People, Planet & Profit
What's next for the CSO?
Now firmly established members of the C-suite, CSOs are trying to lead major changes. Can it be done in this economy?
Over the last few years, Chief Sustainability Officers have evolved from C-suite novelty to leader, setting strategy, communicating goals, and evolving a sustainability function. Now comes the hard part—leading transformation at scale.
Many CSOs aren’t just beginning a new year in 2023, they are also embarking on a new phase in the evolution of their roles. “They are moving from intent to action,” says Andrea Walsh, Global ESG and Sustainability Leader at Korn Ferry. And, according to CSOs, it’s getting harder.
As a follow up to our 2021 report, The Rise of the Chief Sustainability Officer, Korn Ferry interviewed about two dozen CSOs to get a sense of what they have experienced since taking on the role. The study found that CSOs are running into a number of challenges, among them macroeconomic headwinds, heightened pressure from stakeholders and a lack of talent as they try to implement and operationalize their strategies. “CSOs today must manage change, drive cultural adoption, embed sustainability throughout operations, and show a financial return,” says Walsh.
And they must do all that against the backdrop of a looming recession and in the face of rising pressure from regulators and across stakeholder groups. Activist investor campaigns citing ESG concerns are on the rise, for instance, and this year the SEC proposed new disclosure rules around ESG that will heighten reporting requirements for companies. At the same time, the economy is teetering on the brink of recession, which will likely result in budget cuts across initiatives next year. That’s why CSOs need to build closer relationships with their CEOs and CFOs, says Jacklyn Ward, a Senior Principal of ESG and Sustainability Solutions and owner of the CSO Resource Hub at Korn Ferry.
In fact, one of the key findings from our interviews with CSOs is that reporting to the CEO can accelerate progress because it gives them insight into business decisions. As it currently stands, however, a recent Korn Ferry sustainability organizational design study showed only 37% of CSOs report to the CEO or other enterprise leader. Reporting to the CEO can also help with the cultural transformation needed to embed sustainability throughout the organization. Ward says the fact that more companies are tying bonuses and incentives for the CEO and other leaders to ESG metrics elevates the role of CSO and drives adoption of sustainability practices across the organization.
According to CSOs, one of the biggest challenges they face in putting their sustainability strategies into action is employee bandwidth. “There’s not enough talent,” says Ward. Indeed, CSOs are being charged with leading massive business and cultural change often across global enterprises with teams that have fewer members than a basketball team’s starting lineup.
CSOs stressed in our interviews a need for more professional development that blends environmental, digital and business skills. “A people strategy is becoming more critical for CSOs,” says Walsh, noting the need for both learning and training for internal talent and a fit-for-purpose success profile for outside hires is likely necessary to get companies where they want to go with sustainability.
While time isn’t running out—sustainability is a fundamental part of the business landscape now, not a one-off project—it is moving faster than CSOs would like. Many companies that progressed sustainability functions over the last decade set targets of 2025 or 2030 for achieving goals. “That’s not that far away anymore,” says Walsh.
For more information about the future of the CSO, download our full report:
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Key takeaways
- How the CSO role is evolving in 2023
- What current CSOs have to say about the challenges of the role
- The need for more talent to implement sustainability strategies
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