Do we need Chief Sustainability officers?
We’ve all been talking a lot about sustainable development lately, but let’s ask ourselves, do companies know enough about it? Do we have people who master the subject? Is it a time for an independent position of Head of sustainable development? What does such a person do at all?
CSO is a relatively new function. We had known it since 2004 when Du Pont appointed the first Director of Sustainable Development. It is probably not surprising, however, that their number has risen sharply among listed companies. Among the 500 wealthiest companies, in 2020, we had as many leaders or directors for sustainable development as in the previous three years combined.
What does a sustainable development manager do?
In short, it helps the company to be economically, environmentally, and socially sustainable. More specifically, this means that he or she:
- Defines the strategy for sustainable development.
- Helps to transform the business strategy into a sustainable one.
- Ensures the integration of a sustainable strategy, monitors the implementation and achievement of objectives.
- Has an overview of all risks and primarily monitors the quality of environmental, social, and governance risks.
- Assists the Management Board in financial and non-financial reporting.
- Leads a team of multidisciplinary experts who make up a sustainable team.
It does all these and more, depending on the company, industry, and authority level.
To understand what they are doing, don’t look at where they’re coming from, but what problems they’re trying to solve. The role of a leader for sustainable development is defined differently in different companies because it depends on too many variables. With the development of regulatory bases and thus standardization, this role will also become more standardized.
To begin with, let’s look at which functions or departments Chief Sustainability Offices is involved in in a typical larger organization.
CSO’s interactions with other departments
Source: Deloitte and Institute of International Finance, The future of Chief Sustainability Officer, 2020
It is a holistic function, which requires a set of knowledge in the field of strategy preparation, integration of legislation into business models, environmental protection, circular economy, risk management, social responsibility, quality standards, processes, product and service development, management of various stakeholders, procurement, human resources, communication, etc. Moreover, exceptional leadership skills are also essential. CSO is not someone who sits quietly in their room and thinks about how to save the company and the world but is an integrator, motivator, and organizer of the work of many departments. She or he is a fighter, a futurist, and above all, she or he can impress other leaders with a sustainable philosophy.
When do companies choose the position of Head of sustainable development?
The global study conducted by the Institute of International Finance (IIF) and the consulting firm Deloitte in 2020 among financial institutions showed that the time for this function is:
- When companies face some external change (e.g., COVID 19 or legislation), they cannot cope with it at the moment.
- When different stakeholders (investors, customers, suppliers, employees, etc.) have higher expectations regarding sustainable development and business than the company realizes.
- When the company’s management realizes that the risks associated with the environment, society, and control are so significant that they have become strategic.
Development of the profession
It is encouraging for the development of this profession that the biggest suporter of CSO is CEO. A survey conducted by the Weinreb Group in 2020 showed that in 50% of cases, the CEO is the biggest supporter.
But what are the prospects for the advancement of Chief Sustainability Officers? Many CSO’s have been promoted to the position of CEO. Helena Helmerson, former director of sustainability at H&M, became the company’s CEO in 2020.
Will this function remain?
Every time a new function appears in companies, we rightly wonder if it will stay in the long run. Dr. Nadya Xhexembajeva, a scientist, entrepreneur, and author specializing in reinvention and sustainability, says: “When the quality movement started, we got the first Chief Quality Officers. Now quality is built into all the departments in the company, and this function is disappearing. It will probably be similar to sustainability officers. “
However, before we reach this stage, the interest in such staff will grow. Above all, knowledge on sustainable development within companies will have to grow at all essential functions and all levels of decision-making.
The article was originally published on the web site Svet Kapitala.