What Recruiters Should Look for in Chief Sustainability Officers
April 18, 2023 – Sustainability has been a growing business concern for years. Recently, it has become even more of a strategic priority. “Investors are demanding information about sustainability activities… and customers and affected communities are becoming more aware [of] the power that they have to affect corporate behavior on this issue,” International Finance Corporation (IFC) said in their Focus 15 report. “This demand for sustainability in business is driven by broad awareness of the danger of climate change,” according to a recent report from BoardEx, which is now a part of Altrata. “But also, corporate decision makers are beginning to recognize the business benefits sustainability practices can provide,” said the study. “Leadership teams now have a responsibility to prioritize sustainability in their sourcing, operations, and partnerships—ethically, but also in terms of business success.” As Heikki Iikka, EY Nordics region assurance managing partner says: “The markets have spoken: Sustainable operations are deemed good for business, and, as such, required across the board.”
In this article, BoardEx considers the key sustainability themes and policies business leaders are discussing today, and how they are defining the chief sustainability officer role with these conditions in mind. They take a look into the types of companies within S&P 500 and FTSE 350 today that are hiring CSOs and creating sustainability committees within their boards. BoardEx also explores what’s required for corporations’ sustainability initiatives to be effective, and how business leaders can redefine “corporate purpose” to include sustainability.
What sustainability themes are driving today’s corporate decision-making?
The connection between the natural world and business success isn’t lost on corporate leaders, according to the BoardEx report. Indeed, the best-governed companies in the world consider economic, societal, and environmental factors in their leadership decisions, IFC says.
Related: Developing Sustainability-Focused Leaders
The study says that there are some common sustainability leadership themes that executives at the world’s most successful companies discuss. BoardEx says to consider these topics from a recent Nike, U.S. meeting of internal and external corporate, non-profit, and other environmental stakeholders:
• Set bold corporate responsibility and sustainability ambitions that align with business goals. Consider setting time-bound, quantitative sustainability targets, and make sure to hold leaders accountable for meeting them.
• Demonstrate the connections between business and sustainability strategies. Demonstrating these connections to employees, customers, investors, and regulators, among others, allows companies to increase trust, build resilience, and create business value, the study said.
• Reframe corporate responsibility narratives to illustrate sustainability as a priority. Companies must tell their story in a way that resonates with stakeholders and differentiates them from their competitors, says BoardEx. For example, Nike’s sustainability initiatives suggest that “protecting our planet” aligns with “increasing access to sport.”
• Better articulate corporate influence and ambitions in the industry. Companies should be specific in terms of the systemic change they will drive in their particular industries, such as more sustainable sourcing practices compared to the status quo.
“Despite these priorities, the process of hardwiring sustainability into business operations and decision-making is just beginning—and ambitions don’t necessarily translate into real, lasting results,” the BoardEx study said.
How are business leaders turning sustainability into corporate policy?
What will change as regulatory and disclosure requirements across countries continue to emerge? As part of its Net-Zero Emissions Procurement by 2050 initiatives, the Office of the Federal Chief Sustainability Officer in the U.S. will “require major federal suppliers to publicly disclose emissions and set reduction targets” if they hope to do business with the federal government.
Correlations Between Executive Search and Sustainability
Sustainability acts as an umbrella term for companies and organizations focused on advancing social and environmental impact initiatives. Organizations are looking to implement transformational change and forward their sustainability/ESG agenda. These changemakers have provided insights on the ever-evolving nature of the sustainability executive search market, and its importance within the U.S. market in a new report from Tempting Talent‘s Lauren Falconer, sustainability practice lead. “A sustainability revolution is sweeping across the business landscape,” the report said. “Companies must evolve to ensure that they are driving purpose-driven, value-based change. Inaction risks reputational damage and the possibility of extinction in the long run. What was once a nice-to-have is now a must have.”
The BoardEx report explains that the effects of these long-term requirements on core lines of business put companies’ responsibility for action squarely on corporate leadership. As Harvard Business Review says: “The ultimate responsibility for defining [sustainability as part of corporate purpose] must rest with the board, because it has a duty to take an intergenerational perspective that extends beyond the tenure of any management team.”
For many corporate boards, this is new territory. According to Responsible Investor, it has been more common for boards to rely on consultants to guide ESG decision-making, without taking significant steps to enact any long-term ESG or sustainability policies, or even prioritize sustainability at the board level. This needs to change if they hope to make sustainability a strategic success.
How are leading companies defining their chief sustainability officer roles?
“Sustainability is moving up the corporate agenda and so too is the formal CSO role,” the BoardEx report said. “That’s because a CSO, sustainability chair, or similar leader can help codify sustainability as a strategic priority. The world’s leading corporations are already taking this step.”
“The number of CSOs holding an executive level position, alongside board members such as the chief executive or chief financial officer, hit 28 percent in 2021, more than tripling from nine percent in 2016,” Reuters reports on a survey of 1,640 companies across 62 countries. Recent BoardEx data also shows that companies specifically within both S&P 500 and FTSE 350 are creating and filling CSO roles, with noteworthy examples across industries.
To read the full report from BoardEx, please click here!
Related: Sustainability’s Impact on Talent Teams
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media