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The Ever-Evolving Role of the Chief Sustainability Officer
In 2018, Weinreb Group research found there were 44 Chief Sustainability Officer positions at roughly 7,000 publically traded US companies, and that number is growing.
By: Leah Kinthaert
In the last few months for example, Ralph Lauren, AIG, Citigroup, Travelers’ Cos., LafargeHolcim, Liberty Mutual and PepsiCo all appointed their first ever Chief Sustainability Officer. Company shareholders, customers, employees and prospective employees are the reasons that CSOs have increasingly become a necessity at corporations. HBS Professor George Serafeim summed up the situation in a 2014 paper co-authored with Kathleen Miller: “Regulators and investors are asking for it, customers are demanding it, and employees are expecting it.”
It is difficult to pin down a “typical” career path for a Chief Sustainability Officer. If you take a look at the backgrounds for CSOs at some of the most well-known companies, you will see that some CSOs, such as Sunya Norman, Director of Sustainability at Salesforce, seemed to know from almost day one of their careers that sustainability would be their focus. Norman was a sustainability intern at McDonalds, Sustainability Coordinator at Facebook, and has most recently had more than six years of sustainability experience at Salesforce. However you might be surprised that many do start out their careers in sustainability or related fields. Kathleen McLaughlin, for example, studied electrical engineering, then was a Director at analyst firm McKinsey for thirteen years before becoming the CSO at Walmart. Kristina Kloberdanz had a 24 year career at IBM that began as a marketing manager and ended as Corporate Responsibility leader – she is now the SVP, Chief Sustainability Officer at Mastercard. Nicole Johnson-Hoffman who is the Global McDonald’s Business Unit Leader, Chief Sustainability Officer and Sr. Vice President of OSI Group, LLC started out in law. So if there is no set path – how does one go about learning what is key to make it as a sustainability executive? What are organizations looking for when hiring (or promoting from within) for this role? We spoke with CSOs, sustainability HR experts and consultants to find out, including Sunya Norman, Director of Sustainability, Salesforce; Nicole Johnson-Hoffman, Global McDonald’s Business Unit Leader, Chief Sustainability Officer and Sr. Vice President of OSI Group, LLC; Catherine Harris, Head of CR & Sustainability (North America), Acre; Diane Gilpin, CEO, Smart Green Shipping Alliance; and Keynote Speaker, Author and UN Advisor Dr. Sally Eaves.
“The path to leading a sustainability initiative or department is often varied, as the role requires more of a way of thinking than a particular set of credentials” offers Sunya Norman, Director, Sustainability at Salesforce. “I’ve found that regardless of background—whether you’re coming from a traditional business function, such as finance or operations, a nonprofit organization or just received an MBA in sustainability—similar types of people can succeed in this role.”
Norman continues: “To lead a successful sustainability program requires someone who isn’t afraid of innovation, and has the ability to lead through influence. The job calls for a lot of collaboration within your own team, and outside of your four walls. Being able to clearly articulate your vision, the importance of the initiatives, and prove you can manage and execute the project is critical. Beyond strong project management and interpersonal skills, being able to think broadly about the problems you are working to solve is necessary to make an impact in this role. This concept of ‘systems thinking’ means being able to look at a problem from different angles, seeing how parts fit into the whole and what the ultimate consequences could be. From a business perspective, this frame of mind enables sustainability leaders to know what levers to pull within the organization and work through each problem a variety of different ways to make the greatest impact. This is especially key at vision-driven companies like Salesforce.”
“Finally, unlike other traditional business roles, in sustainability, it’s essential to not just be passionate about the work you’re doing in the office, but to have it woven throughout your personal and social life. If you’re not living these values every day, it will be difficult to demonstrate your credibility and compel others to believe in your way of thinking.”
Like several of the other CSOs we encountered while researching this role, Nicole Johnson-Hoffman, Global McDonald’s Business Unit Leader, Chief Sustainability Officer and Sr. Vice President of OSI Group, LLC had a background in law (at Cargill and later CarVal investors) before she moved into the CSO role over two years ago. We asked Johnson-Hoffman what being a sustainability head entails: “Becoming the head of sustainability at an organization requires understanding a wide variety of important issues and how they fit together to influence that organization. Sustainability professionals have an intimate understanding of their own company and industry in order to be effective in identifying key motivators, areas for improvement and impact opportunities. Lastly, a head of sustainability should be knowledgeable and experienced in sustainability, what that means and why it is important so they can pull out their company’s relevant issues and focus on what will ensure they’re around for the next 50 years.”
Johnson-Hoffman recounts how she started in sustainability: “I started in the beef industry as a lawyer before moving onto the operations side. With operations, I began at a single facility and then assumed leadership of a multi-facility business. This gave me invaluable insights into the meat industry that has helped me support sustainable farming and production practices in areas that I know will make an impact while also working to ensure commercial success. The key is to work hard towards a shared value without shying away from everyone’s contributions to the effort. There are no unlikely partners when empowering members of the supply chain to be profitable and ensuring future success for our communities and environment. That is how we will ensure the efforts we make in sustainability are permanent.”
Johnson-Hoffman continues: “I learned a lot about sustainability through getting involved in industry organizations and beef roundtables that are focused on sustainability. Being a part of these organizations has given me perspective relating to the entire market and supply chain. Sustainability is a driving force in the food industry these days, and I make a point to be an active participant. I am constantly learning from experts from a variety of disciplines and backgrounds so I can bring world class sustainability practices back to my company, our customers and the industry as a whole.”
Since its beginnings, corporate sustainability has become more wholistic and is no longer solely about environmental sustainability; it currently features an approach that has three “main pillars: economic, environmental, and social… informally referred to as people, planet and profits.” Travelers Cos. Yafit Cohn sums up the change: “Sustainability is not simply about environmentalism… Rather, we take a holistic view about how the company creates long-term shareholder value.” Why the change? The addition of people-oriented topics such as diversity and inclusion to sustainability policies has largely been driven by the 00s phenomenon of “diversity debt” – where companies have been exposed, and subsequently have lost reputations from customers and shareholders, for exhibiting rampant misogyny and having a hostile work environment. A new generation of millennials and Generation Z are demanding this new wholistic sustainability from companies; attracting and retaining those employees is another reason sustainability has become key. A 2018 Deloitte survey found that: “Those working for employers perceived to have diverse workforces and senior management teams are more likely to want to stay five or more years.” Additionally the study found: ”three quarters of millennials believe multinational corporations have the potential to help solve society’s economic, environmental and social challenges. These findings suggest millennials believe business has an imperative to become involved in improving society beyond creating jobs and generating profit.” Another study proves the point even further, with data showing “64% of millennials won’t take a job if a company doesn’t have strong corporate social responsibility (CSR) values”. Cybersecurity and capital risk management have also become part of some CSO job responsibilities.
We can expect the role of CSO to keep evolving. HBS Professor George Serafeim explained in his 2014 study: “Sustainability is not something that’s static. It has to be dynamic because social expectations are continually changing.” Indexes such as the Dow Jones Sustainability Index (DJSI) and the FTSE4Good Index which “serve as benchmarks for investors who integrate sustainability considerations into their portfolios” and measure ESG (Environmental, Social and Governance) practices have also become increasingly important to companies. Many companies are directly referencing the UN’s sustainable development goals as a good baseline from which to practice sustainable business.
Diane Gilpin, CEO, Smart Green Shipping Alliance has this advice – not just for those inclined towards sustainability roles but for everyone in the business world: “If your career path isn’t all about ‘sustainability’ I’d switch direction immediately. The word ‘sustainable’ seems to have been hi-jacked as a code-word for ‘green’ or ‘eco’ but we must be abundantly clear that a sustainable business is one that creates great products or services, with clear-eyed management, excellent customer service at every level. It means the business must work profitably within planetary boundaries. It’s no use being ‘green’ but not remaining in business – that’s not sustainable.”
“If, in your career, you seek to make a game-changing impact I’d look for businesses designing regenerative systems solutions – that is those with clear targets for developing business models that aim to reduce whole life cycle impacts – ones that address emissions, resources and biodiversity. It’s also worth checking out the B-Corps.”
Gilpin continues: “I’d recommend reading: ‘Doughnut Economics’ by Kate Raworth; ‘Designing Regenerative Cultures’ by Dr D.C.Wahl and ‘Transformative Innovation’ by Graham Leicester. It’s been especially useful for me to understand the concept of ‘Three Horizons’ – covered in all these books – in developing our ambitious strategy to get zero-emissions cargo ships launched by 2030.”
Andy Cartland, Managing Director, Acre Resources Ltd, had this to say about the importance of a CSO in Acre’s excellent white paper “The Emergence of the Chief Sustainability Officer”: “For me, the most striking insight is the broad skill set of the CSO and the parallels with the skill set of the CEO. I look forward to the time when a major company appoints their CSO as the new CEO; that may be the next defining moment in the progression of sustainability up the corporate agenda.” Interested in learning more about what sort of skill sets hiring companies are looking for in this increasingly important role, I got a chance to speak with Catherine Harris, Acre’s Head of CR & Sustainability (North America). She had this advice for potential job candidates: “As a specialist in CSR & Sustainability (CR&S) recruitment, Acre places senior candidates in the corporate, non-profit, banking & finance sectors. There are numerous routes to a career in sustainability. A more traditional path might start with data analysis and audit, reporting and storytelling; moving into a more strategic position, building a company-wide program and securing a budget to roll that out. Practical, hands-on sustainability experience is invaluable and sets a firm foundation for senior executive positions further down the line.”
Harris advises people who are thinking about changing to a career in sustainability to be proactive while at their current position: “Senior professionals looking to transition into a CR&S career from an unrelated profession, should ideally seek to first add sustainability responsibilities to their current remit. This route is easier than, say, applying for a role where other candidates already have many years’ relevant experience under their belt. Those with a background in law, communications, marketing, government relations, investor relations, corporate affairs and procurement (to name a few) are already well positioned to make that transition into a sustainability role. These roles closely align and work closely with the Sustainability function – and a combination of these functions makes for an exceptionally impactful and effective Sustainability leader.”
Harris continues: “For those with the time and budget to study a Masters; this will equip you to understand the issues and opportunities within CR&S; however doesn’t necessarily guarantee a role – particularly when you’re interviewing against seasoned sustainability practitioners. An MBA is worth considering for sustainability professionals as it will distinguish you from your CR&S peers and equip you with the necessary business skills for influencing the Executive team, securing investment and engaging the Board – using language that makes good, solid business sense.”
World Economic Forum analysis “suggests that digital initiatives offer immense opportunity for decarbonizing the global economy”. To get a better understanding of how digital transformation could fit into the role of a CSO, I spoke with one of the world’s most influential women in tech, Dr. Sally Eaves. Dr. Eaves had this to say: “Corporate sustainability or CSR 2.0 brings together different but highly interrelated disciplines to create shared value – indeed it reflects the increasing intersection of professional/brand and personal values. Given the rapid pace of change and the need to be ambidextrous to adapt, developing a depth and breadth of skills to underpin your desire to ‘do well and do good’ is critical.”
Dr. Eaves continued: “Considering the diversity of ethical, social, environmental, cultural and economic dimensions to sustainability, this is not a career path that has been strongly defined in the traditional sense. Identifying mentors from both within and external to your current organisation or place of study is an excellent starting point – who do you admire, who do you see not just talking about, but actualising business sustainability and responsibility? Who do you consider to be an inclusive leader? Developing the broad range of tools, techniques, skills and experience that is required can also be supported by a growing number of training and applied education courses alongside related research that highlights consumer, organisation, governance and employee perspectives.”
“Careers in technology and/or the application of emergent technologies is also highly aligned with undertaking a corporate sustainability path. Secure Distributed Ledgers such as blockchain can embed trust, transparency and traceability into supply chains as one example. To help embed sustainability into culture and operations, the use of interactive workspaces can be a powerful conduit to bring different stakeholders together to share knowledge and iteratively work on projects. Smart workplaces employing AI can monitor and respond to energy use and optimise efficiency. Additionally, within work roles, AI can be employed to handle the more routine and predictable tasks, freeing up time to allow employees to focus on complex tasks and solutions, and meaningful initiatives aligned to brand values and the overarching framework of the United Nations’ Sustainable Development Goals (SDGs).”
Being a Chief Sustainability Officer has its challenges, from going against people who are not open to change to dealing with media criticism. But the flip side is that sustainability is increasingly known to not only cut costs but also increase profits. The Chief Sustainability officer of Hewlett Packard Enterprise (HPE) Chris Wellise told Bloomberg News that sustainability-related practices brought $240 million in new revenue in the first three quarters of 2018. Showing a dramatic increase year-over-year, an HPE source has told me their sustainability-driven revenue for Q1-Q3 of 2019 is over $400M. P&G’s Chief Sustainability Officer Virginie Helias recently described to TheGrocer.Co.Uk how “the single biggest and most impactful thing (she) could have done to reduce the footprint of the (P&G) brand… also reversed the laundry brand’s three-year downward trend”. A 2014 McKinsey report explains: companies taking sustainability seriously can: “reduce their environmental footprint and bolster their reputations but also… improve operations and financial performance.” Harvard Business Review tells us that: “Between 2006 and 2010, the top 100 sustainable global companies experienced significantly higher mean sales growth, return on assets, profit before taxation, and cash flows from operations in some sectors compared to control companies.” Sustainability guru and author Bob Willard has found that: “smart sustainability initiatives can improve profit by at least 51 percent to 81 percent within three to five years while avoiding a potential 16 percent to 36 percent erosion of profits if they did nothing.”
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