Businesses can make sure they are well-positioned for long-term success by giving CSOs more authority and acknowledging their potential to shape long-term business outcomes
In recent years, the Chief Sustainability Officer (CSO) role has evolved dramatically. Once a position primarily focused on environmental compliance and corporate social responsibility, the modern CSO is now at the forefront of strategic value creation and long-term risk management. This transformation raises an intriguing question: Can today’s CSO become tomorrow’s CEO?
A Perspective on Ambition
A survey conducted by EY revealed a surprising trend among corporate sustainability professionals. While nearly half of CFOs want to be CEOs, none of the 60 CSOs polled expressed a desire for the top position. This reaction may appear perplexing, particularly given the strategic importance of sustainability in today's business environment. Former 2019 US Vice President Al Gore once said that combating climate change is "the single biggest investment opportunity in history. Then why are the CSOs not believing they can shape the business revenues or vision?
Progress and Challenges in Sustainability
Two recent studies highlight the "ambition gap" in corporate climate action. Despite over 11,000 companies pledging to achieve net zero emissions, progress is lagging. Only 26 percent of companies provide detailed information on climate risks in their financial reports, and only a third mention climate issues at all. However, there is a positive trend: 68 percent of companies now see the advantages of transitioning to a low-carbon economy.
These findings are echoed by the EY Sustainable Value Survey, which gathered insights from over 500 CSOs. It reports on headline progress in emissions reductions but emphasises ongoing challenges, such as the need for cross-functional collaboration. This lack of integration is causing dissatisfaction among CSOs, with 40 percent expressing a willingness to leave their current position. Interestingly, transformational CSOs—those with significant resources and organisational influence—are not only making faster progress on decarbonisation but also generating more financial value and experiencing higher job satisfaction.
So it is evident that most CSOs are not setting agendas or driving change, but rather coordinating between departments/functions and guiding them to set targets and report. This may also be partly due to the limitations of roles and authority and partly due to the CSOs’ understanding of business challenges and opportunities.
Empowering CSOs for Greater Impact
Chief Sustainability Officers (CSOs) who have the power and connections to work well with others in their organisations are more successful and happier in their jobs. They are making better progress in sustainability efforts and showing strong business skills. On the other hand, CSOs without this influence are less successful and satisfied. This highlights the need for these leaders to be empowered and integrated within the company.
The EY DNA of the CFO Report highlights that 50 percent of CFOs meet short-term earnings targets by reducing funding for long-term priorities, with ESG programmes being the most vulnerable. Which also shows that CSOs still don’t enjoy adequate clout to influence investment decisions and shape company strategy, both critical traits for a CEO.
The Path Forward: CSOs as Future CEOs
To close the gap between ambition and action, businesses must acknowledge the critical role of the CSO, and the CSOs must shape business outcomes and the company’s plans. CSOs need to develop the strategic vision and skills required to drive business success in a fast-changing world.
For CSOs to become future CEOs, several changes are essential:
Empowerment and Integration: CSOs must be given the authority and resources to influence organisational strategy.
Visibility and Recognition: The contributions of CSOs to business value and sustainability goals should be highlighted, and they should be part of board discussions and added to executive committees.
Alignment with Business Goals: Sustainability initiatives must be integrated into the core business strategy, aligning with financial and operational goals, and the success and failures of these initiatives should be attributed to CSOs.
The CSO's changing role is evidence of how sustainability is becoming more important in business. The perspectives of CSOs can be priceless as businesses negotiate the complexities of sustainable development and climate change. Businesses can make sure they are well-positioned for long-term success by giving CSOs more authority and acknowledging their potential to shape long-term business outcomes. CSOs, in the same spirit, need to see themselves as business change agents and influence outcomes, coordination of reporting and evangelising sustainability will not make the necessary impact either on their careers or to the organisation’s prospects.
Today's CSOs are uniquely positioned to guide their organisations into a prosperous and sustainable future in a world where sustainability is increasingly seen as a key driver of value creation.
(Ramnath Iyer, Co-Founder and CEO, ESGDS)