As companies around the world pursue ESG drives, the role of the c-suite in sustainability transformations is more crucial than ever. However, a new study has found that the majority of companies still do not have an active Chief Sustainability Officer – instead favouring adding the responsibilities to an existing portfolio, and with a limited mandate.
The majority of businesses are currently adopting environmental sustainability practices. Almost 90% of respondents in recent Eden McCallum research said they were concerned about environmental sustainability. The task now is to translate that concern into effective action.
Sustainability transformations are however, hard to achieve, even with the best of intentions. While the C-suite might keen to make a difference, green-lighting sustainability transformations and supporting their implementation, such programmes often run into difficulties, while executives with other remits cannot focus all of their time on solving them. As such, previous analysis of sustainability change has shown as many as 81% of programmes enjoy mediocre performance at best.
One of the key measures which businesses can apply to ensure better outcomes is the appointment of a Chief Sustainability Officer. As part of the C-suite of chief officers, CSOs can provide visionary leadership and coordinate with management, shareholders, and employees to develop and maintain an effective corporate strategy for sustainability – while not being distracted by the day-to-day firefighting of other roles. Despite this, though, the growth of the CSO role is slow, according to a new Strategy& study.
The researchers examined 1,640 companies from 62 countries worldwide, and found that North America leads the way on CSO installations – but even there, only 48% of firms have an active CSO. Meanwhile, 39% have a “light CSO”, which is likely combined with another C-suite role. In Europe, while the market is the second quickest in its uptake of CSOs, the proportion is even lower. Only 35% of businesses have a separated CSO active in their firm. However, the 57% to deploy a “light CSO” means that there are still fewer firms without any CSO plans than in North America.
At the same time, not all industries are adopting CSOs at the same rate. While the industries which are most typically associated with negative environmental outcomes have more rapidly rolled out the function, it is of concern that disruptive digital industries – which due to the energy required to run them also have huge carbon footprints – are not taking things as seriously.
Leading the way, consumer products organisations make up the only sector on the brink of a majority having active CSOs. With topics like packaging and material waste having caught consumer ire in recent years, this is something retail goods producers have had to reckon with quickly – especially as many customers are now willing to go elsewhere and pay more if it means their goods and services are sustainable.
At the other end of the spectrum, though, e-commerce seems relatively unconcerned by the need to appoint CSOs. Only 14% of operators in the sector have an active CSO – with 77% instead opting to bolt the role onto another set of C-suite responsibilities, and with a limited mandate.
Explaining why this approach may not lead to effective sustainability transformations, Dr. Peter Gassmann, Global Leader of Strategy&, said, “The various ESG dimensions have developed into an important evaluation criterion for companies. Not only access to financing, but also the perception of the company in the talent market and in the broader public depends on one’s own ESG transformation. In order to remain credible when it comes to sustainability issues, companies should strategically and operationally bundle their sustainability projects in top management. The right leadership by a strategist who also has a broad knowledge of sustainability lays the foundation for a comprehensive realignment.”