Chief Sustainability Officer role faces identity crisis, says Imperial study
Study highlights divergence in qualifications, function and place in the corporate hierarchy
A study by Imperial College Business School has highlighted a striking lack of consistency across corporate Chief Sustainability Officers (CSO).
Researchers at the school’s Leonardo Centre on Business for Society interviewed 37 sustainability executives from companies including Unilever, Shell, Pernod Ricard, Schneider Electric, Ferrero and Carrefour.
The interviews reveal a wide variation in CSOs’ areas of expertise, roles, team sizes and status within companies.
“One big tension is whether you put all your people and skills into a central function, or have a lighter central team and embed the expertise within existing functions instead,” said Maurizio Zollo, founder of the Leonardo Centre and co-author of the report.
Half of CSOs now report to executive board
The research found that “the transformational power” of the CSO is linked to where they sit in a company’s hierarchy, with a correlation between how much access each CSO was given to top leadership, and how much influence they had on the company.
Around half of the 37 reported directly to the CEO or the executive board. Where they reported to communications or marketing departments, the company’s sustainability strategy was generally “not very advanced”.
In an article published in the Harvard Business Review (HBR) over the summer, academics Bob Eccles and Alison Taylor argued that for CSOs to succeed, they must be given the same stature as other members of the C-suite, such as CEO and general counsel.
“New sustainability reporting standards, such as from the International Sustainability Standards Board, necessitate rigorous internal control and measurement systems, similar to those for financial reporting,” the pair noted. “The finance function houses this expertise, making the CFO an ideal candidate for the CSO to report to.”
But Zollo said that, while CSOs reporting to CFOs “would be an improvement on the historical role, which has been about liaising with NGOs and stakeholders… If the objective is to embed sustainability into strategy and innovation, the CSO should be in the strategy group, not the financial team.”
He pointed to insurance company BNP Paribas Cardif, whose sustainability team sits in a broader strategy department alongside corporate development and innovation.
“This is a very advanced structure that allows the sustainability function to influence key strategic decisions, which would not be the case if it were reporting to the CFO.”
Background and qualifications
Speaking about the HBR article during a panel in July, Taylor, a clinical professor at NYU Stern School of Business, described “an astonishing lack of attention” around the role of the CSO, adding that it “could report into marketing, legal, HR”.
“To some degree it’s legitimate that a sustainability officer would sit in different places in different kinds of business, because the material issues are different,” she said, but added that many sustainability teams “seemed to spend their entire year gathering data and writing reports, and didn’t seem to have any power or budget”.
She said this suggested they were more like “the paramilitary wing of the marketing department”.
Zollo echoed these concerns, telling REP that CSOs often have a background in PR or communications.
“The presence of technical backgrounds in environmental or social sciences among CSOs wasn’t as diffuse as we expected,” he explained. “That’s not necessarily bad, if instead they have very strong knowledge of company strategy, and can access in-house social and environmental expertise to support them. But often it’s neither of those two options.”
Two thirds of the CSOs interviewed for the study had a background in economics, business or engineering. Only 30% had attended any sustainability-related study programmes.
This confusion about the necessary capabilities of the CSO has contributed to what Zollo described as “quite amazing” turnover among CSOs. The study suggests that they spend an average of 3.3 years in their role, with half of those interviewed having been in position for less than 18 months.
Function of the CSO
The report also flags the lack of consensus around the function of the CSO and the broader sustainability team within companies, with one interviewee expressing frustration over the fight “not to be seen as a compliance department” in light of the explosion of sustainability-related regulation.
Taylor talked on the panel about a “super weird” idea that “the CSO takes care of stakeholders, which implies that everyone else is just taking care of shareholders”.
“There’s a belief that if something is really an existential risk to the business, then the last person you’re going to give it to is the CSO,” she added.
Speaking alongside Taylor was Anna Lungley, CSO for international markets at Japanese advertising firm Dentsu, and a member of the firm’s leadership team.
“The challenge of being in that role is that people assume I’m here to fix this for them,” she said. “[But] the role of the CSO is to have foresight about what’s coming, to get the business ready to integrate it so that other functions are driving it, and then to move onto the next issue.”
Lungley noted that this leaves the role open to merging with the Chief Strategy Officer role in the future.