Why CSOs are just as important as CFOs

In the 20 years I’ve spent in sustainability consulting, I’ve seen the issue go from being an occasional sidebar to the forefront of organisational performance. Now that sustainability-related topics like climate change are creating existential threats, companies are re-evaluating their organisational strategies. In future, as a matter of course, strategy development will give same emphasis to sustainability as it does to growth.

As a result, the role of sustainability leaders is being elevated. A trend I experienced first-hand last June, when my CEO said to me:

“Sustainability is one of the biggest topics of our generation. It’s a transformational issue that I need to be involved with, and I want you to sit on our Executive Leadership Team.”

Since then, I’ve attended monthly ELT meetings. And, while I don’t always have an agenda item, I do always have important input in wide-ranging issues from employee engagement to value creation. ?

This is critical. Because, when the voice of the CSO is not heard, all too often sustainability goals and activities can be sacrificed for more immediate operational priorities.

In this regard, it’s important to acknowledge that incidental decision making is sometimes as important as the strategic decisions. This is the space that CSOs are currently often not present for or involved in – and this needs to change.

Already, we have CFOs to ensure every decision considers the finance implications – and COOs to ensure decisions consider the operational implications.?Now CSOs need to be there – not just to put sustainability goals at the forefront of the executive agenda – but also to ensure every decision also considers the ESG implications.

How should CSOs prepare for this change?

CSOs come from a wide variety of backgrounds. Some with deep sustainability credentials. Others with commercial, financial or legal experience. CSOs joining the executive leadership team will need to understand where their strengths lie and establish what their next wave of knowledge should be.

Those with a more commercial background will need a deep understanding of the sustainability issues impacting their organisations so they can bring an outside view of emerging ESG trends to the executive table. They also need to engage directly with stakeholders to get a sense of what is important to them.

Whereas sustainability professionals will have to get further into the business and understand the imperatives for the board, CEO, CFO and COO. While a sustainability manager can get away with being somewhat oblivious to commercial realities, a C-suite role requires candidates first and foremost to understand the business.

An executive CSO needs a commercial mindset that enables them to add value to every part of their organisation. That means understanding:

• What is the business agenda and how is it operationalised?
• What’s working well – and what’s not?
• Where are the pressure points and commercial challenges?

What should the sustainability function be responsible for?

As CSOs join the C-suite, where should their responsibilities lie? To date, many sustainability functions have been tasked with related elements touching the ESG portfolio: nonfinancial reporting, community investment, advocacy and lobbying and even public positioning and branding.

Now the CSO is moving into a more senior strategic role, they should predominantly focus on embedding sustainability into strategy and ESG stakeholder management. Other tasks could usefully be handed over: nonfinancial reporting to finance, advocacy and lobbying to corporate or government affairs, or branding to the marketing department.

Clearing their desks to focus on priority areas is essential. CSOs will be at the forefront of shaping the organisational transformation needed to achieve a sustainable and successful future. They need the time and thinking space to shape a vision that will mobilize passion and purpose as organisations internalise sustainability as a driving force for all their endeavours. ?

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Disclaimer: 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.