Sustainability Executives

For many years, “sustainability” fell under the functional description of environmental, health and safety, or “EH&S”, and the primary role of the EH&S leader was to handle audit and compliance matters and interact mainly with permit writers, safety inspectors and low-level compliance staff at regulatory agencies.  However, a range of pressures and sources forced companies to take a new look at how their EH&S and sustainability activities were managed including aggressive governmental enforcement activities in the US and in the European Union, financial and legal considerations, concerns about climate change and energy costs and availability, the need to develop new technologies to address environmental challenges and intensified scrutiny from public interest groups and the media into sustainability practices generally and oversight of environmental and social matters in supply chains specifically.  Companies also had to address the emergence of numerous guidelines and reporting standards for sustainability and social responsibility that were changing the expectations of stakeholders regarding corporate performance and communications.[1] 

The country’s first chief sustainability officer (CSO), Linda Fisher, was appointed at DuPont in 2004, and since then many large companies have created a position with that title and other positions within their executive teams that focus on sustainability, environmental impact, corporate responsibility or citizenship.[2]  Today the best practice is to have sustainability represented in the C-suite as a catalyst for the strong leadership and support for sustainability initiatives that must emanate from the senior executive team in order for those initiatives to capture the imagination and energy of employees and other stakeholders.  The CSO should be sure that sustainability is taken into account when business strategy is being discussed and established in the boardroom and in meetings among senior executives, and should take the lead in communicating with operations managers about how budgets and performance metrics for particular programs have been established taking into account sustainability priorities.  The CSO should also join the CEO in engaging with stakeholder groups to explain the company’s sustainability strategy and obtain feedback and address concerns.  Finally, the CSO should be responsible for ensuring that the company adheres to the continuous process of auditing and evaluating its sustainability activities in order to ensure that its sustainability strategies are coherent and effective.[3] 

The ideal CSO is an ambassador, visionary and strategist charged with driving commitment to sustainability within the company and across the company’s external stakeholders.[4]  The CSO position has a number of specific roles and related knowledge requirements.  For example, with respect to the company’s social sustainability activities the CSO is expected to integrate social responsibility with the company’s business strategy and operations.  At the same time, the CSO might directly manage, facilitate or participate in the environmental compliance and leadership activities of the company, including identifying, assessing, responding and monitoring environmental risks and opportunities in the company.  With respect to governance, the CSO would be expected to be involved in advising the board on its duties relating to oversight of sustainability, business practices and ethics, compliance and risk management, disclosure and transparency, stakeholder communications and monitoring and auditing sustainability initiatives.  The CSO’s primary internal working relationships would be with the entire board, C-level executive leadership, the board committee(s) assigned responsibilities for sustainability, governance and investor relations and governmental affairs.  With regard to external working relationships, the CSO should be communicating regularly with community groups, NGOs, policy makers and major investors; media, financial and industry analysts; professional CSR organizations; and peer counterparts.[5]

A guide prepared and distributed by the National Association of Corporate Directors (NACD), which looked at the role of the CSO position from the perspectives of the members of the company’s board of directors, listed the following as core duties and responsibilities of the position:[6] 

• Strategy: Lead development of an overarching sustainability approach directly related to the company’s long-term business plans
• Thought Leadership: Broaden and raise the company’s understanding of what society, customers, employees, investors, and other stakeholders expect
• Advocacy: Speak out on behalf of the company’s sustainability goals and accomplishments
• Policies and Programs: Drive the development and execution of guiding principles and initiatives for the company’s sustainability programs
• Goals and Measurement: Develop appropriate targets and ways of assessing progress to drive and evaluate the company’s performance on sustainability
• Reporting: Determine how the company will internally and externally express progress toward accomplishing its sustainability goals and respond to society’s increasing demand for greater transparency
• Stakeholder Engagement: Build constructive alliances and coalitions with key constituency groups
• Risk Management: Identify risks and opportunities based on stakeholder expectations and design proactive mitigation and response strategies
• Fiscal Oversight: Through the sustainability strategic and operational planning process, develop an understanding of the fiscal impact of the company’s goals and priorities in this area

As for the preferred qualifications for the CSO position, the Corporate Responsibility Officers Association (CROA), which is now called the 3BL Association, has mentioned C-suite executive level experience; a sophisticated understanding of the global sustainability landscape and best practices; being the kind of individual who is sought out for his or her advice and perspective; experience working with and influencing senior company leadership (including the CEO and/or COO), chairperson of the board and board members) on projects that involve the development of new company-wide policies and programs;  ability to work successfully with people of diverse functional and cultural backgrounds; demonstrated ability to anticipate trends and issues in business and society; excellent written and oral communications skills; ability to analyze and interpret data; and strong business financial acumen.[7]

The preferred approach, assuming there are sufficient resources, is for the CSO position to be supported by a full sustainability leadership team with cross-functional experiences and skills drawn from key areas including corporate communications, operations, human resources, legal and compliance, sales, marketing, philanthropy, community relations and EH&S.  As a practical matter, the size of the sustainability leadership team will be determined by factors that are beyond the control of the CSO including the size of the organization, responsibilities assigned to other functional areas and available capital and human resources. 

One important sustainability leadership post is the vice president of sustainability, a senior operational role reporting to the CSO and responsible for oversight of the development and implementation of sustainability strategy and managing a team of sustainability specialist experts.[8]  Inside the company the vice president of sustainability would work closely with executive leadership, the committee(s) of the board to which sustainability duties and activities have been assigned, business line managers (i.e., supply chain, human resources and environmental affairs), investor relations and governmental affairs and his or her direct reports.  Facing outward, he or she would be working with community groups, NGOs and policy makers; media, financial and industry analysts; professional CR organizations and peer counterparts. 

As one gets deeper into the staffing of the sustainability function, variations will necessarily be observed given that each organization has its own priorities and resources.  As a point of reference regarding the specialist positions that might be created, consideration might be given to five other key sustainability-related positions within the organizational hierarchy mentioned by the CROA[9]:

• Director of Sustainability Communications: Responsible for developing and executing a comprehensive, cohesive communications strategy for both internal and external audiences and for the production of the annual sustainability report, and uses the communications strategy to connect and convey broader reputation and social issues to the commercial objectives of the business.  Works closely with internal groups like public relations, human resources, government affairs, investor relations, and environmental health and safety as well as with external stakeholders like SRIs, NGOs, customers, etc.. 
• Director, Philanthropy:  This position is responsible for establishing, leading and managing, a non-profit charitable foundation which awards grants annually to a variety of organizations in communities where the company does business.  Duties and responsibilities include overall strategic planning, revenue generation, financial management, organizational development, staff management and program operations. 
• Director, Sustainability Procurement Strategy:  This position is a specialist procurement role focused on sustainability and includes developing and implementing procurement’s strategy and policy on sustainability in relation to suppliers and their supply chains.  
• Director of Environment, Health and Safety:  This position leads and directs the organization’s EH&S processes and has company-wide responsibility for all EH&S related functions with accountability for operational, administrative, technical, and financial components.  Contributes to the development and execution of functional business plans and EH&S strategies and assesses operational risks that could affect EH&S in order to advise senior leadership on constructive plans and mitigation strategies. 
• Director, Sustainability:  This position is responsible for developing a comprehensive sustainability strategy across all dimensions of sustainability that can be delivered through the tools of the practitioner, including issue monitoring, stakeholder consultation, materiality, risk analysis, transparency and reporting.

The activities under each of the directorships may be supported by steering committees and other processes for coordination and collaboration.   For example, an EH&S steering committee might be responsible for proposing EH&S strategy and targets, overseeing the company’s EH&S policies and performance and approving the company’s EH&S audit program and reviewing the results of such audits to make recommendation to senior management.  In many cases the activities of the EH&S steering committee are deemed to be of such significance that the CSO, as well as the EH&S director, will serve as a member, often as the chairperson.

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This article is an excerpt from the author’s forthcoming book on Sustainability Management, which will be published by Routledge in late 2020.  For further information, visit the following page on the author’s Sustainable Entrepreneurship Project website: https://alangutterman.com/topics/governance-management/

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About the Author

This article was written by Alan S. Gutterman, whose prolific output of practical guidance and tools for legal and financial professionals, managers, entrepreneurs and investors has made him one of the best-selling individual authors in the global legal publishing marketplace.  His cornerstone work, Business Transactions Solution, is an online-only product available and featured on Thomson Reuters’ Westlaw, the world’s largest legal content platform, which includes almost 200 book-length modules covering the entire lifecycle of a business.  Alan has also authored or edited over 90 books on sustainable entrepreneurship, leadership and management, business law and transactions, international law and business and technology management for a number of publishers including Thomson Reuters, Practical Law, Kluwer, Aspatore, Oxford, Quorum, ABA Press, Aspen, Sweet & Maxwell, Euromoney, Business Expert Press, Harvard Business Publishing, CCH and BNA.  Alan is currently a partner of GCA Law Partners LLP in Mountain View CA (www.gcalaw.com) and has extensive experience as a partner and senior counsel with internationally recognized law firms counseling small and large business enterprises in the areas of general corporate and securities matters, venture capital, mergers and acquisitions, international law and transactions, strategic business alliances, technology transfers and intellectual property, and has also held senior management positions with several technology-based businesses including service as the chief legal officer of a leading international distributor of IT products headquartered in Silicon Valley and as the chief operating officer of an emerging broadband media company.  He has been an adjunct faculty member at several colleges and universities, including Berkeley Law, Golden Gate University, Hastings College of Law, Santa Clara University and the University of San Francisco, teaching classes on corporate finance, venture capital, corporate governance, Japanese business law and law and economic development.  He has also launched and oversees projects relating to sustainable entrepreneurship and ageism.  He received his A.B., M.B.A., and J.D. from the University of California at Berkeley, a D.B.A. from Golden Gate University, and a Ph. D. from the University of Cambridge.  For more information about Alan and his activities, and the services he provides through GCA Law Partners LLP, please contact him directly at alangutterman@gmail.com, follow him on LinkedIn (https://www.linkedin.com/in/alangutterman/) and visit his website at alangutterman.com.

About the Project

The Sustainable Entrepreneurship Project (www.seproject.org) was launched by Alan Gutterman to teach and support individuals and companies, both startups and mature firms, seeking to create and build sustainable businesses based on purpose, innovation, shared value and respect for people and planet.  The Project is a California nonprofit public benefit corporation with tax exempt status under section 501(c)(3) of the Internal Revenue Code dedicated to furthering and promoting sustainable entrepreneurship through education and awareness and supporting entrepreneurs in their efforts to launch and scale innovative sustainable enterprises that will have a material positive environmental or social impact on society as a whole. 

Copyright Matters and Permitted Uses of Work

Copyright © 2020 by Alan S. Gutterman.  All the rights of a copyright owner in this Work are reserved and retained by Alan S. Gutterman; however, the copyright owner grants the public the non-exclusive right to copy, distribute, or display the Work under a Creative Commons Attribution-NonCommercial-ShareAlike (CC BY-NC-SA) 4.0 License, as more fully described at http://creativecommons.org/licenses/by-nc-sa/4.0/legalcode.

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[1] A. Luijkenaar and K. Spinley, The Emergence of the Chief Sustainability Officer: From Compliance Manager to Business Partner (Heidrick & Struggles International, 2007), 6-7.

[2] C. Bader, “What Do Chief Sustainability Officers Actually Do?”, The Atlantic (May 6, 2015), https://www.theatlantic.com/business/archive/2015/05/what-do-chief-sustainability-officers-actually-do/392315/ (accessed April 26, 2020).

[3] K. Rangan, L. Chase and S. Karim, Why Every Company Needs a CSR Strategy and How to Build It (Cambridge MA: Harvard Business School Working Paper 12-088, April 5, 2012), 21-22 (while the term “CSO” is used in the text, Rangan et al. preferred to refer to the position as “Chief Responsibility Officer” and focused on strategic management of corporate social responsibility).. 

[4] Corporate Responsibility Officers Association, Structuring and Staffing Corporate Responsibility: A Guidebook (2010), 22-23; and C-SUITE EXPECTATIONS: Understanding C-Suite Roles Beyond the Core (Washington DC: National Association of Corporate Directors, 2013).

[5] Id. at 39-51.

[6] C-SUITE EXPECTATIONS: Understanding C-Suite Roles Beyond the Core (Washington DC: National Association of Corporate Directors, 2013).

[7] Id. at 40.

[8] Corporate Responsibility Officers Association, Structuring and Staffing Corporate Responsibility: A Guidebook (2010), 24.

[9] Id. at 28-29.