Does your Company Need a Chief Sustainability Officer?

Does your Company Need a Chief Sustainability Officer?

In the last ten years, numerous large companies appointed a Chief Sustainability Officer to serve as an executive on the board of directors. Companies like Citigroup, General Motors, and International Pape are the latest companies to add a CSO to their executive roster. But does your company need a Chief Sustainability Officer?

Companies with significant environmental and social impacts will benefit from appointing a Chief Sustainability Officer (“CSO”). Resource-intensive companies need to carefully monitor their usage and wastage, a burden that’s eased by having a selected individual monitor and report the company’s sustainability management.

Ultimately, the shareholders or the current board of directors will decide if the company needs a CSO. To guide the decision, let’s explore why companies need a CSO and the benefits of appointing a CSO.

Why your Company Needs a Chief Sustainability Officer?

Suppose your company operates in an industry that uses many of the earth’s resources (say gold, aluminium, electricity, oil, etc.). In that case, your company will do well with a CSO on the board of directors.

With an increasing population, experts and political leaders are concerned over the sustainability of the world’s resources compared to their consumption. Many experts raise the question of whether our world’s resources will suffice for future generations. As a result: Companies, investors and lenders focus on the environmental, social and governance (ESG) impact of a company’s operations.

Even certain professional service firms and financial institutions could use a CSO. A valuable method to promote ESG positive practices is to assess, monitor, and report on customers’ (or portfolio companies’) ESG impact.

The Benefits Of Having a Chief Sustainability Officer

A company benefits in many ways by having a CSO on the board of directors. For most, the focus might be on increasing the good and reducing the harm. Although this might be the underlying intention, companies have other (sometimes overlooked) benefits.

Advancing the Industry’s Research on ESG Impacts

Specific industries are infamous for excessive usage of natural resources. Some are harmful to our earth (think about the energy industry and the use of fossil fuels), while others can have a reputation for social ham (i.e. fast fashion and child labour).

Operating in an ESG-positive manner is a relatively new research topic, popularised only since the 1960s. Although it might seem like a long time to most, compare it to a more mature research field like modern medicine (since the 18th century), and ESG research is still in the early stages.

ESG research adds value to how the company operates – finding innovative ways to reduce wastage and improve efficiencies.

A Public Statement To Take ESG Seriously

Appointing a CSO is a public announcement that your company takes ESG seriously. In addition to the positive branding, a CSO can work with the marketing team to promote ESG best practices in the industry.

ESG research (combined with strategic marketing) can establish the company as a market leader, adding value to the company, shareholders, staff and the industry.

In Conclusion

A CSO is a valuable appointment for any medium-to-large company operating in a resource-intensive industry or to institutions or firms with relationships in these industries.

All companies impact ESG somehow, and a CSO can guide the company to reduce harm and increase the positive. In addition, a CSO can identify and promote ESG best practices for the industry.