There’s a new title in the C-suite - is the Chief ESG Officer here to stay?
Companies are under pressure to do more than the bare minimum - not just for the environment but also for society. For some, banding and marketing are the key motivators driving ESG issues (Environmental, Social, Governance), while others can see the opportunity of putting ESG at the heart of their strategy. The Chief ESG Officer title hasn't been around for long but is already being welcomed by big-name companies 1. Will yours follow suit?
What does a Chief ESG Officer do?
The Chief ESG Officer focuses on the bigger picture. They help businesses re-examine their offering through the ESG lens to identify green opportunities, balancing complex and conflicting demands between different areas of the company - including legal, environmental, social, geopolitical and logistic issues - to transform how business gets done. Also named sense-maker in chief, their role touches on many areas of the business. To be effective, they need the mandate to pursue their agenda across all areas, which is why they're best placed at C-level 1.Interactions of a CSO in a typical organisation with respect to sustainability 4
How does the role differ from Chief Sustainability Officer?
In most cases, it doesn’t. Right now, Sustainability Officer and ESG Officer are used interchangeably. It’s generally understood that the CSOs of today are not only focused on the E but increasingly on the S and G. The CSO’s role is evolving as companies come under pressure to deliver ESG performance metrics and include them in financial disclosures. They’re becoming more financially involved and spending more time with Chief Financial Officers to report on ESG impacts and value - possibly explaining the rise of the Chief ESG Officer title.
Could this new title replace the CSO in the future?
It’ll depend on the company. Those who already have a CSO may not see the need for a title change. For others, the Chief ESG Officer title may be more accurate - particularly if the role is heavily-focused on ESG reporting.
Should your company appoint a Chief ESG Officer?
Appointing a Chief ESG Officer can be a good decision for companies struggling to transform their business or those at risk of stakeholder scrutiny. At a time when many people are frustrated at companies who talk the talk but don’t act, appointing a Chief ESG Officer can show commitment.
In one study, 90% percent of employees “said that they would trade a portion of their life’s earnings for greater meaning at work” 1, showing people care about whether their work has a positive impact. It’s not just the employees that care - it’s the stakeholders too: “If an organization’s products, business practices, or brand becomes socially unacceptable to stakeholders, the business model itself could cease to be viable. Modifying existing practices to better address environmental and social sustainability matters is simply good business” 2
A Chief ESG Officer can help companies implement strategies to mitigate business risk and future-proof their brand. Once in place, they can boost ESG performance, secure consumer loyalty and increase employee satisfaction.
What’s the business potential of ESG solutions?
Companies with strong ESG programs deliver better returns 2. They’re also better at adapting to change and more likely to have a future-ready business strategy. No wonder investors are looking for data to help them identify which companies are taking ESG issues seriously. Setting ESG commitments rooted in the business strategy can help to build trust and boost share value. The Chief ESG Officer will play a key role in attracting investors by heading up ESG issues, building strategies, gathering robust data and reporting against ESG goals.
What’s the best background for a Chief ESG Officer?
Most enter the position with previous experience in corporate sustainability while others come from a strategy background.
Looking ahead, many believe the Chief Financial Officer will be perfectly poised to head-up ESG issues. That's because ESG isn’t just about sustainability - it’s also about maximizing efficiency, performance and attractiveness to a new wave of investors who seek more than profit. Someone with a financial services background is likely to have a solid understanding of markets, investors and analysts - and be able to track, measure and communicate ESG data in the most meaningful way. As more companies are required to put climate disclosures on financial documents, we will see a growth in ESG reporting responsibilities in corporate finance - making the transition an obvious choice 3.
Chief Legal Officers (CLOs) could also be a good fit for the ESG Officer role due to the legal risk of misrepresenting green initiatives (greenwashing). Experts with a legal background are more likely to spot oversights in communication and safeguard ESG compliance 3. Regardless of the background, Chief ESG Officers and Chief Sustainability Officers need to be business-savvy strategists and should avoid being seen as mere internal philanthropists 4.
Is the ESG Officer here to stay?
Unlike other transformation roles like the Chief Digital Officer - which saw a decline after companies successfully adopted digital transformation - the Chief ESG Officer could have a more permanent position due to the ongoing need for ESG reporting and investor relations. For now, the role seems here to stay, especially as governments, investors, consumers, employees and companies continue to prioritize ESG issues. But will the role be around in the future? In a survey by Deloitte, 99% think the role of CSO will grow in prominence over the next two years, and 70% believe it will continue to be a critical role within the next five years 4. Beyond that, it’s difficult to predict.
Need help finding a Chief ESG Officer or Chief Sustainability Officer? With Heron Talent's recruitment services, a recruitment consultant will help you find inspirational leaders with the skill and experience your company needs to build its sustainability strategy and navigate its next big challenge. Get in touch today.
- Does Your Company Need a Chief ESG Officer? by Robert Langan and Markus Menz, Harvard Business Review, February 17, 2022
- Tectonic shifts: How ESG is changing business, moving markets, and driving regulation, Deloitte, 29 October 2021
- Sustainability & ESG quickly becoming the responsibility of several C-level roles, Thomson Reuters, 24 August 2022
- The future of the Chief Sustainability Officer, Sense-maker in chief, Deloitte, February 2021