Chief Sustainability Officer: an essential role in transforming organizations

Growing global concerns over sustainable development issues and elevated stakeholder expectations signal the need for more than just financial metrics’ to measure the performance of companies. Emphasized at COP 28 in Dubai, 2023, this has pushed an evolution in the C-suite's role to prioritize environmental and social responsibilities, highlighting a broader economic perspective.

Exploring the emerging role of the Chief Sustainability Officer (CSO)

An organization's ability to address sustainability can greatly impact its financial performance, growth, and ability to attract financial capital. Given increasing responsibilities in this field, sustainability issues now command the undivided attention of both the C-Suite and the Board. Their governance and oversight play a crucial role in driving success in this arena. In fact, according to the EY Global Risk Survey, two-thirds (66%) of boards believe that their enterprises can only be resilient if they are environmentally sustainable.

Most European corporations and financial players have started to integrate climate change risks into their financial business models, as worries heighten that corporate accounts no longer mirror reality. However, disparities can exist between sustainability reports and financial projections, since identifying key sustainability indicators is still a work in progress. Amid these challenges, CSOs, though relatively new, have become essential in driving the sustainability strategy and its solutions in organizations. As achieving sustainability targets necessitates major operational changes and defined processes, it's logical that CSOs be integral to key decision-making.

Active players in voicing ESG concerns and setting management strategies

The role of CSOs has significantly evolved in the past year, transitioning from a primarily non-financial reporting and communication overseer to an active player in shaping management strategies that address ESG concerns. In fact, there are some primary areas where CSOs are equally important to CFOs, due to the increasing importance of ESG factors and requlatory expectations around their integration and monitoring into daily activities. For one, CSOs are responsible for the establishment of dedicated ESG processes and controls. CSOs should identify major actors involved in their company’s activities and inform them about ESG matters on a regular basis, ensuring compliance with ESG regulatory requirements. Furthermore, CSOs and their teams must be meticulous and strategic in ensuring accuracy when dealing with sustainability data and ratings.

The role of the CSO has expanded to include handling ESG matters. In doing so, CSOs are observing the widespread integration of sustainability within all aspects of business: products and services, clients and the business partners ecosystem, wider communities, HR and talents, internal governance and daily functioning… to name only some examples and must identify the most effective strategies to facilitate broad organizational changes.

Some of the world’s largest global firms have already succeeded in evolving their governance overseeing these matters. “More and more, firms are systematically setting aside time in board meetings to discuss ESG matters and are also seeking external insights by collaborating with sustainability partners,” says Renaud Breyer, EY Luxembourg Partner and Sustainability Leader. According to the same EY studied mentioned earlier, 58% of CSOs now meet with their C-suite executives on a monthly or quarterly basis.

Food for thought

“Organizations should acknowledge that sustainability is a shared obligation,” says Renaud. Particularly, those in leadership roles can exert a notable impact: by reinforcing their sustainability commitments, leading by example, and instigating a substantial shift towards more sustainable operations. Additionally, they have the power to enable their clients to make more sustainable choices by promoting a vision for sustainability. This involves driving positive change through enhancing their company's and their clients' sustainability capabilities and skills.