Successful Sustainability Requires Strategic Partnership At The Top

The past year has become a tipping point for sustainability as a business imperative, but agendas can easily be derailed. What CEOs need to know.

The global response to the Covid-19 pandemic showed just how quickly organizations can mobilize and collaborate in the face of systemic risks. The crisis itself may be seen as “a dress rehearsal” for potential climate disruptions to come. The systemic nature of climate change is clear to see and with it the realization that the global economy faces an existential threat. Now is the time for CEOs to lead their organizations in implementing a strong, systemic approaches to sustainability. Core to this is creating sustainability leadership roles that get in front of the issue to create real, long-term change.

We interviewed more than 50 CEOs and Chief Sustainability Officers (CSOs) in organizations around the world to understand the role sustainability now plays in their operations, strategy, culture and leadership. There was a shared conviction that 2020 has become a tipping point for sustainability as a business imperative.

Success means a mandate from leadership, such as the CEO or chair, and a strategic approach instead of a “firefighting function.”

The CSO role has evolved rapidly during the last 20 years. By 2014, 90 of the S&P 500 companies had a CSO, and numbers have grown steadily from there.

Through our interviews and research, we certainly see sustainability leaders increasingly operating at the C-suite level. To provide credible and trusted guidance, these CSOs are able to talk the language of business, effectively manage and persuade stakeholders, and show acumen outside the ‘sustainability bubble.’

Sustainability leaders have had to adapt to growing demands and pressures on their function. But this can create differing priorities and expectations across the organization – which may lead to inefficiencies, duplication or even chaos. As one CSO put it, “despite being a strategic pillar for us, the word sustainability is much misunderstood and there is a prevailing sense of ‘where exactly do I fit?’”

These inconsistencies mean CSOs are often called on to break down silos. As another CSO says, you need to “be a tempered radical, with a healthy disregard for rules and the status quo.”

CSOs are perceived as the ‘Chief Translation Officer’, simplifying complex ideas and communicating the correlation between risk, trust, growth and cost. Getting buy-in means articulating value for the businessan ability to “meet the business where it is at.” They may not be the one making the decisions, but CSOs can partner with the CEO and others to achieve those goals through others with an ability to engage and inspire, and a willingness to fail fast and often.

Balancing resilience with passion

There is no longer a tension between sustainability and profit – the only tension is one of timeframe.

According to our interviewees, it can take time to deliver success. In their experience, sustainability professionals can be derailed if they exhibit any of the following tendencies:

• Altruism, over business acumen

• Ego or over-confidence, over exploring possibilities

• Rigidity, over tolerance for ambiguity

• Thinking too small, over a world view of the business in society

• Inauthenticity, over ability to influence at every level.

In defining an Executive Success Profile for the CSO role, Korn Ferry has identified three functional accountabilities.

1. Executive committee membership

Typically, the CSO reports directly to the CEO, with the mandate and perception that comes with it. Alternative homes include Strategy or Corporate Affairs, with a small, lean central team within a ‘hub and spoke model’.

2. Address material sustainability impacts

The CSO must deeply understand the material impact of sustainability risks to create positive impact and unlock value. Sustainable Development Goals (SDGs) provide additional reference points to measure business impact, but materiality should guide focus.

3. Partnership approach

The business delivers – the CSO is the guide. The capabilities to achieve SDGs must come from across the organization. To make the business case, CSOs need to anticipate business trends, and understand how sustainability relates back to the business with shared accountability.

Investment in this role has grown exponentially in recent years. Although some budgets have been reined back due to the economic impact of Covid-19, these cost controls are perceived as temporary – because sustainability is now accepted as an investment in future survival.

As one CSO put it, “Covid changes very little. In some ways it has cleared the fog and scrutinized the ‘just in time’ system – proving the need for a more resilient one.”

It’s important to note that successfully implementing sustainable strategies cannot take place in a vacuum. It may require fundamental transformation of an organization, grounded in its purpose. By shifting perceptions and building employee advocacy, the CSO, with the support of the CEO, can make sustainability part of everyone’s responsibility. When it’s embedded in the culture, business-as-usual activities are more likely to contribute to sustainability goals.

This is about ‘good growth’, rather than ‘growth for growth’s sake’ – and it takes the whole organization to achieve it.