The rise of the Chief Sustainability Officer
As 'ESG' has grown, the role of the CSO has shifted and evolved to match the demand
If you enter an MBA class today, you might be surprised to hear there are more corporate aspirations than becoming CFO or CEO. The role of the chief sustainability officer has entered the management structure, exciting investors and potential employees alike.
In 2020, the number of CSOs across Fortune 500 companies soared to ninety-five, a number that grew more than 228 per cent since 2011, according to the Weinreb Group, a CSO recruiting and research firm. Last year alone, thirty-one Fortune 500s appointed their first CSO.
“The CSO role is expanding — and shifting, ‘sustainability' isn’t exclusively about the environment anymore.” Ellen Weinreb, founder of the Weinreb Group, said.
As ‘ESG’ has risen to the forefront of investor pressure and employee demands, the question of which corporate leader answers these demands have equally been called into question, catapulting the role of the sustainability chief forward.
More than one-third of US institutional investors want to hear from a company’s head of ESG on sustainability topics including supply chain risk, employee health and safety and the impact of climate risk, according to a survey by consultancy Edelman.
But, in contrast to the rise in appointments, CSOs have moved further away from reporting to the CEO, the Weinreb Group found, despite the chief executive polling to be their strongest advocate.
“To make a meaningful impact, the CSO must have a seat at the table.” Anne Alonzo, Corteva Agriscience SVP, external affairs & chief sustainability officer, said.
However, in 2021, only 21 per cent of CSOs reported being one step away from the CEO, a decline over the past decade. Critics have taken notice regarding the role as mere greenwashing.
“Appointing a CSO used to be an internal search,” Caspar von Blomberg, head of public and social practice at Egon Zehnder, remarked, “someone in communications or marketing would be identified, sent to a six-week sustainability course and then appointed. That has changed entirely.”
Instead, sustainability teams have become integrated into other departments such as general counsel or enveloped under the COO, which many argue is positive as ‘ESG’ becomes fully consolidated into traditional business functions.
Today, CSOs with a background in "hardcore science" subjects has risen, Andrea Romi, an accounting professor at Texas Tech University and a CSO researcher, reported. A change in the roles' demand has impacted the search process for a CSO and the talent pool.
“We play a crucial role at the company. Why? Because we touch all parts of the business," Dick's Sporting Goods CSO, Peter Lands explained. CSOs have reported their roles being impactful through "collaborative efforts," such as sustainable bond initiatives or employee-focused programs.
Employees are increasingly calling for companies to address 'ESG' concerns and improve transparency, as environmental impact aligns with their personal values.
Seventy-two per cent of UK based office workers responded they are concerned about environmental ethics at their workplace, while sixty-four per cent said they would consider turning down a job offer from a company with a bad environmental record, according to a recent study from employee research firm Unily.
As Generation Z enters the workforce, companies have begun to field social impact questions that were previously disregarded, executive search group Egon Zehnder said. In general, companies have begun to answer to employees and investors alike on environmental concerns, social impact, and governance structures in greater scrutiny than before.
The role of the CSO has evolved to have decision-making functions and executive privileges, but the career path of a CSO onward remains unclear. There has yet to be a CSO who ascends to the chief executive role, making some question the career path onward.
A mere decade ago, chief sustainability officer was an emerging role, with many critics regarding it as 'greenwashing.' Today, sustainability heads are being appointed at record rates. Weinreb Group said they anticipate 2021 to track similarly.
"I had to earn a seat over a longer period of time by linking sustainability issues to key business dynamics," Jackie Roberts, AppHarvest CSO said, saying her role meant proving that there was a "competitive advantage if the company is a first mover in ESG activities".
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