Five signs that sustainability has a permanent seat at the boardroom and executive leadership table

As the sustainability professional shifts gears, five revealing statements are ringing in their ears.

As sustainability and survivability occupy the corporate agenda in 2023, the Chief Sustainability Officer (CSO) is stepping into a more senior strategic role – one with greater accountability, responsibility and influence.

Rather than simply developing and driving a company’s sustainability strategy, the CSO is now responsible for ESG performance along the length of the value chain. As this opens the doors to new conversations from the boardroom down, here are five common phrases that are a sign of the times...

“Have you read this article on ESG?”

If you’ve checked your inbox to find this message from the CEO, you’re not alone. The ESG agenda is keeping CEOs up at night – and that is good news. The bad news? The CEO email always ends with “We should do this.”

This is why the CSO should be elevated to the executive leadership team. As sustainability becomes core to organisational performance, the CSO plays a pivotal role in shaping long-term strategic direction. As CSOs inform discussions about what will and won’t impact long-term value creation, they discourage the pursuit of ideas that can be easily abandoned for more immediate and pressing operational priorities. Having a clearly defined strategy and then sticking to it, helps these discussions with the CEO as it provides a platform to respond to shifting requests.

“We should give you more budget.”

After years of being short of hard funds, CSOs are getting bigger budgets. While this is always welcome, we can’t afford to tinker at the edges. The Nirvana we must pursue is an entire rethink of corporate strategy with ESG at its centre.

Does an organisation need a separate function if the business strategy has truly embraced sustainability? The answer is ‘yes’ – because sustainability requires a different way of thinking and operating that goes beyond traditional business practices.

“We should fill in this analyst survey.”

The investor relations teams are now on board and that’s more great news. But the latest EY Global Corporate Reporting and Institutional Investor Survey underscores a clear disconnect between the sustainability disclosures in today’s corporate reporting and what investors actually want.

Nearly three-quarters (73%) of the 320 global investors surveyed for the report thought that companies had “largely failed to create more enhanced reporting, encompassing both financial and ESG disclosures, which is critical in our decision-making”. What’s more, 76% of investors said “companies are highly selective in what information they provide to investors, raising concerns about greenwashing”.

It is only when sustainability is systemically, strategically and rigorously integrated into reporting processes that we will see investor scepticism subside.

“Let me introduce you to our new CSO. I’ve transitioned them from finance or corporate affairs.”

Chief sustainability officers come from a wide variety of backgrounds; some with deep sustainability credentials, others with commercial, financial or legal experience. Those with commercial backgrounds need to cultivate deep understanding of sustainability issues influencing their organisations so they can bring outside views of emerging ESG trends to the executive table. On the other hand, sustainability professionals need to dig deeper into the business to understand the imperatives for the board, CEO, CFO and COO.

A successful sustainability function needs innovators, influencers, marketers, project managers and transformation agents, educators, financiers and media managers. The idea that the sustainability function can deliver all of this with just two or three people is unrealistic.

The solution is to undertake an internal review of the sustainability function to understand the skills you have internally, those that you can lean on from other parts of the business, and those that must be acquired externally.

“We are already doing so much. It's just about communication.”

This one is the most frustrating of all. We are not doing enough. In fact the 2022 EY report, Enough: A review of corporate sustainability in a world running out of time, couldn’t be clearer.

The number of signatories to the United Nations Global Compact and United Nations Principles for Responsible Investment has grown exponentially in a few short years. So too have the number of companies setting and committing to Science Based Targets and committing to the Carbon Disclosure Project. And yet, by any measure, emissions continue to climb and the health of the planet continues decline.

Every indicator tells us we are going backwards. We must move our executives away from any narrative that we are doing enough – because while momentum within the sustainability profession is gathering pace, there is much, much more work to do.

The views expressed in this article are the views of the author, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.