How can systems thinking help make firms more sustainable?

How can we become more sustainable consumers? How can manufacturers shift their business towards a circular model to reduce waste?

And how can we develop more affordable housing while also restoring biodiversity, preparing for increased flood risks, and embracing greater water stewardship?

These questions scarcely scratch the surface of the complex reality that underpins many of today’s urgent and vexing sustainability challenges.

Anyone seeking answers to these questions will find that simple solutions rarely exist.

New technologies and policies often reveal new concerns or consequences that had not been anticipated when looking at a problem through a narrow lens. But why?

Scientific and technological progress is often achieved by drilling down into smaller issues (think materials, diseases, or purchasing decisions).

However, those working in sustainability will tell you that focusing on an individual challenge in isolation is often ineffective or, worse still, counterproductive.

It may yield great insights and progress of sorts, but it ignores the important connections that exist between many of the issues we face.

Viewing sustainability challenges in context

Complex challenges such as climate change, loss of biodiversity, plastic waste, and rising demand for energy, food, and water are all interconnected.

They are also influenced by a wide range of other issues such as inequality, corruption, modern slavery, growing mental and physical health problems, societal polarisation and mistrust, and the emergence of transformative technologies such as AI.

Zooming in on any one of these challenges can help us to understand it in greater depth.

But that is not enough. To address these issues effectively, we also need to zoom out to acknowledge the bigger picture and integrate it into our decision-making.

This leads us to an important realisation: the need for systems thinking.

As much as this can be a source of despair – when we feel too small to do anything – it also grounds our thinking in the importance of driving global change.

After all, many of the issues we face are not constrained by human-made borders; they represent planetary problems.

Zooming out can also mean looking at longer timeframes, both past and future.

We need to recognise that the benign climatic conditions of the last 12,000 years – which enabled humans to settle, develop agriculture, build societies, and prosper – cannot be taken for granted.

The impact of culture on climate attitudes

This broader view encourages us to question if a few generations should rapidly burn through a limited stock of fossil fuel resources that took millions of years of natural processes to develop (even before we consider the climatic implications of doing so).

Systems thinkers also realise that people’s actions, decisions, and behaviours are shaped by a variety of drivers. Some of these are invisible, but they hold powerful sway nonetheless.

Most of us recognise the importance of factors such as price, brand, and the availability of raw materials in informing and constraining our decisions especially in business.

Equally important are the structures that give us access to timely and relevant information, the rules and regulations we have to comply with, and the societal and organisational hierarchies that encourage us to compare ourselves to others and aspire to more.

Least obvious, but perhaps most influential, are the cultural factors. These include organisational goals, individual beliefs, and social norms.

Partly inherited, partly acquired through socialisation, culture invisibly shapes our worldview, affecting how we live, consume, and engage with the natural world.

While there are obviously a wide variety of cultures, these overlap and create the tapestry of behaviours we observe in our societies and economies.

How systems thinking can promote a balanced approach

Understanding – and ideally mapping – these systemic factors is key if we want to develop new insights and approaches to engage companies and consumers.

By doing this, systems thinkers can identify so-called leverage points – opportunities for different interventions that might allow the system to shift in a desirable direction.

Interventions at the practical end of the spectrum are typically the easiest, but they may not yield the biggest impact if all other conditions remain the same.

Conversely, a shift in society or organisational cultures may well be the most impactful change to make, but it is often the most difficult to achieve.

For example, our approach towards defining societal progress in terms of economic growth alone has long been challenged as conflicting with our goal of becoming more sustainable. Yet it has proved hard to change due to deeply entrenched economic and social norms.

People may have good intentions but often find themselves caught in a vicious circle where continuously interacting factors disincentivise or prevent them from doing the right thing.

The key is to develop ideas that break these cycles and cultivate virtuous circles instead.

Reaching a tipping point on sustainability

Ideally, desirable decisions and behaviours reinforce each other, continuing to grow until they reach a social tipping point.

Many believe that globally renewable energies have reached such a point, as their economic and environmental benefits have now surpassed the reasons for continuing with fossil fuels.

In practice, approaching sustainability issues with a systems thinking mindset requires us to begin with small, experimental steps, and to observe if this begets further change over time.

If it does not, it requires careful adjustment, a willingness to reflect and learn from any feedback we have obtained, and to embrace the dynamic nature of human behaviour.

Systems thinking is a complementary skillset, necessary to address all sorts of today’s challenges, not just sustainability.

A number of our students at WBS are now applying this approach within their organisations to map systems that are relevant to them and drive change.

Systems thinking allows us to better make sense of the world we live in and develop a clearer shared understanding of the problems we collectively face.

How we then choose to act is up to us all.

Further reading:

Why firms need to start measuring Scope 3 emissions now

How can small businesses achieve net zero?

The sustainability transition is already happening: Lessons from COP30 

How multinationals can avoid supply chain scandals

Frederik Dahlmann is Associate Professor of Strategy and Sustainability and teaches Business & Sustainability on the Executive MBA, Executive MBA (London), the Global Online MBA, the Global Online MBA (London) and the Part-time MBA (London Accelerator).

Refine your leadership capabilities to meet the challenges facing your organisation with the WBS Executive Leadership programme.

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