Vital Skills Of A Chief Sustainability Officer

The role of the Chief Sustainability Officer (CSO) has evolved rapidly over the last two decades. In fact, by 2014, 90% of S&P 500 companies had a CSO, and the numbers have grown steadily from there, according to global organisational consulting firm Korn Ferry. In recent years, as sustainability factors become a mainstream part of investment decisions, there have been calls for companies to provide high-quality, globally comparable information on sustainability-related risks and opportunities. Heeding the call, the International Sustainability Standards Board (ISSB), formed by the trustees of the IFRS Foundation in November 2021, has released IFRS 1 General Requirements for Disclosure of Sustainability-Related Financial Information and IFRS 2 Climate-Related Disclosures, both in 2023.

What exactly do CSOs do, and what are the requisite skills and qualities to do the job well?

A World Economic Forum article published in May 2024 highlights the four key attributes of CSOs that enable them to succeed:

1. Collaboration – the ability to form partnerships inside and outside one’s organisation, to facilitate learning and knowledge sharing;
2. Credibility – In a challenging business environment, it’s imperative for CSOs to show the value of their recommendations;
3. Commercial awareness – knowing how to navigate the environmental, social and governance (ESG) space in order to help drive business. The CSO must be able to balance commercial opportunities with risks, transparency and public reporting.
4. Commitment – There is increasingly more pressure on CSOs and companies to do their part in the fight against climate change and in sustainability. Everyone – from global entities to corporates and individuals – are in it for the long haul. Commitment is thus essential, especially when the going gets tough.

The discussion about the role of the CSO picked up pace around 2020, when megatrends like sustainability and advanced technology came to the forefront of public consciousness.

As sustainability has become a part of normal business operations, “there is no longer a tenson between sustainability and profit – the only tension is one of timeframe”, says a CSO in a 2021 Korn Ferry research paper. And, “for the first time in history, the sustainability agenda has become a material determinant of success, and perhaps even survival, for companies”, says another CSO.

The Korn Ferry research paper identifies four signs of success that distinguish the top CSOs from their less high-performing peers. This means that a CSO who has all four of these capabilities are primed for success:

1) Know how to break down business siloes

The sustainability agenda creates differing priorities and expectation across an organisation, which can lead to inefficiencies and/or duplication. The CSO who can build relationships across multiple business areas to get the collective buy-in is poised to succeed.

2) Able to influence mindsets

CSOs need to be able to influence at scale and change mindsets across the entire organisation. They need to convince others that sustainability is an enabler and not a threat, a creator for business and not merely a cost or reporting function. 

3) Set ambitious goals; are resilient

To be successful, CSOs need to think big. Sustainability actions, at a scale that is required to make a real difference, are relatively new. So while setting things in motion, CSOs are also constantly learning. They have to be resilient in the face of resistance, setbacks and uncontrollable external factors.

4) Know how to get the job done through others

High-performing CSOs make an impact through others. Having gained an understanding of the different perspectives, CSOs must use that understanding to inspire and develop the momentum for change. The key is to identify opportunities, then enable change.

CSO AS “SENSE-MAKER CHIEF”

The research may differ but the vital qualities of a CSO remain similar. In their 2021 report, Deloitte and the Institute of International Finance (IIF) describe the CSO as a “sense-maker chief” of the organisation, tasked with interpreting changes in the rapidly changing external sustainability environment, and working out the strategies needed to address these changes.

The CSO is also charged with influencing, communicating and cutting through the organisational complexity to allow the firm to deliver on its ESG commitments. Fast forward three years to today, the CSO’s responsibilities have expanded to include ESG, business strategy, financial transformation, risk management, board governance, integrated disclosures, compliance, and even talent and compensation.

Interactions of a CSO in a typical organisation with respect to sustainability

Source: The Future of the Chief Sustainability Officer, Deloitte and Institute of International Finance, 2021

It is not lost on the board that the CFO is in a good position to drive sustainability within the organisation. This C-suite executive has a bird’s eye view of how resources flow internally, and his/her responsibilities include ensuring that the organisation’s scarce resources are efficiently utilised, such as for its sustainability initiatives.

However, the growing demands and expectations from investors and stakeholders regarding a company’s sustainability commitments mean more needs to be done, such as having a very senior executive to oversee sustainability. Appointing a Chief Finance & Sustainability Officer (CFSO) appears to fit the bill. A 2022 ISCA research report names the CFSO as an emerging job role. More commonly seen in companies which have well-developed sustainability initiatives and commitments, the CFSO is placed above the CFO and CSO functions, thereby allowing the CFSO to oversee the integration of finance and sustainability into the business strategy of an organisation. Professionals with an accountancy background would have an edge for this position as it requires intimate and indepth finance knowledge, says the report. It is a potential career option for today’s accountancy and finance professionals to transition into.