7 Feb 2023
7 Feb 2023
By 2011, the number of CSOs in publicly traded companies in the United States had climbed to 29, and the demand for CSOs has soared by 228 per cent over the last decade. In 2020, Fortune 500 companies hired more CSOs than in the previous three years combined, with 31 of them appointing their first CSO.
Today, the role of a CSO is no longer a novelty but a necessity. Discussions surrounding sustainability, particularly environmental sustainability and climate change, have gained traction in recent years, with more and more stakeholders holding businesses accountable for how responsibly they act and operate.
For businesses, the pandemic has also served as a wake-up call: Sustainability can no longer be an afterthought but is the key to survival and resilience. At the Singapore Institute of Management (SIM), we believe that as sustainability gains prominence in the boardroom, the CSO has evolved into a role that is crucial, even indispensable, to any company’s management team.
What makes a CSO
As its name suggests, the CSO is primarily in charge of leading a company’s sustainability journey. This means developing a sustainability strategy that embodies the company’s purpose and supports its business priorities, as well as getting both leaders and employees on board with their sustainability vision.
Some still believe that these responsibilities fall under the remit of the Chief Executive Officer (CEO). But it is unrealistic to expect CEOs to be in the know about everything regarding the sustainability landscape, especially with increasingly complex climate risks and tougher regulations.
In fact, seismic shifts and developments can take place in just a matter of weeks when it comes to sustainability issues. Here’s an example: Within a two-week period in January 2021, French President Emmanuel Macron joined other world leaders to commit to protecting biodiversity at the One Planet Summit; US President Joe Biden rejoined the Paris Agreement; and China reaffirmed its climate pledge to reduce carbon emissions by 65 per cent by 2030.
This is where the CSO comes in – they have the expertise to help their CEOs navigate this dynamic, sometimes unrelenting, sustainability landscape. Needless to say, this is a multi-faceted task.
First and foremost, CSOs have to keep up with developments – big or small – in the external environment and make sense of them, before taking these insights back to their companies. Like myself, most CSOs don’t start off as purely CSOs – we come from different backgrounds and often wear other hats as well. But it is precisely because we have extensive experience working with diverse peoples and stakeholders that we are well-placed to view and manage change from both outside and within.
It is important to identify who your stakeholders are in order to engage them. Find out what's important to them, and then decide on your organisation’s priorities. Remember to always link these back to your organisation’s “why”, because that is what will resonate with your stakeholders.
Of course, you have to walk the talk. This brings me to my next point: Once CSOs have made sense of external developments and assessed their company’s readiness to respond to such developments, they have to come up with – and continuously refine – their organisation’s long-term sustainability strategy and put it in place, whether through innovation or reducing emissions.
For SIM, we have aligned ourselves with the United Nations’ Sustainable Development Goals. We aim to have our physical campus Green Mark-certified and are actively reducing waste, such as by phasing out the use of single-use plastics. We also have a three-year plan to incorporate sustainability into all our operating practices, including recruitment, business ethics, diversity policies, staff practices, our sources of procurement, and more.
Lastly, CSOs have the unenviable task of educating and convincing people within an organisation of its sustainability agenda. Being an effective communicator is thus a must – they have to be able to rally employees across the board to engage with the topic of sustainability. It is for this reason that some say one of most important responsibilities that a CSO has is that of thought leadership. And because results pertaining to sustainability are never immediate, CEOs should support their CSOs by giving them airtime and taking them seriously, to signal their importance to the rest of the organisation.
A must-have in the ESG landscape
The role of CSO will only continue to grow in prominence and evolve. As organisations expand, so will their environmental footprint. Accordingly, this exposes them to greater scrutiny from consumers, investors and regulators.
Closely tied to this is the need for organisations to have a strong environmental, social and governance (ESG) proposition, which the CSO will lead. No one can escape ESG concerns, which are not merely a self-congratulatory trend. Studies have found that better ESG scores often correlate with higher financial returns and about 10 per cent lower cost of capital.
In other words, a good ESG proposition is a way to combine profit and purpose – goals often erroneously thought of as mutually exclusive. In line with the local and global push for sustainability, including the Singapore Green Plan 2030 and the Net Zero by 2050 initiative, companies have started to include sustainability criteria in their work processes.
SIM is no exception. All three areas are important to us but we place more emphasis on the social aspect, given our social mission to enable students, working adults and organisations to thrive across different stages of their lives.
For example, SIM Academy’s new Job of the CSO programme, under its Future of Work Signature Series, is specifically designed to equip CSOs – both new and seasoned – with the right tools and frameworks to prepare their businesses for a sustainable future over a five-month period.
In an ideal world, the CSO will be an obsolete role, simply because sustainability has become so ingrained in a company’s culture. But for now, it’s here to stay – and for a long time.