Chief Sustainability Officer Role is Becoming the Norm

Photographer: Margot RICHARD | Source: Unsplash

The Chief Sustainability Officer (CSO) role is becoming increasingly common at U.S. companies. Over the past ten years, the presence of a CSO at U.S. publicly traded companies has grown by 228%. In addition, the creation of a CSO role has increased during the past couple years. In a 2020 survey of 95 companies with a CSO role, 31 of them hired their first-ever CSO that year.

The Chief Sustainability Officer job function has grown in response to shareholder pressure. In recent years, companies have been urged to consider social good and other non-financial performance metrics, and to factor those issues into decision-making processes.

Environmental, social, and corporate governance (ESG) practices are more important than ever. Socially conscious investors demand companies address the impact of the company on employees, customers, and society at large. ESG considerations also include the company’s governance structure, like executive pay, internal control, shareholder voting rights, and audit functions.

Job Function

CSOs implement and oversee sustainable business strategies for a company. They develop corporate sustainability programs across the business. CSOs must set policy goals and objectives to ensure the company remains on a sustainable path. Plus, they draft annual sustainability and ESG reports, and publish these posts publicly on the company’s website.

From the company’s perspective, sustainability and ESG programs have several objectives. These include improving employee morale, boosting customer loyalty, increasing diversity and inclusion, and enhancing relationships with stakeholders.

A large component of the Chief Sustainability Officer role involves ethics, compliance, and risk management. For example, the #MeToo movement and the use of big data have raised questions. These questions have led to extensive conversations about corporate social responsibility.

Work Experience for the Role

Individuals hailing from diverse backgrounds can become Chief Sustainability Officers. Many CSOs were former lawyers who understand the legal ramifications of poor corporate governance and compliance issues. However, many CSOs have purely business backgrounds or come from the public policy arena.

Examples of Companies with a CSO

Business leaders face more pressure than ever to address social issues and implement sustainable practices. Because of this growing trend, ESG initiatives present both challenges and opportunities for businesses.

Many law firms have launched sustainability and ESG advisory practices to show their corporate clients how to successfully implement ESG programs. As a result, law firms are ramping up resources to help businesses navigate the legal and political nuances of ESG-focused shareholder engagement.

Below are a few U.S. corporations that have created a Chief Sustainability Officer role, as well as the year they instituted the position.

A Few Examples

Apollo Global Management, one of the largest asset management firms in the world, recently hired Dave Stangis as its first-ever Chief Sustainability Officer. Marc Rowan, the CEO of Apollo, emphasized the significance of the announcement. He pointed out that Apollo’s increased ESG efforts will contribute to its overall business success.

“We are pleased to welcome Dave to our team,” Rowan stated. “His unparalleled experience and leadership not only reinforce our commitment to sustainability but also provide clear evidence of our ambitions going forward as we look to continue to drive operational rigor and positive impact around the globe. Sustainability is simply better business and a critical component of our long-term growth strategy.”

Starbucks created the CSO role in 2020. The company hired Michael Kobori from Levi’s to fill the role. Prior to this, Starbucks had faced a wave of criticism from environmental groups for its single-use cups and lack of reusable packaging. Consequently, Kobori has made socially conscious changes at Starbucks stores, like better waste management and more plant-based menu options. Starbucks CEO Kevin Johnson emphasized these efforts are being implemented with revenues and overall business results in mind.

Delta Airlines named Pamela Fletcher as its new Chief Sustainability Officer, effective in early 2022. Fletcher was previously Vice President of Global Innovation at General Motors.

“Amid the challenges of the pandemic, we have accelerated our efforts to combat the crisis of climate change and build a sustainable future for air travel — something that’s essential for Delta’s long-term success,” Ed Bastian, CEO of Delta Airlines, noted. “I’m happy to announce that Pamela Fletcher will be joining Delta to lead that effort.”

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Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.

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Carpenter Wellington PLLC

Carpenter Wellington PLLC

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.

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