There’s no longer any debate about it: Change is accelerating in companies and sustainability is now one of its main drivers. It’s a context in which new positions and opportunities are emerging, and that of the Chief Sustainability Officer is one of the most important in recent years.
Sustainability is more than an economic activity. It is a commitment made by organizations to improve the wellness of the communities where they operate. Environmental impact is one of its most important dimensions, but it’s not the only one. Sustainable businesses aim to generate shared value among all stakeholders and improve the lives of the people around them. It’s been years since sustainability was grounded in ESG (environmental, social, and governance) criteria.
Corporate social responsibility (CSR) is still necessary, but a commitment to communities and the environment requires more than corporate philanthropy. An executive position was needed to integrate sustainability into organizations’ commercial and financial strategy: the Chief Sustainability Officer or CSO. In this article, we tell you what their roles and responsibilities are and why companies value them.
Chief Sustainability Officer: Much more than corporate social responsibility
It’s natural for there sometimes to be a bit of confusion around the difference between corporate social responsibility and sustainability. They share some of the same fundamental objectives:
- Both seek a social contribution that goes beyond a company’s purely commercial activities.
- Both adopt a long-term horizon, or one that is at least longer than a quarter or financial year.
- Finally, both require companies to not merely take into account the interests of employees, shareholders, and clients.
The communities affected by a company’s activity are very relevant to both CSR and ESG. But that’s where the similarities end and the more significant differences begin:
- Mission: CSR focuses on values and philanthropy, while ESG identifies and evaluates risks and opportunities for the business.
- Initiative: ESG responds to pressure from investors and regulators, while CSR responds to the company’s needs.
- Metrics: only ESG has impact indicators for business decisions and for not making them soon enough.
Plus, unlike the former CSR managers, the new Chief Sustainability Officers increasingly report directly to the CEO. Why? Because the boardroom is starting to understand that sustainability has a direct impact on the balance sheet and market valuation.
What type of companies need a CSO?
The figure of the Chief Sustainability Officer has started to appear particularly in large multinationals, which have a more developed structure and also a bigger social and environmental impact.
They tend to be organizations with diversified ownership because they are publicly traded. This means no family or small group of investors can easily control them, they are on regulators’ radar, and they receive strong competitive pressure.
Among these multinationals, those that most tend to have a CSO figure meet these six criteria:
- Urgent adaptation: The company’s structure is evolving much slower than the world around it and they need a wake-up call, and fast.
- Necessary balance: It’s not easy to juggle sustainability and profitability, and someone has to come up with new solutions.
- Dissatisfied stakeholders: The communities impacted by the business are influential and demand changes.
- Disordered desires: The firm, meanwhile, must also attend to the demands of its main stakeholders and is having difficulty prioritizing.
- Relevant risks: The boardroom sees that the risks associated with sustainability are so big that they require their own focus.
- Interested investors: Finally, investors and shareholders are increasingly concerned about sustainability and it now goes well beyond the bottom line.
We’re currently in a time of transition. Some companies have made great strides in the area of ESG criteria, while others still don’t know the difference between corporate social responsibility and sustainability. Every company should analyze its own situation and assess to what extent it needs a CSO in its org chart.
What exactly does a Chief Sustainability Officer do?
Basically, a CSO must be able to identify the company’s biggest stakeholders and build a strong relationship with them, understanding their primary needs and devising strategies to resolve them.
They also have to design or refine the satisfaction metrics for those needs and prevent the risks – fundamentally regulatory and financial – of not meeting them. Plus, risk and satisfaction indicators must be linked to an updated database. Keeping it up-to-date requires good coordination with the managers of the company’s other departments.
In parallel, the CSO must translate all this information and indicators into concrete proposals: strategies that align the company’s sustainability with profitability targets, available resources, the strength of the brand, and ESG best practices in the sector.
They also prepare reports and analyze the risks, costs, and opportunities of the proposed sustainability strategy. Finally, they support the CEO and other executives in their relations with leading sustainability investors and regulators.
What do you need to become CSO?
The position of Chief Sustainability Officer has evolved a great deal in recent years with new regulatory requirements, pressure from stakeholders, and senior executives who are increasingly aware of the financial risks involved with ignoring sustainability. That explains the growing number of job offers and responsibilities for CSOs.
But, if you are interested in this position, before you start scanning through LinkedIn or your contacts, it’s worth identifying which projects most attract you, what differentiates you from your competitors, and what is your value proposal.
To design your proposal, it can be helpful to know the most important characteristics companies are looking for in a CSO:
- Communication and analysis skills, to identify the most relevant information and create indicators to share it.
- Strategic vision, to transform the data and indicators into proposals that add value to the company.
- Regulatory and financial knowledge, to track and estimate the risks of disregarding sustainability with their teams.
- Leadership and bargaining power, to align the organization’s interests with those of its main stakeholders.
The training offered by IESE in its executive education programs, and in focused programs like Sustainability & ESG, will assist you in the transformation process you need to become Chief Sustainability Officer and help your company successfully face some of the most important challenges in the years ahead.
