Transforming HR into strategic steward leadership

In recent years, many companies have hired chief sustainability officers (CSOs) and board-level professionals to establish strategic plans that strengthen both environmental and social sustainability. While the CSO’s responsibility should not be taken lightly, the chief human resources officer (CHRO) has an equally strategic role to play in mobilising the company towards greater success in sustainability and generating profits responsibly. At its core, HR is about managing the most dynamic organisational asset—people. Therefore, when it comes to the biggest challenges facing humanity, it is imperative that HR should shed the administrator image and rightfully claim a seat at the table.

This especially holds true for CHROs of large corporations. According to a Global Justice Now ranking comparing government revenue to some of the most successful companies worldwide, corporations make up 69 of the top 100 economic entities, while only 31 are nations. The power and impact of these mega corporations on global wellbeing cannot be understated.

However, without HR’s strategic leadership, the corporations’ intent and ability to enable “profitable growth with purpose” cannot succeed.

Reinventing HR

Over the past decade, businesses have intensified their efforts toward sustainability. With over $40 trillion invested in ESG funds worldwide and an array of green incentives and regulations, there has been a significant push to protect the planet and humanity. Despite these advancements, progress remains limited, largely due to an overreliance on governance (G) mechanisms to address environmental (E) and social (S) concerns. Governance, primarily composed of regulatory measures, reporting mandates, and incentive structures, has fallen short in driving substantial change. HR has historically operated using a similar framework of incentives, penalties, and rules to influence behaviour, and it is time to change.

Amid a fast-changing labour and economic landscape, HR can no longer rely on a purely governance approach as described above because these mechanisms tend to encourage tick-the-box mindsets and conformity. Businesses in the 21st century must be innovative, adaptable, and ethical, with the ability to build trust, reputation, and resilience.

Therefore, what is urgently needed is a values-and-purpose driven revolution to enable businesses to do well by doing good. This can only be made possible by Steward Leadership – the genuine desire and persistence to create a collective better for a wide variety of stakeholders, not just shareholders. In ESG, this means that G must be elevated to L, specifically Steward Leadership. Being the custodian of corporate culture, HR plays a vital role to bring about steward leadership for the long-term growth and profitability of the organisation.

Fostering a culture of stewardship through HR

So, what is steward leadership and how does it play out? Learning from over hundred E/S champion companies that are driving profitable growth by addressing the very challenges that threaten humanity today, we found that steward leaders believe in four common stewardship values:

1. Interdependence – The belief that the more they give, the more they receive.
2. Long-term view – Viewing business growth as a marathon, not a sprint.
3. Ownership mentality – Taking personal responsibility to tackle today’s existential challenges, embracing steward leadership.
4. Creative resilience – The unwavering determination to innovate and create profitable solutions, seeing challenges as opportunities rather than costs.

Their belief in the four values drives them to pursue the stewardship purpose of creating the collective better future mentioned above. Together, the values and purpose form the organisation’s steward leadership compass. Once the compass is established, the companies make every decision—big and small—through the steward leadership compass lens.

From renowned companies like Patagonia, Faber Castell, Unilever, Tata, Ayala, and lesser known but equally impactful E/S champions, we discovered their commitment to sustainability is not merely a response to financial incentives or regulatory pressures. Their choice of steward leadership springs from a proactive desire to make a meaningful difference. First and foremost, leaders in these organisations see themselves as stewards of our planet and society, embracing the challenge of driving profitability while addressing pressing human problems. This presents a significant opportunity for HR to contribute meaningfully to sustainability action.

Simply incorporating ESG markers into executive performance measurements for drafting policies is not enough. Instead, HR must lead the charge in fostering a culture built on stewardship values and purpose, inspiring behaviour through intrinsic motivation rather than external rewards or punishments alone. As an equal C-suite executive, HR can ensure the integration of steward leadership values in organisational purpose, vision, and strategy. This is achieved by ensuring alignment of people, processes, and structures to the organisation’s steward leadership compass.  

“HR must lead the charge in fostering a culture built on stewardship values and purpose, inspiring behaviour through intrinsic motivation rather than external rewards or punishments alone.” – Rajeev Peshawaria, CEO, Stewardship Asia Centre

This alignment can be done through executive learning and development, integrating stewardship values into the hiring process and performance evaluations, and promoting diversity at all levels of the organisation. If done effectively, this can lead to greater innovation and better decision-making regarding sustainability. And that is not all — constant engagement, communication, and recognition will be needed to hone the corporate culture into a strategic asset that will be enable workforce retention, brand value growth, market differentiation and innovation.

We have seen throughout history that actions driven by values and purpose far outweigh those dictated by incentives and penalties. Our research, as laid out in the Sustainable Sustainability playbook, confirms that companies pursuing steward leadership create more long-lasting profitable growth compared to their industry peers. The best CHROs play a pivotal role not only in shaping strategy, but also in its execution. They ensure that both (strategy and execution) are grounded in purpose and foster innovation that constantly create profitable solutions to existential challenges like climate change and socioeconomic inequality.

In essence, through their astute steward leadership, they help their companies in seeing sustainability as a win-win-win growth opportunity instead of a cost and compliance problem.

Will you, as an HR leader, rise to the challenge of steward leadership?

About the author: Rajeev Peshawaria is the CEO of the Stewardship Asia Centre (SAC).