Stakeholder Capitalism

What is a CSO and does every company need one?

A man views solar panels on a roof at Google headquarters in Mountain View, California, June 18, 2007. Google announced today that they have switched on a solar panel installation at its headquarters which will help reduce the company's carbon footprint. REUTERS/Kimberly White (UNITED STATES) - GM1DVNATWEAA

The position of chief sustainability officer has earned its place in the C-suite. Image: REUTERS/Kimberly White

Natalie Marchant
Writer, Forum Agenda
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Corporate Governance

This article is part of: The Davos Agenda
  • A Chief Sustainability Officer drives the sustainability strategy of an organization, championing and monitoring its efforts.
  • 76% of people expect companies, rather than governments, to lead the way on climate change.
  • While 46% of people believe top talent would only want to work at companies with sustainable business practices.

The role of Chief Sustainability Officer (CSO) may be a relatively new one, but it is fast becoming essential in the boardroom, as concerns about climate change increasingly dominate the global agenda.

A CSO drives the sustainability strategy of an organization, and champions and monitors its efforts. The role started appearing in the early 2000s in response to the rise of the environmental, social and governance (ESG) movement – and was originally dismissed as a glorified marketing position. It is now a fixture in the C-suite.

Have you read?

The benefits of putting sustainability at the heart of corporate strategy are multi-fold – from boosting profits to improving the company’s reputation and making them more likely to attract and retain talent.

Businesses expected to take the lead on climate change

Customers increasingly expect businesses, rather than governments, to take direct action on issues such as climate change. Edelman’s 2019 Trust Barometer showed that 76% of people expected CEOs to lead the way on change, rather than waiting for regulation.

In addition, investors and other market players such as lenders are increasingly integrating ESG considerations into investment decisions, according to the Organization for Economic Cooperation and Development.

Corporate governance and sustainability are also increasingly relevant to many employees. The 2019 HP Workforce Sustainability Survey found that 46% of respondents believed top talent would only want to work at companies with sustainable business practices, while 96% would recommend their workplace to others if these practices were ahead of others.

A graph showing how important sustainable business practices are to employees in various economies around the world.
Sustainability is of increasing importance to employees. Image: Edelman

Sustainability more important than ever

CSOs can have a big impact on business, and with companies across the world focused on surviving the COVID-19 pandemic, their role is perhaps more important than ever, according to Thomas Singer, writing in the Harvard Law School Forum on Corporate Governance.

Businesses with robust sustainability schemes are more likely to perform well during a downturn, he argues, and those with a defined corporate purpose, awareness of broader societal challenges, engagement with stakeholders and a collaborative culture are more likely to prosper in the long run, he adds.

Meanwhile, Lindsay Hooper, executive director of education at the University of Cambridge Institute for Sustainability Leadership, stressed that the role of CSO should form only a part of a business’s sustainability agenda and that there was a growing need for executive teams to be challenged on how they address issues.

“This requires not just dependence on a CSO, but a board that is able to guide a strategic approach that proactively develops solutions to difficult issues such as navigating the economics of transition to a sustainable future,” she told the Financial Times.

Benefits to companies big and small

CSOs can make a difference to companies of all sizes. The CEO of Swedish retail giant H&M Group, Helena Helmersson, was once its CSO, and she says putting sustainability at the core of business is a way “to accelerate the pace of change”. In 2019, the company’s global operating profit was $1.8 billion.

But smaller businesses can also benefit. UK-based organic baby food company, Ella’s Kitchen, is a certified B corporation for its environmental and social performance, whose CEO Mark Cuddigan is also head of sustainability – or ‘the good stuff’ as they call it.

Last year, Ella’s Kitchen – which is working towards achieving the UN’s Sustainable Development Goal of zero hunger – achieved a turnover of £73 million ($98.7m), despite uncertainty over Brexit.

With sustainability and survivability at the top of most businesses’ agendas as the pandemic continues, the role of CSO is likely to become ever-more relevant.

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