The United States Global Change Research Program's most recent report on the science of climate change and its causes revealed that the Earth has warmed nearly 2°F (1°C) since the beginning of the 20th century. In the Guardian, John Abraham wrote that, 'Today’s Earth is the warmest it has ever been in the history of modern civilization [...] We are observing heating of the atmosphere, oceans, and the Earth’s surface. Glaciers are melting at an alarming rate. Snow cover is decreasing and we are experiencing increased water scarcity, particularly in parts of the world that rely on snowmelt for water.'
Humanity stands on the brink and it is everyone's responsibility to ensure we pull back, particularly businesses'. Mark Carney, the Governor of the Bank of England, has spoken of ‘the urgent need to address climate change’ in the business world, and governments must ensure that companies play their part through regulation and enforcement. But it is not just a question of compliance. Consumers today demand that the companies that employ them and from whom they buy goods and services are a force for good. This doesn't just mean in terms of the environment, but in all aspects of their working practices, from equal pay to employee welfare. This is particularly true of Millennials. By 2020, Millennials will make up nearly 50% of the workforce and will represent 30% of total retail sales. In surveys of Gen-Yers by Deloitte, 87% said they believe that 'the success of a business should be measured in terms of more than just its financial performance,' while they were also the most willing to pay more for products and services seen as sustainable or coming from socially and environmentally responsible companies.
Many companies, both large and small, are realizing this and are working hard to align or realign their strategies around sustainability and corporate social responsibility. Sustainability is no longer just a punchline for major global companies, it is supposedly a central focus in all aspects of their operations - from production to delivery - and they have the ad campaigns, eye-catching initiatives, and long sustainability reports setting out their goals and annual progress to prove it.
One of the most eye-catching of these has been the appointment of a Chief Sustainability Officer. Companies have had someone overseeing sustainability efforts for many years, with the position steadily growing in importance as it has entered the public consciousness. In 2003, twice as many companies had full-time sustainability officers as in 1995. The role only reached the C-suite, however, in 2004, when Linda Fisher was appointed 'Chief Sustainability Officer' of DuPont. Since then, major brands including Kering, Mars, and Unilever have introduced the role. But to what extent is this just for show? Or are they really of benefit to companies and the environment?
The Financial Times defines ‘business sustainability’ as ‘a process by which companies manage their financial, social and environmental risks, obligations and opportunities’, with these often referred to as ‘profits, people and planet.’ The Chief Sustainability Officer monitors all of these. They deal with environmental issues such as water and energy use, as well as improving working conditions in their own organization and throughout the supply chain, creating better safety procedures and ensuring responsible sourcing. They are on the C-suite to promote understanding of how trends, risks, and opportunities over the mid- to long-term will impact business strategy and can ensure that they are included in decision-making processes.
Once considered symbolic of the increasingly bloated C-suite, it now makes sense to have someone addressing these issues. A Chief Sustainability Officer is vital in that it ensures the company take a holistic approach and that efforts are embedded in their core operations. There are many examples of Chief Sustainability Officers putting in place initiatives that are both eye-catching and effective. MGM Resorts Chief Sustainability Officer Cindy Ortega, for example, is leading a $30 million initiative to install more energy-efficient lighting across all 17 MGM resorts. It is also attracting some extremely qualified people. For example, Marie-Claire Daveu moved from her position as chief of staff for five years to environment minister Nathalie Kosciusko-Morizet under Nicolas Sarkozy to take the role at Kering, setting out to lower the effect the company has on the environment by 40% by 2025 and have 50% male and 50% female staff and equal pay.
However, while initiatives and targets are eye-catching, it can give the impression that a Chief Sustainability Officer is just there as good PR. For many organizations, short-term thinking is still pervading, and should consumer demand change, this role will likely be sidelined again. Lyndsay McGregor, a senior editor at Sourcing Journal, notes that, 'Brands still want to turn a profit and all of these wonderful things that sustainability officers want to implement cost money. The margins on environmentally-conscious materials and processing aren't as high as the margins on conventional materials. And consumers don't seem willing to pay a little extra for something that's sustainable. So if brands can't pass on some of that additional cost, they're less likely to be enthusiastic about making big changes until consumers start demanding that they do so.' This is true to an extent, but many are willing to pay more, as surveys of Millennials have shown. It is correct, though, that companies need to take a long-term view, and for this to happen the Chief Sustainability Officer cannot just be there for show.
You need the splashy initiatives, but you also need to take a long-term strategic approach - not because consumers want it, but because it makes sense for the long-term health of your business. It may seem trite to say that businesses need to take care of the world because without it, they won't have a business, but it is true. Tim Koller, a leader of McKinsey & Co.’s corporate finance practice, notes that. 'If the forces in the world that relate to sustainability are going to be material to a business, it’s management’s job to take a longer view and figure out what to do about them. Because eventually, these things will affect cash flows.' The companies best at sustainability have it ingrained through their business, they put it at the heart of every decision. The Chief Sustainability Officer needs to make the company look like it is doing something, but it also needs to ensure that actually is, and to do this they need to be taken seriously.