Tackling the climate crisis is one of the greatest challenges of our time. There is a need for a collaborative and inclusive approach to restoring our planet and protecting our future – and it is clear this topic needs to be on every boardroom agenda.
Environmental, Social and Governance (ESG) performance is now central to how companies create and protect value for their stakeholders, and the growing prevalence of chief sustainability officers (CSOs), or sustainability leads, reflects a significant shift in business objectives. Organisations are no longer asking “Why be sustainable?” but instead: “How can my business create value through sustainability?”
However, this is leading to what some have dubbed a “sustainability gap”: a divide between what a company says it is going to do, and the action it is taking to get there. This does nothing to address the climate emergency and can lead to accusations of greenwashing and loss of stakeholder trust.
Today’s CSO is crucial in closing the sustainability gap by putting ESG at the heart of value creation. By working closely with the CIO and others across the board, CSOs can play a key role in shaping business strategy and technology stack, along with driving green tech transformation and growth. But before that can be tackled, their initial priority should be to identify and address any disconnect between their organisation’s intent and action.
Bridging the gap between sustainability and strategy
CSOs or sustainability leads are increasingly being tasked with determining which ESG areas their company should prioritise and embedding these into the business’ transformation strategy. This means defining a sustainability action plan and making sure every function of the business delivers on this.
However, CSOs often face challenges with managing siloed sustainability efforts across the business. To address this, they must ask themselves a series of practical questions before they start developing the company’s overarching sustainability transformation plan. These include:
• How are they strategically positioned to help realise the opportunities and manage risk around ESG goals?
• What governance is in place across the business to reflect the importance of their role in determining the ESG agenda?
• What is the business promise to net zero goals – and what is the timeline they’re working towards?
• Is their ESG reporting designed to meet regulatory expectations, or do they want to position themselves as a leader in the sustainability conversation?
Clearly, one person cannot be solely responsible for the full breadth of ESG across an organisation. Collaboration between different teams and CSOs is essential: whether that’s working with the IT department and business unit leaders to drive sustainable transformation; liaising with finance to measure the true cost and opportunities of ESG; or regularly meeting with the risk and audit committees to manage ESG risks and comply with regulation.
Ultimately, CSOs act as a bridge between sustainability and business strategy by collating information from each department and presenting the most relevant insights back to the board.
Elevating the role of the CSO
From here, CSOs must be empowered to strategically position themselves with a seat at the leadership table, have appropriate levels of funding assigned to them, and clear KPIs and reporting lines. Alongside this, they need to interact closely with the board to consistently align ESG with the strategic direction of the business. Businesses need to shift away from a standalone “sustainability strategy”; they must now integrate and embed their sustainability ambitions into their core business strategy.
It is the CSO’s responsibility to present and advocate the ESG strategy to the board, emphasising the link between sustainability, strategy and digital transformation. In return, the board should ensure ESG is fully integrated into the present and future business strategy. This will avoid any fragmentation across the business, ensuring any potential action is grounded in reality and what is realistic for the business to achieve.
The potential gains and losses from ESG will affect everyone across the C-suite, so alignment on key priorities will benefit all.
Businesses cannot create an effective sustainability strategy without tying it back to their business goals. As digital adoption increases, this means considering sustainability alongside their digital transformation journey.
CSOs must work alongside CIOs to ensure ESG is at the forefront of the business’ technology strategy and that any tech deployed across the business is optimised to meet sustainability targets. They must also work together to ensure these technologies do not pose any significant risks to the business’ overall ESG goals when implemented.
An ESG-driven strategy will help organisations develop and implement technological solutions that are both effective and socially and environmentally responsible. This will not only benefit the business but will also contribute to creating a more sustainable and equitable future for society overall.
