The greening of industry is creating a fundamental shift in the way business is done. Many of the top companies in the world have realized the value of having an individual in the executive and management ranks dedicated to their company’s impact on and use of natural resources. The CSO’s influence shows up in the triple bottom line: people, planet, profits.
CEOs and COOs manage strategy, risk and operations. HR manages employee issues. Now, CSOs manage the company’s relationship with the environment and the resources it consumes. As an executive, the CSO’s role is to make the overlap between people, planet profit as big as it can be. The larger the overlap, the more green a business is.
Chief Sustainability Officers are responsive to the impact their company has on the environment and how to strategically use resources with less waste and less pollution. They find ways to integrate renewable resources and energy into their operations, ideally with a positive impact on profits. As individuals, they tend to be multi-departmental and can be involved in supply chain management and carbon markets while they mind the triple bottom line.
According to the Annual Sustainability Executive Survey, 2012 [1] 88% of the companies planned to invest in employee engagement and 73% in supplier sustainability performance. The report revealed that only two rankings were relevant to more than half of the respondents: the Carbon Disclosure Project and the Dow Jones Sustainability Indices. The Carbon Disclosure Project (CDP) focuses on greenhouse gas emissions, generating revenue from sustainable products/services, resilience against climate change, and reducing impact on water resources. The Dow Jones Sustainability Indices (DJSI) states that “Long-term challenges such as resource scarcity, demographic shifts and climate change are redefining societal expectations, public policies, regulatory frameworks, and hence business environments and investment outcomes.”
A McKinsey & Company survey showed that executives increasingly understand and manage sustainability issues to add to their companies’ value—both internally and externally. The marketplace values green businesses higher than non-green. Greener businesses tend to be healthier places to work, yielding healthier, more productive employees. [2]
In their paper on Chief Sustainability Officers, authors Miller and Serafeim describe the three stages companies tend to go through on their way to greening: compliance, efficiency and innovation. Optimal performance in these areas requires varying skill sets. In the early stage, companies often task individuals in other roles to fill the need. When efficiency becomes the primary motivation, the role typically becomes more formalized. As the company turns sustainability into an innovative pursuit, it is not uncommon to see the decision-making decentralized, as the innovation may come from a variety of departments. According to the authors, the individual in the CSO role, whether formalized with a title or not, tends to have a close relationship with the CEO, even if they are not direct reports. [3]
The outlook for sustainability in the corporate sector is quite promising. In September 2014, global corporate leaders from companies like McDonalds, Unilever, Royal Dutch Shell and Ikea met UN Secretary-General Ban Ki-moon to discuss climate change. Some of the biggest US-based companies are looking to switch to 100% renewable energy. Concurrent with the summit, the World Bank announced that “1,000 companies were joining 73 countries and 11 regions” to assign a price on carbon. [4]
In the meantime, I look forward to the day when the shift is complete and we can look back on a global wave of change that is already long overdue.
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Sources:
2. mckinsey.com ↩
4. fortune.com ↩
