The evolving role of sustainability leaders

Executive summary

Businesses are responding to the climate emergency by seeking competitive advantage whilst avoiding accusations of 'greenwashing.'

The successful sustainability leader of today is no longer an evangelist working in a silo.

The role has evolved as organizations mature their response and understands the scale of change that is required. Today these leaders are business partners who integrate the sustainability agenda into the wider business plan so that trade-offs can be made.

Context

Sustainability or 'ESG' leaders are in more demand as regulation increases, (particularly with incoming Corporate Sustainability Reporting Directive (CSRD) regulation in the EU), due to the growth of ESG-led investing and an ever-shifting global regulatory landscape. Competency around sustainability has become an absolute necessity to operate.

Consumers and the next generation of employees are pushing for their employers to take action to mitigate the climate emergency.

There is increasing awareness of the significant reputational risks which could result from 'greenwashing.'

Sustainability leaders who succeed do two things well:

• build a clear business case for change that aligns environmental goals with business objectives and highlights competitive advantage 
• engage multiple stakeholders to deliver change; the ability to bring disparate parts of an organization together to achieve a goal is key

The successful sustainability leader of today is no longer siloed. Rather, they are a business partner who can work across functions to align goals, as well as operationalize and integrate the sustainability agenda into the wider business.

“We want to co-own the challenges with the business. In the past maybe we expected change would happen because it was the right thing to do. And in some cases this worked. But decisions where trade-offs have to be made are where things get stuck. All the challenges are systemic. The business case needs to be made and goals aligned. We want to recruit diverse teams, including businesspeople, who we can integrate into the business. This is how we create a mechanism to stimulate innovation and operationalize sustainability in the business. It is how we will deepen integration and achieve targets in the next three to five years.” Simon Henzell-Thomas, Director of Global Public Affairs, Advocacy & Transparency, IKEA

“At a fundamental level, CSOs are transformation experts and bring about real change by presenting the business opportunities of sustainability. This is how they move the needle on corporate sustainability in a more positive direction.” Christine Maria Betz, CSO, BSH Home Appliances Group.

Organization design

The choice of leader is determined by the business’ sustainability maturity level and industry.

The role could be a dedicated Chief Sustainability Officer (CSO) on the Executive team or a dual role whereby another functional leader takes on the sustainability remit.

The role will evolve as an organization matures, and its response and understanding of the scale of change that is required becomes more apparent.

“The danger is you appoint someone and they operate within a silo with other members of the management team abdicating responsibility and inevitably nothing gets done.” Paul Druckman, Chair, World Benchmarking Alliance.

This concern is echoed throughout the market and is particularly noticeable if the sustainability leader does not have a direct line to the CEO.

“Sustainability can’t be the sole responsibility of certain functions or roles.”

“We are working hard to integrate it into all functions (real estate, procurement, retail and others) so these leaders and their teams take responsibility for achieving targets. We keep a small team to focus on tasks like strategy, data, integration, partnerships and reporting.” Simon Henzell-Thomas, Director of Global Public Affairs, Advocacy & Transparency, IKEA.

The internal appointment

It is not uncommon for a business first approach to give the responsibility to an existing senior executive who knows their business well and has the appropriate strategic and operational acumen. This individual can work with external advisors to lead the strategy and target-setting phase when establishing what is integral to their business and the scale of the change required by the organization. An internal appointment can demonstrate to employees that the company rewards those who champion ethical causes and can align commercial success with sustainable business.

The external hire

Once a Board has understood the opportunities and risks of the climate emergency and what is most important to their business, they may realize significant transformation of their business is needed. In this case, they will seek a sustainability leader from outside the organization with the relevant technical and regulatory knowledge and strategic and operational leadership strength to deliver change. Beyond the technical skillset, appointing an external sustainability leader brings a fresh perspective to the company. It sends a clear message to the employees and customers.

However, leaders with both the regulatory and technical specialism and the ability to think strategically and manage change are a rare commodity. In sectors such as finance or commercial real estate there are very specific technical standards and regulations where qualifications and experience are at a premium. Such individuals will seek opportunities to work with Boards and businesses where the whole C-suite, led by the CEO, are ready to respond to the climate emergency. These are the companies most able to attract premium sustainability leaders and ensure they are future-fit businesses.

How can Odgers Berndtson help?

• We have industry experts with specialist sustainability networks who can help identify suitable sustainability leaders across consumer, industrial and financial services markets as well as in global non-governmental organizations operating in this space.
• We implement companywide programs to identify, assess and develop future-fit leaders across the C-suite with the strategic vision and operational acumen to respond to the climate emergency. This is the most effective way to effect change, rather than relying solely on appointing a single sustainability leader.

We practice what we preach

We are committed to asking every client and candidate we meet, in all sectors and functions around the globe, about climate change. We believe this curiosity goes hand in hand with our commitment to identifying inclusive and diverse leaders. 

Whilst our biggest contribution to reducing climate risk is felt in the work we deliver for our clients, we are reducing our own carbon footprint. We have engaged Carbon Intelligence, part of Accenture, to assist us in developing a robust decarbonization strategy. We are well underway with calculating our current carbon footprint, across scopes 1,2 and 3 emissions globally and our reduction targets will align with climate science. 

“Setting science-based targets and aligning sustainability to remuneration and senior leadership performance are the most effective ways of defining and achieving sustainability goals.” Paul Druckman, chair, World Benchmarking Alliance.

If you think Odgers Berndtson can help with your sustainability or ESG goals, contact Dominik Legault, Principal and ESG Lead at Odgers Berndtson Canada.