embedded rather than peripheral (Aguinis & Glavas, 2013), and built-in rather than bolt-on (Grayson & Hodges, 2004). For instance, Joyce & Paquin (2016, p. 1474) argue that there is a need to: “(…) move beyond incremental, compartmentalized changes within an organization and towards integrated and integral changes which reach across the organization and beyond in its larger stakeholder environment”. Likewise, theUnited Nations Global Compact (2024, p. 1) highlights the importance of integrating corporate sustainability in strategy, operations, and culture:
“It is important to move sustainability from a peripheral, discretionary activity, mostly aimed to manage risks and protect the company’s reputation and brands into a significant source of innovation, productivity, market differentiation and growth. Sustainability must be woven in as an important element of the company’s strategy, operational processes, and culture and that of all its business and functional subcomponents.”
Despite recurrent calls for corporate sustainability integration, it is widely acknowledged that corporate sustainability in practice often leaves much to be desired. Corporate sustainability integration is a difficult and complex process which is affected by a number of contextual factors (Fonseca, Abreu, & Silvestre, 2021). In fact, only a minority of companies take meaningful steps to embed corporate sustainability throughout the organization and in its relationships with key, external stakeholders (suppliers, distributors, customers, etc.) (Nguyen & Kanbach, 2023; Pedersen & Neergaard, 2008). For instance, a recent report concluded that three out of four surveyed business leaders did not believe that they effectively integrated corporate sustainability within their organization (Bain & Company,2023, p.4). The apparent lack of corporate sustainability integration is by no means a new observation. Scholars and practitioners have known for decades that companies often fail to embed corporate sustainability in strategy and operations (Lacy & Salazar, 2006; Mirvis & Googins, 2004; Pedersen & Neergaard, 2008).
The negative consequences of corporate sustainability (dis-) integration are well-known. Not only will peripheral approaches to corporate sustainability do little to improve social and environmental performance, poor integration can also damage the company’s brand and reputation if the discrepancy between the lofty sustainability promises and actual business practices sparks backlash from stakeholders. Over the years, numerous companies have been targeted with accusations of greenwashing, which have sometimes ‘stuck’ to the organizations for years (Blazkova, Pedersen, Andersen, & Rosati, 2023; Martin, Thapa, & Aguinis, 2024).
Organizational silos are an often-overlooked factor in understanding corporate sustainability integration (and lack hereof). Silos can be broadly understood as impermeable organisational boundaries, which obstruct the orchestration of organisational activities (Briody & Erickson, 2014; Serrat, 2017)). Silos can for instance emerge between organisations, divisions, departments, functions, professions, hierarchies, and sub-cultures. Furthermore, as silos tend to create sub-optimisation and bottlenecks, they can be a source of conflicts between stakeholders. In summary,Serrat, (2017, p.713) argues that the existence of silos:
“…misaligns goals, dilutes roles and responsibilities, makes for ambiguous authority, leads to resource misallocation, breeds defensive personnel, and fosters a culture whereby the incentive is to maximize the performance of the silo, not that of the organization.”
Silos can also serve as barriers to implementing corporate sustainability, which almost by definition cuts across organizational boundaries and require interaction between internal and external stakeholders. Previous research also suggests that corporate sustainability works best in organizations with more flexible, open structures (Pedersen, Gwozdz, & Hvass, 2018). It is difficult to imagine corporate sustainability being integrated in an organization characterized by impermeable boundaries, which obstruct the flow of materials, knowledge, and information. According to Engert & Baumgartner (2016, p. 828): “In the implementation phase of corporate sustainability strategies, the fit between strategies, organizational structure and organizational processes is essential”. The need to overcome organizational silos is also increasingly recognized by practitioners. A recent report from IBM Institute for Business Value argues that there is a need to burst the silos to better anchor corporate sustainability throughout the organization:
“Embedded sustainability means breaking sustainability out of its functional silo and integrating it across every business unit, in particular the core functions and workflows” (IBM, 2024).
In the next section, examples of the silos that can emerge within and between key stakeholder groups are briefly discussed. Moreover, a few recommendations for overcoming silo tendencies in relation to corporate sustainability are outlined. Given the format, it will not be possible to go into great detail with the individual silos. Future researchers should examine how organizational silos, individually and in combination, affect corporate sustainability integration across geographies, industries, and company types.
Stakeholder Silos and Corporate Sustainability Integration
Stakeholder thinking has been a key pillar underlying much corporate sustainability theory and practice. Corporate sustainability moves beyond a narrow focus on customers and owners and takes into account the voices of a broader range of groups and individuals who affect and/or are affected by the company’s activities (Hörisch, Freeman, & Schaltegger, 2014; Pedersen et al., 2018). However, stakeholder theory is by no means anti-profit, anti-shareholder, or anti-capitalist. Adopting a stakeholder perspective is simply seen as a better way to do business and create value for everyone in the long run – including shareholders (Freeman, Harrison, & Wicks, 2007). While stakeholder conflicts are inevitable in the short-term, the interests of stakeholders are expected to merge through time. Over the years, stakeholder thinking has been met with criticism from both the left and the right, but remains a leading theoretical perspective within business and societal domains. The stakeholder perspective also seems to resonate well with business practitioners. When business leaders were asked in a survey about the primary role of business, the most popular alternative was “Balance needs of all stakeholders” (39%; Bain & Company,2023, p. 79). The option “maximize immediate shareholder value” (15%) only made it into the third place.
Silos can emerge within and between stakeholder groups, which can have a negative impact on the orchestration of organizational activities. This also concerns all types of corporate sustainability work that require coordination across organizational boundaries. Highlighted below are a few examples of silos that relate to some of the key stakeholder groups – groups that often directly influence company activities and its bottom line (Henriques & Sadorsky, 1999). However, it should be noted silos can also emerge in business relationships with other stakeholders as well (community groups, regulators, consultants, technology providers etc.).
Management silos
Silos between managers at different levels and across different functions can seriously hamper corporate sustainability integration. Managers from different units, divisions or departments do not necessarily have the same perspective on sustainability, and the costs and benefits from introducing corporate sustainability may be unevenly distributed among them. Internal management disagreement about corporate sustainability can result in mixed communication to stakeholders and decoupled corporate sustainability efforts. Silos can also emerge between managers and other stakeholder groups. For instance, hierarchical silos are not uncommon between managers and employees, where the top does not know what happens on the floor (Pedersen & Andersen, 2023).
Employee silos
Corporate sustainability integration depends on engagement from employees at all organizational levels (Hahn, Sharma, & Glavas, 2024). However, silos can emerge between employees from different functions, professions, and sub-cultures within the organization, which can obstruct coordination and collaboration about corporate sustainability. Formal and informal silos between the employees at the sustainability department and those working in other business functions are classic examples (Kok, Bakker, & Groenewegen, 2019; Risi, Wickert, & Ramus, 2022). In line with these observations, a study from Spain indicated that the sustainability and communication departments almost existed in “parallel universes” (Ruiz-Mora & Lugo-Ocando,2018, p. 154). Internal employee silos can also have negative implications for the relationship with external stakeholders. As an example, attempts to promote a more sustainable supply chain can lose credibility if employees from different departments in the buyer organization send competing signals to the suppliers (Villena & Gioia, 2020).
Supplier silos
It is well-known that suppliers do not always act in accordance with the interests of buyers when it comes to corporate sustainability (Pedersen & Andersen, 2006). Non-compliance challenges can be caused by competing interests. However, poor knowledge exchange between the buyers and suppliers can also be a source of misunderstanding and conflict which can obstruct the implementation of supply chain sustainability. Companies are often unaware about what is going on in the supply chain. Therefore, buyer requirements for corporate sustainability can be formulated without adequate knowledge about actual supply chain conditions. Furthermore, suppliers can find it burdensome to comply with corporate sustainability requirements, which are costly or irrelevant.
Customer silos
Many companies lose control when their products are handed over to the customer. The knowledge silo between the company and the customer implies that critical knowledge about the product user and usage is lost. As an example, a recent PhD study concluded that only 10 percent of fashion products actually fit users’ bodies (Terkildsen, 2024). In terms of corporate sustainability, silos between the company and its customers can generate a lot of waste due to poorly coordinated logistics, lack of customization, and inefficient use. Moreover, customer silos complicate attempts to develop circular business models that seek to repair, share, recycle, and/or upcycle. In circular business models, customers play key roles in keeping the product in the loop. Here, marketing play a key role in gaining customer insights, identifying enablers and barriers, and promoting more sustainable product use.
The emphasis on stakeholder silos should not be seen as disregarding system challenges within and between companies, which can work against corporate sustainability integration. Systems, standards, and procedures used to coordinate business activities can enable as well as constrain the integration of corporate sustainability (e.g. KPIs, work protocols, bonus schemes, job descriptions, investment procedures, and databases) (Engert, Rauter, & Baumgartner, 2016; Hoffman, 2010; Lueg & Radlach, 2016). However, organizational structures obstructing corporate sustainability will only manifest themselves when put to use by stakeholders. As an example, organizational charts and the annual budgets may reinforce a siloed coordination of business activities, yet these structural challenges are channeled through, and brought to life by, stakeholders in concrete, ongoing interactions.
Bursting Stakeholder Silos
Recommendations on how to overcome such silo challenges can be found in the general management and organization literature (Casciaro, Edmondson, & Jang, 2019; Gulati, 2007). The corporate sustainability literature often deals with silo challenges implicitly, although there are examples of work addressing especially functional demarcation lines in discussions of corporate sustainability integration (IBM, 2024; United Nations Global Compact, 2024). Inspired by the work ofHess (2008), it is worth stressing three key dimensions that can foster coordination of corporate sustainability across silos: - real transparency, real improvements, and real relationships.
Real Transparency
Keeping stakeholders in the dark can hardly be considered as good practice, when it comes to corporate sustainability. Companies are often criticized for selective disclosure of information about social and environmental performance, which has led to accusations of decoupling, hypocrisy, and greenwashing (Blazkova et al., 2023; Pedersen & Andersen, 2023). However, lack of transparency is not only a problem for the public who are interested in the environmental footprint of the company. Lack of transparency can in itself be a symptom of silos as isolated ‘pockets of knowledge’, where stakeholders within the silo do not share information with stakeholders outside the silo (Cromity & Sticker, 2011). For instance, a poorly functioning department has no interest in sharing performance data with management or other members of the organization. Promoting transparency across silos will make it more difficult to hide inefficiencies and underperformance.
In the context of corporate sustainability, efforts have also been made to increase transparency and break knowledge silos between stakeholders. For instance, digital technologies have been introduced to increase transparency and share sustainability-relevant information among stakeholders (Mcgrath, Mccarthy, Marshall, & Rehme, 2021). It should be noted that transparency does not mean disclosing everything to everyone. Transparency comes with costs and stakeholders have different needs and wants. Therefore, companies need to balance the costs and benefits when investing in transparency solutions. However, in general, transparency works for the benefit of corporate sustainability integration when it inspires improvements that generate real benefits for stakeholders.
Real Improvements.
In order to comply with new regulations and/or the demands from other stakeholders, companies must satisfy an ever-increasing number of reporting requirements. Despite the rhetoric surrounding the push for more documentation, it is important to keep in mind that compliance does not equal improvements. At worst, compliance efforts can result in suboptimization and draw resources away from concerted efforts that bring about real social and environmental benefits for the company and its stakeholders. As an example, a recent report concluded that companies spend 43% more money on sustainability reporting compared to sustainability innovation (IBM, 2024). Moreover, only a minority of companies actively use sustainability data and insights for operational improvements and innovation (Ibid.). These numbers indicate waste rather than corporate sustainability integration. Corporate sustainability integration only happens when the company is successful in driving improvements across organizational boundaries and stakeholder interests. Failure to do so will only breed cynicism and undermine organizational support for corporate sustainability. Therefore, companies can also benefit from beginning the corporate sustainability journeys with low-hanging fruits that quickly generate tangible benefits (e.g., energy efficiency projects, waste reduction, etc.).
Real Relationships.
Corporate sustainability integration depends on engagement with internal and external stakeholders (Engert & Baumgartner, 2016; Fonseca et al., 2021). Companies need to work with stakeholders to overcome silos and make coordinated efforts to bring about social and environmental improvements. As an example, a successful implementation of circular economy solutions (recycling, upcycling, sharing etc.) will almost inevitably include collaboration with stakeholders (Pedersen, Lüdeke-Freund, Henriques, & Seitanidi, 2021). However, corporate sustainability efforts are often implemented in a top-down fashion, which can breed resistance and reinforce silos between stakeholders. As an example, supplier requirements for corporate sustainability can face resistance if they are introduced without consideration of suppliers’ needs and wants (Baden, Harwood, & Woodward, 2009; Boyd, Spekman, Kamauff, & Werhane, 2007). Likewise, finding support for new corporate sustainability policies will prove difficult if they are met with resistance from key organizational units that do not feel that they have been heard. Integration is more likely to succeed if corporate sustainability is seen as a collective effort that brings together stakeholders across organizational boundaries. As noted by Casciaro, Edmondson, & Jang (2019, p.137): “Instead of holding oneway information sessions, leaders should set up cross-silo discussions that help employees see the world through the eyes of customers or colleagues in other parts of the company”.
Internal marketing approaches can play a key role in overcoming stakeholder silos and promoting corporate sustainability integration. Organizational silos are known to stimulate internal conflicts and lower job satisfaction, because impermeable boundaries make it difficult for employees to perform their jobs and create value for customers and other stakeholders. Internal marketing solutions to cope with silos include for instance promotion of teamwork across organizational boundaries. Moreover, training of internal ‘brokers’ can be a means to foster cross-silo coordination within the organization and in its relationships with key external stakeholders (Casciaro et al., 2019). Corporate sustainability integration require competent actors who are able to cross organizational boundaries defined by others (Broekhoven, Boons, Buuren, & Teisman, 2015). Therefore, the organization will benefit from the training of brokers who are able to: “ (…) to act in a competent, legitimate manner in multiple communities, thereby spanning the boundaries and helping to facilitate the learning between them (…)” (Weller, 2017) . Last, better stakeholder communication is a key marketing approach to overcome silos and promote corporate sustainability integration. Unfortunately, much corporate sustainability communication today is asymmetrical, one-way information with limited involvement of internal and external stakeholders, which in turn is likely to have a negative impact on corporate sustainability integration. For instance,Griffiths and Petrick (2001) hypothesize that organizations that allow employees to feed into strategy making with their knowledge are likely to demonstrate higher levels of corporate sustainability. Therefore, more engaging approaches to corporate communication that include the voices of multiple stakeholders should have more potential to burst silos and promote corporate sustainability integration.
Concluding Remarks
Integration has been the labelled the holy grail of corporate sustainability (Hengst et al., 2020). However, all evidence indicates that only few companies manage to successfully integrate corporate sustainability in strategy and operations. This commentary zoomed in on organizational silos that were seen as a key barrier to embedding corporate sustainability throughout the organization and in relationships within key stakeholders. Corporate sustainability is by definition a multi-dimensional concept that depends on active contributions from all key stakeholders across organizational boundaries for successful implementation.
Research in stakeholder silos and corporate sustainability integration is still at an embryotic stage. More research is needed for better understanding how the permeability of organizational boundaries shape stakeholder relationships and corporate sustainability integration. In the following, a few underexplored areas are highlighted which call for closer analysis by marketing researchers in the future:
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There is a rich literature on boundary work, which covers the“(…) purposeful individual and collective effort to influence the social, symbolic, material, or temporal boundaries, demarcations; and distinctions affecting groups, occupations, and organizations” (Langley et al., 2019). In a sense, corporate sustainability integration can be seen as boundary work, which expands the boundaries of organisation in terms of scope (single to triple bottom line), constituents (shareholders to stakeholders) and logic (business to lifecycle logic). However, thus far, we know little on how marketing can play an active role as a broker in overcoming silos and reconfiguring organisational boundaries by 1) translating across differences, 2) aligning among differences, and 3) decentering differences (Quick & Feldman, 2014).
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In addition, there is a need for better understanding how stakeholder silos influence marketing as a business function when it comes to corporate sustainability. Over the years, countless corporate scandals have been rooted in discrepancies between organizational saying and doing regarding corporate sustainability (Blazkova et al., 2023). The apparent decoupling in corporate ‘talking’ and ‘walking’ when it comes to corporate sustainability may at least partly be rooted in silos between marketing and other stakeholder groups. For example, communicating corporate sustainability is a near-impossible task if knowledge silos exist between marketing and other departmental functions in the organization. Marketing can be an opportunity for mainstreaming corporate sustainability as well as a source of tension, e.g., if stakeholders perceive a gap between corporate communication and actual business practices.
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Last there is a need for understanding how new marketing tools and digital technologies can burst stakeholder silos and strengthen corporate sustainability integration. For instance, new digital tools introduced in the supply chain can potentially increase transparency and align buyer-supplier interests (Mcgrath et al., 2021). The literature talks about boundary objects which help organization members translate knowledge, activities, and routines, across different types of organizational demarcation lines, e.g. between different professions or departments (Sharp et al., 2020). Boundary objects can for instance be artifacts, common language, and shared processes (Wenger, 2000). However, today we know little about how boundary objects within the field of marketing can play an active role in promoting corporate sustainability integration.
Conflict of interest
The Author declares no conflict of interest.
About contributors
Esben Rahbek Gjerdrum Pedersen
Department of Management, Society and Communication, Copenhagen Business School, Copenhagen, Denmark
Denmark
