The Rise of the Chief Sustainability Officer

The perspective that meaningful and credible sustainability reporting is an essential requirement for any responsible business is increasingly becoming accepted, by many companies around world. Yet reporting cannot take place in isolation. Sustainability is a critical aspect of business strategy and operational decision-making, which needs to be embedded in the corporate DNA through a transformative process.

That process takes time and requires strong leadership at the C-suite level, which has led to  the emergence of the Chief Sustainability Officer (CSO). Less than two decades ago, a CSO was a novelty. The first-known CSO appointment was Linda Fisher at Dupont in 2004. By 2011, there were 29 CSOs in publicly traded companies in the USA – and in 2020, Fortune 500 companies hired more CSOs than in the previous three years combined.

Cognizant of the crucial role of CSOs in accelerating business action on sustainability, in 2020 the Prince of Wales’s Sustainable Markets Initiative launched the Sustainable 30 Group. Comprised of CSOs from some of the world’s most influential companies, its aim is to ‘collaborate on initiatives and actions to help protect and drive sustainable stakeholder value’.

Getting to grips with ESG risks

The role of the CSO covers a widening set of mandates and duties amid the multiple sustainability challenges that confront organizations. Deloitte's recent report, The Future of the Chief Sustainability Officer, highlights how changes in the corporate's external environment is intensifying scrutiny from stakeholders, fuelling an ever-greater focus on Environmental, Social, and Governance (ESG) risks.

Despite these realities, which have only been heightened by the business resilience pressures of the COVID-19 pandemic, the need for a CSO is still yet to be embraced evenly by all major corporations. Some are still at an earlier stage in determining why and how to integrate sustainability, as enabled by transparency, into their business functions and processes.

Against this backdrop, Global Reporting Initiative (GRI), provider of the world’s most widely used and trusted sustainability reporting standards, held a webinar in July under the theme ‘do companies need a Chief Sustainability Officer?’. Unsurprisingly, the findings of the session were an unequivocal ‘yes’. This was the first instalment of our seven-part Building Leadership for Sustainable Business expert series, which runs until July 2022. Next up will be an event in September on aligning sustainability and risk management.

Through up-close and personal discussions with six distinguished CSOs and sustainability champions in Southeast Asia, the webinar illuminated why a CSO is becoming indispensable, what their core competencies, skills and leadership attributes are, and how the CSO will be crucial to the implementation of successful business strategies in future. 

Competencies for CSO leadership

Herry Cho, Managing Director and Head of Sustainability and Sustainable Finance with the Singapore Exchange (SGX), debunked the myth that advancing sustainability comes at the expense of profitability.  According to Cho, the financial and non-financial performance and impacts are “interwoven by ESG analysis” – and the CSO’s commercial mindset enables them to “add value to every function in the organization” – anticipating sustainability risks and opportunities that may impact the organization’s financial and strategic position.   

The CSO challenges the traditional understanding of leadership, according to Yvonne Zhang, Deloitte Southeast Asia Sustainability Leader. As she puts it, the CSO’s leadership qualities can be set out as ‘C’ for ‘credibility’; ‘S’ for ‘sense-making’ and ‘O’ for ‘orchestration’. As such, the CSO has a critical role helping companies to understand what is happening outside the organization, in support of decisions that “embraces disruption, innovation, and stewardship… The multifold tasks and hybrid roles can push a CSO to live both in the present and anticipate the future”.  

Esther An – CSO for City Developments Limited (CDL) in Singapore – reflected on key learnings from her CSR and sustainability journey over the past 20 years. In her view, a CSO should be someone who cares about the environment and the community at large;  is committed to the cause of doing good and doing well; and creative and communicative in mapping out a sustainability centric strategy that has impact.   

Darian McBain, Global Director, Corporate Affairs and Sustainability of Thai Union, emphasized that passion drives the CSO to be both a fighter and a collaborator. As she puts it, the CSO is not afraid to push something because it is the right thing to do, working with people across and outside the organization to make change happen. Similarly, Dr Simon Lord – an independent sustainability advisor, scientist and former CSO of Sime Darby Plantation – added that purpose and performance are of equal import to the CSO. Without a clear sense of purpose, one cannot perform well, and performance reinforces one’s purpose.  

At the outset, embedding sustainability in the organization may entail some costs. However, according to Ignacio Carmelo Sison, Chief Corporate Officer of Del Monte Pacific, “In the long run the cost of investing in sustainability is less than the cost of not investing in it. Disruption, in its negative sense, would be a greater cost – be it environmental, social or operational. Sustainability is essentially the opposite of disruption. Companies, therefore, need to invest in the present to sustain the future.” This is the essence of sustainability and the CSO has a key role to work with stakeholders to future-proof the organization. 

Where next on the CSO journey?

Companies cannot survive in an increasingly volatile, complex and uncertain world without putting sustainability at the core of their operations. Yet accessing the right people with the right sustainability skillset is not easy. As covered in analysis by GreenBiz this month, PwC intends to create 100,000 ESG jobs by 2026, reflective of the current situation whereby demand for sustainability professionals is far outstripping supply.

The mandate of the CSO can be expected to continue to evolve, while a comprehensive understanding of sustainability performance is likely to be a growing requirement for many other senior roles – be they Chief Financial Officer, Chief Risk Officer, and all the way up to CEO. Indeed, the ideal situation will see a CSO as unnecessary, with sustainability effectively integrated throughout the company’s operations, practices, products and services.

Until that day comes, the CSO is here to stay. Bringing vision, passion and purpose to the leadership team, they will be at the forefront of shaping the organizational transformation that is still needed to achieve a sustainable and successful future.

ABOUT THE AUTHOR

Dr. Allinnettes Adigue is Head of the GRI ASEAN Regional Hub in Singapore. She leads GRI’s collaboration with ASEAN stakeholders to create a conducive policy environment for sustainable business practices, while fostering the corporate case for sustainability reporting by organizations. She joined GRI in 2018, initially delivering donor-funded programs in Vietnam, Indonesia, and the Philippines.

Prior to GRI, Ally worked in both the public and private sectors in Australia, Philippines and Singapore. She earned her PhD on Public Policy from the Crawford School of Public Policy (Australian National University). She holds two Masters Degrees: in Development Studies (Erasmus University, The Netherlands); and Public Administration (Lee Kuan Yew School of Public Policy, Singapore).

ABOUT GRI

Global Reporting Initiative (GRI) is the independent, international organization that helps businesses and other organizations take responsibility for their impacts, by providing the global common language to report those impacts. The GRI Standards, which are provided as a free public good, are the world’s most widely used sustainability reporting standards.