While CEOs and boards have increasingly empowered chief sustainability officers (CSOs) to retool organizations for a decarbonized world, it’s no secret some sustainability initiatives are faltering. If around one in three CSOs are seeing “substantial positive value” from delivering ambitious sustainability goals, that means almost two-thirds are not. Easy gains seem increasingly hard to come by, and sustainability efforts generally have run into headwinds amid economic uncertainty and the reality of the work required to meet global net-zero goals. Meeting regulatory reporting requirements further complicates these efforts. But CSOs remain steadfast: 80 percent see sustainability and business strategy as inseparable, and they’re working to ensure sustainability remains a priority. The challenge now is ensuring the whole organization does too.
Sustainability and value creation
A persistent criticism of sustainability efforts is they’re a “feel-good” priority disconnected from performance. CSOs know that’s incorrect: sustainability can ultimately lower operating costs, mitigate risk, boost organizational resilience, and drive brands and reputations. But actions speak louder than words, and CSOs are increasingly focused on creating value.
Sustainability is seen as a way to create value
Sustainability is seen as a way to create value
The key to achieving sustainability goals? Business units
Real organizational change happens in business units. That’s why CSOs interact with business units more than any other function, and why almost nine in 10 CSOs regard interactions with business units as important to making progress on their sustainability agenda. In fact, CSOs spend nearly half their time engaging other functions or C-suite leaders — more than they spend with their own teams.
CSOs interact most with the business units
CSOs interact most with the business units
The foundation in place, CSOs shift focus to business impact
Organizations have in recent years focused on laying a sustainability foundation: engaging with senior leaders on the issue, improving data collection and reporting, and developing plans for transitioning to a decarbonized future. The rubber is now hitting the road: 35 percent of CSOs see a concerted focus on sustainability initiatives in the next five years, while 25 percent predict a stronger link between those efforts and business impact.
Sustainability activities will soon shift dramatically
Sustainability activities will soon shift dramatically
The measurement and reporting challenges
You can’t change what you don’t measure. But CSOs are feeling the strain: they spend twice as much time focused on reporting- and measurement-related activities than those related to revenue generation, and some are spending up to 40 percent of their week on reporting and compliance. The problem? Those demands are only likely to increase as a result of new regulations, such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the Securities and Exchange Commission’s just-released climate disclosure rule in the United States.
Reporting demands and measuring impact are top challenges for CSOs
Reporting demands and measuring impact are top challenges for CSOs
A need for greater interaction with the board
CSOs know boards are critical to the success of sustainability efforts, ranking them in the top five most important stakeholders to their efforts with the CEO, business units and the CFO. Yet CSOs interact with boards far less frequently than other functions (ahead of only human resources). CSOs see a measurable gap between CEOs and boards when it comes to knowledge of sustainability issues. Greater exposure to boards — whether through the CEO or via a sustainability committee charged with overseeing related issues — is critical to driving organizational change.
Average sustainability knowledge rating (0–10 scale)