All large corporates now have sustainability officers. But what do they do? And how might their role change as the circular economy grows?
It only takes a quick glance at the headlines to spot the high profile of chief sustainability officers (CSOs). Noel Kinder, Nike’s CSO, recently announced that the sportswear maker’s European offices will be powered by renewables by 2020; it fell to Ruth Kimmelshue, CSO at agricultural commodities trader Cargill to explain why the company will not meet its goal of halting the conversion of forests into farms by next year; Allianz Global Investors, one of the world’s largest investors with €565 billion in asset under management, recently named Beatrix Anton-Groenemeyer as its first CSO.What do these people do? And why is their profile growing within companies and the media? The role of a CSO varies greatly according to the company, its sector and its philosophy. Obviously, some topics are more material for some sectors: health and safety is more relevant to mining than banking, for instance. It also varies according to the maturity of the company in terms of its sustainability journey. Some companies are at the corporate donating and volunteering stage; others have integrated sustainability into their core business.
While the role of sustainability officers varies, in essence the job is about making the company fit for the long-term future in relation to environmental, social and governance issues. Ultimately, it’s about long-term value creation rather than just ethics. Sustainability is increasingly data-driven and focused on metrics and there is an increasing regulatory and compliance element, such as legislation on modern slavery or transparency. Market-driven changes such as CO2 prices are also important. And as Dell’s vice president of sustainability David Lear notes, forming partnerships is critical.
“A few years ago, we realised that to achieve our long-term sustainability goals, we really needed to rethink our entire ecosystem,” explains Lear. “We gathered insights from customers, suppliers, NGOs, governments and employees to establish a set of 21 goals across topics of environment, community and people for Dell to achieve by 2020. By setting those long-term goals, we sent signals to a lot of our supply chain partners and technology partners about where we wanted to go. That opened the door for some of them to jump in and say, “Hey, we can help you get there faster.”
“This structure does produce some challenges,” concedes Wijnands. As there isn’t a single coherent group focused solely on responsibility, it is more challenging to keep track of progress. “But the great advantage is that by embedding sustainability in the business, it means that decisions are made and executed within a business setting, which means they are much more likely to be followed through.”
Of course, companies not only have to determine a strategy to implement sustainable change but also carefully select a focus – the United Nations’ sustainable development goals cover 17 areas, ranging from eliminating hunger and gender equality to clean energy and climate action. After consulting with stakeholders internally and externally, ING decided to focus on two main topics: bringing about the low-carbon society through its lending portfolio; and enhancing self-reliance in society by empowering people to manage their money and futures more effectively.
“That doesn’t mean that we ignore other aspects of sustainability,” says Wijnands. “Indeed, we go beyond compliance and regulations in all areas. However, we’ve chosen to focus on those two areas because they are most relevant to our stakeholders and our business.”
For many companies, a move towards circularity will result in the expansion of the sustainability function: are there sufficient numbers of skilled people available? Wijnands says it is easy to find people who are enthusiastic about sustainability and want to work in the sustainability function but that it’s important to ensure complimentary skills and diversity.
“The demands of the role have changed over time,” explains Wijnands. “While we still have plenty of people with expert knowledge of human rights and environmental issues, our most recent hire was a PhD in behavioural economics. This is because we recognise the need to change behaviour.” ING observed that 30% of all emissions relate to real estate, and half of that is residential. From a banking perspective, it looks like it would make sense to develop a green mortgage product that offers a discount for the installation of solar panels, for example.
“But behavioural economics shows us that in many instances the adoption of greater sustainability is not primarily a financial decision; often people are overwhelmed by the complexity of choices and therefore simply decide to do nothing,” says Wijnands. “We have partnered with Vattenfall to develop an approach that helps clients to make complex choices in relation to sustainability – insights into consumer behaviour are critical.”
For CSOs, such ‘thinking outside the box’ seems certain to become a core element of the job in the coming years; only open-minded candidates need apply…
This article first appeared on the website of ING