Sunday Brunch: What does a CSO actually do? Part 2

Many companies seem to want the upside that comes from better sustainability optics, without doing the hard work involved in integrating sustainability into their operational processes and strategy formulation - Alison Taylor on recent Salesforce webcast.

Despite the best of intentions, most Chief Sustainability Officers (CSOs) are not really engaged (enough) in key company activities such as strategy formulation and financial value creation. Which raises questions around why this is (are we focused on the 'wrong' aspects of sustainability), and what can we do to change the situation?

We can make the CSO role more impactful

Yes, we can. But to do so we need to change how we pitch sustainability to companies. Yes, values, regulation, data, compliance, and reporting are important. But the bottom line is that for nearly all companies, the sustainability transitions need to be financially viable if they are to be adopted.

The good news is that they can be. If fact, we would go further and say that anticipating the changes that the sustainability transitions will bring can be massively financial value enhancing for companies.

We collectively talk a lot about sustainability risk. And as the recent report from Robert Eccles & Alison Taylor shows, we also talk about its impact on reputation, brand and recruitment. But we don't talk enough about sustainability opportunity. How companies that embed material sustainability issues into their operations, their strategy, and their culture, have a very real opportunity to create competitive advantage. And from that create long term financial value.

Coming back to what a CSO actually does and what they could do more of. Let's work on making sustainability more relevant to how companies create financial value. Maybe then there will be less of a gap between aspiration and action.

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The Sorry State Of Sustainability Today - or what do most CSOs actually do?

That title is not ours. It's from a recent research report authored by Robert Eccles and Alison Taylor. The full title is The Best And The Rest: The Sorry State Of Sustainability Today. What are the key messages?

While some CSOs are making a real difference to the financial and sustainability performance of their companies, recent research suggests that many are not. And this is despite the vast majority of senior management teams identifying sustainability as a key driver of future value creation. A cynic might say that this is because companies only pay lip service to sustainability.

Our take is different. We argue that the main reason for the aspiration gap (between what companies think and what they do) comes down to how we pitch sustainability. For many sustainability professionals it's about values. And this gets interpreted by company management teams as impacting them via reputation, brand, and recruitment. To them it's about how they message their sustainability efforts.

The sustainability transitions (and a just transition) will only happen if it makes good financial sense for companies to act. We are not arguing for sustainability professionals to abandon their values. But, we are saying that if we want companies to act, we also need to pitch sustainability in a way that shows the business opportunities. That shows how acting on sustainability can positively impact the companies bottom line, and enhance their ability to generate a fair financial return to their investors.

The evolving role of a Chief Sustainability Officer - part 2

Back in November 2023 we wrote a blog entitled "The evolving role of a Chief Sustainability Officer". In it we discussed the question of who you as a CSO report to, and why this is important.

The evolving role of a Chief Sustainability Officer

As a prospective CSO perhaps one of the first questions you should ask of your new employer is ‘who will I report to’. The closer we are to the financial and strategy decision makers, the more influence we can have.

The Sustainable InvestorSteven Bowen

The blog was very much based on a Harvard Business Review article by Robert Eccles & Alison Taylor. In it they argued that CSOs "once focused on optics and reputation. Today many are interacting with investors and helping set strategy."

The Evolving Role of Chief Sustainability Officers

The role of the CSO is undergoing a rapid and dramatic transformation. Historically CSOs have acted like stealth PR executives—their primary task was to tell an appealing story about corporate sustainability initiatives to the company’s many stakeholders. Now, however, some CSOs have moved away from a role centered on messaging and instead are spearheading the true integration of material ESG (environmental, social, and governance) issues into corporate strategy. This pivotal change requires close collaboration with other members of the senior leadership team and active engagement with investors. This article argues for four major changes to the CSO role. The CSO should be involved in strategy and capital allocation; be more focused on and realistic about stakeholder interactions; be more fully engaged with investors; and be supported with sufficient resources and expertise throughout the entire organization, including on the board and senior leadership team. In an ideal world, the authors say, a stand-alone CSO role would become obsolete once companies fully integrate ESG considerations into their corporate strategy and operations. Until that day arrives, however, it is crucial to adapt and evolve the CSO role.

Harvard Business ReviewRobert G. Eccles

Perhaps un-surprisingly, it was one of our most read blogs. Feedback suggested this was for two reasons. One was it tapped into a sense of frustration by sustainability professionals that they were not fully involved in key corporate decisions around value creation. And the second was a desire to understand what was possible - where could this CSO role potentially go? How could it be made better?

The good news part

The good news that came out of the Taylor & Eccles study (we are going to alternate the names as both of their inputs are equally important) was that some companies seem to have found ways of integrating (or starting to integrate) sustainability into their value creation process. As we said in our November 2023 blog .....