The Role of the Chief Sustainability Officer

As businesses increasingly focus on sustainable practices, the role of the Chief Sustainability Officer (CSO) is becoming more prevalent across various industries. Major accounting firms like PricewaterhouseCoopers (PwC) and Deloitte, along with leading business publications such as the Harvard Business Review, have covered the CSO role in an attempt to provide insight and clarity. Here is a selection of statements from some of these publications and my responses.

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“The number of Chief Sustainability Officers tripled in 2021.” (PwC)

I'm not surprised by this. There has been a growing push for different corporate expectations, especially with the EU's new Corporate Sustainability Reporting Directive (CSRD) coming into play. Many companies are preparing for this, so the increase in CSOs makes sense to me.

I officially became a CSO in 2022, although I joined Takeda in 2019. When I first assessed my team, I noticed that our CSR team, which focused more on philanthropy, had the beginnings of a sustainability team. I decided it made more sense to separate CSR, which dealt with corporate giving, from global sustainability, which focused on long-term business strategies and stakeholder needs.

By 2022, with heightened global awareness on sustainability, it was the right time to make my role official and expand my responsibilities to align with these growing demands.

“The CSO is the ‘sense-maker in chief’ of an organization.” (Deloitte)

Sense-maker in chief! So, I interpret this title to mean a broad understanding of stakeholders' expectations and bridging these expectations with where the company is. And while I’d say that's part of the CSO role, it’s not all.

Initially, sustainability roles focused on ensuring companies met regulatory requirements to continue operating. Now, it's also about the license to grow. And for me, bringing a sustainability angle into the business to drive growth is the exciting part of the job.

Sustainability at Takeda isn't a revolution but an evolution.

I see the role fitting closely with the chief strategy officer or CEO, not just corporate affairs, which some might mistake as purely communication or PR. My background in corporate affairs allowed me to frame our sustainability strategy more strategically. ?An executive recruiter once mentioned that my ability to understand the external macro-environment, along with a comprehensive internal view of enterprise needs, is a strength I could leverage in the CSO role to help connect the dots. This broader view helped integrate sustainability deeply into our corporate philosophy and strategy, ensuring it wasn't just a set of programs on the side but central to how we do business.

Before I join a new company, I always delve into the company's heritage and underpinnings, and I saw something unique in how Takeda is run. Sustainability at Takeda isn't a revolution but an evolution. It's another term to describe how we operate as a company, focusing on values-based decision-making, doing what's right for patients and all stakeholders to ensure we have a license to operate and grow.

“To fulfill the ‘sense-maker in chief’ role, CSOs need to have a proper seat at the table.” (PwC)

That's a hard one for me. I do sit at the table since I am on the executive committee. If I were layers below with a CSO title, would I present to the board? Perhaps not. So, there's some truth to that statement.

However, even if you were at a different level in the organization but had the expertise and your executive championed your voice, you could still make a difference. It's unfair for me to fully judge since I'm not in that position, but it's true that sitting on the executive committee carries weight. It allows for peer-to-peer discussions, especially when there are differences on how to approach things.

“Once perceived as hippies and tree huggers, CSOs have evolved from a backroom marketing function to key figures in business operations and growth.” (The Wall Street Journal)

I’d say that regulatory expectations are pushing this “role evolution.” Whether it's the EU or the SEC, the demands for environmental and human capital disclosures are growing. That means that if I were coming into this role as an environmental expert, I'd now have to consider HR and policy aspects. The bar keeps getting higher, and the EU regulations are challenging, requiring the same rigor for sustainability data as for financial data.

Having a C-suite CSO is more impactful, as it helps bring in the Chief Financial Officer (CFO), finance and legal teams to understand mandatory reporting.

When I started in 2019, this understanding wasn't there. Now, having a C-suite CSO is more impactful, as we can have direct conversations with the CFO and finance team who are responsible for mandatory reporting and legal teams to assess potential risks and opportunities. It's easier to have these conversations at the highest level rather than at the working level as it requires judgment.

Takeda is also evolving. There's a better understanding that sustainability isn't just about reducing CO? but needs to be core to the business.? It’s about discovering and delivering treatments for patients in a way that creates a win-win for all stakeholders while simultaneously reducing our environmental footprint.

This thinking is embedded in our processes, especially in packaging and product development. While we won't retrofit all our products, new products will have this environmental sustainability lens applied from the start.

“In an ideal world, a stand-alone CSO role would become obsolete once companies fully integrate ESG considerations into their corporate strategy and operations.” (Harvard Business Review)

Funnily enough, when I took the job, I shared similar thoughts. If sustainability considerations were fully integrated into corporate strategy, my role wouldn't be needed. However, given the increasing complexity and expectations, I'm not sure when this will happen. I might have been naive initially, thinking it might take five to seven years, but then again, these roles just evolve in different ways.

For anyone interested in becoming a CSO, my advice is to prioritize being business-savvy first and sustainability experts second.

“There are two types of CSO role, ‘CSO with impact’ (C-suite) and ‘CSO light’ (junior positions).” (PwC)

I’m not sure about this phrasing. I don't think being at the C-suite level necessarily equates to having an impact because driving sustainability is a complex change management process. Passion and the right skill set can often be more influential among peers. Access to the board and management is crucial for embedding sustainability into strategy, which requires a certain level of seniority. However, effective influence comes from various levels within the organization.

For anyone interested in becoming a CSO, my advice is to prioritize being business-savvy first and sustainability experts second; understanding core business processes and making a strong business case for sustainability initiatives.?

“From the companies we surveyed, 67% of CSOs are ‘homegrown’ and have been promoted internally, while only 33% percent come from outside the organization.” (PwC)

That’s interesting, especially as I would be classed as one of the “33%!”

I don’t think that one is necessarily better than the other. It’s likely that many CSOs are promoted internally because they understand the business, processes, and culture. However, as someone who has come in from the outside, I could see what differentiates the company more clearly, which became my advantage, though I had to learn the industry by asking questions.

But ultimately, I think it depends on the corporate culture of the particular organization. At Takeda, we take a long-term view and have a bottom-up culture, meaning people balance short-term and long-term needs deliberately and take initiative without top-down targets, which contrasts with cultures needing strict goals. I feel assessing the corporate culture and aligning how one drives change is vital for effective CSOs.

[References]

• PWC: Chief Sustainability Officers with impact
• Deloitte: The future of the Chief Sustainability Officer
• Harvard Review: The Evolving Role of Chief Sustainability Officers
• The Wall Street Journal: Sustainability Chiefs Say Their Roles Have Become More Complex and Relevant