The case for implementing sustainability in an organisation has become clear, and the pressure is mounting. Stakeholders and investors consistently demand added scrutiny to measure performance, but implementing a successful sustainability strategy can be challenging. 

As a result of this rising focus on sustainability, CSOs have become in high demand. Data from BoardEX suggests that over 27% of S&P 500 companies had a CSO in 2022, rising from 19% in 2017-2018. In 2021, more CSOs were hired than in the previous five years combined. A separate study found a 211% increase in client demand for sustainability hires between 2019 and 2022. 

The trend for sustainability professionals is likely to continue. Considering new directives and reporting regulations in Europe, industry experts expect a rising demand for CFO and finance services, executives with a direct influence and responsibility for sustainability and ESG plans.

Inevitably, the scale and extent of the role of a CSO is transforming. In previous years, CSOs typically operated separately from others, managing CSR measures but with less involvement with business leaders and the overall strategy. Today, the CSO represents a more strategic and high-priority position, someone likely to work closely with senior leadership, customers and investors, embedding sustainability into the overall corporate strategy.

While it’s positive to see sustainability move more into the spotlight, it creates additional challenges for leaders and hiring businesses. The CSO is a relatively new role, so there are fewer consistent factors and metrics to use as benchmarks. Some industry experts believe the role of the CSO is becoming ever more challenging.

Rising demands and emerging mandates for the CSO, along with multiple reporting lines make the duties of a CSO even more complicated. Studies suggest that only 30% of CSOs report directly to the CEO.

Today’s CSO will play a critical role. Rather than battling to be heard by executives and the leadership team, the CSOs now face the opposite challenge: managing the demands of multiple stakeholders. Traditionally, the sustainability team has been assessing and questioning the rest of an organisation. This has completely changed, and now the rest of the business is coming to CSOs for advice and support.

For the transition to be considered sustainable, executives must define the focus of their company as best as possible. They must be clear on which ESG targets to prioritise and ensure the reporting line for the CSO aligns with these goals to drive effective, sustainable action.

Gartner recently published a report on the importance of C-Suite in driving sustainability. The conclusion was that business leaders must convert sustainability plans into tangible action and clear results. Energy Search Executive explores the main findings from the report.

For sustainability strategies to be impactful, executives must define their goals and integrate their plans into business outcomes, which can often be challenging. Business leaders are critical to delivering sustainability promises, earning stakeholder trust and driving growth. Businesses must prioritise their leadership and communication strategy, technology investments and how to respond to the energy transition to create impact from sustainability goals.

According to the report, only 38% of business leaders claim to have embedded environmental sustainability into their decision-making strategies. Executive leaders must determine the business outcomes and resources to invest in sustainability plans.

A business sustainability strategy can generate specific outcomes, like enhanced compliance, resource optimisation or transformation via new business channels. There are also other indirect benefits, like reduced operational expenses. Less than 10% of business leaders stated that they have recognised these benefits. 

To continue progressing with sustainability goals, executive leaders must be clear on decisions between costs, services and environmental/social impacts. They will also need clarity on the factors influencing short and long-term decisions. 

Gartner suggests three core practices to support executive leaders continue moving forward with their sustainability goals:

1. Determine the definitive sustainability priorities, such as complying with sustainability legislations and regulatory rules and focusing on the areas of importance to stakeholders and impactful to business.
2. Define activities that benefit sustainability and the bottom line, like energy efficiency.
3. View sustainability as a long-term process and not a quick fix. Create long-term sustainability goals that can adapt to potential challenges.

Meeting bold sustainability goals requires clear decisions, aligning strategic priorities and leveraging the right skills. Sustainability goals require the collective efforts of the entire workforce and creating a culture of sustainability. How business leaders manage and communicate strategies and performance will influence stakeholder trust in sustainability plans. To enable change and embed sustainability within a business, Gartner suggests the following factors:

Change Management – explore how change management plans can support embedding sustainability into core business decisions.

Work with employees – educate employees on the importance of sustainability and how their actions can influence enterprise goals.

Build partnerships – work with others to tackle sustainability challenges via innovation and collective action.

Communicate – Prioritise the communication of sustainability performance to stakeholders.

Adopting and applying new technologies to deliver on sustainability goals

Technology can drive sustainability performance by generating insights to automate or enhance decision-making. Business leaders must ensure they are using the right technology at the right time and in the right way. According to Gartner, 94% of business leaders believe their future growth depends on the increased use of technology. With this reliance on technology, we must consider the environmental and social impacts, associated with technology development. There are three categories defined within the Gartner Hype Cycle for Environmental Sustainability:

Resource Optimisation – Technologies that allow energy, packaging and material efficiencies i.e. sustainable packaging and energy management systems.

Data and Analytics – Solutions that generate insights for decision-making, i.e. AI for sustainability or carbon accounting software.

Drivers and Concepts – Strategies and plans that support and drive sustainability goals i.e. ESG Solutions, Scope 3 emissions analysis and voluntary 

carbon offsets.

While adopting these technologies takes time, most will likely be adopted in the coming years. Integrating these solutions earlier could provide a competitive edge and position a business as a sustainability leader.

Manage growth to enable GHG emissions targets

Business growth typically increases GHG emissions, creating challenges for reaching net-zero goals. The Gartner report suggests that 26% of business leaders are not consistently measuring their operational emissions, which could impact financing for GHG reduction strategies. Business leaders should apply the following actions:

• Define clear goals for emission reduction accounting for growth
• Forecast and measure the relationship between growth and emissions
• Deliver detailed, cost emissions-reduction plans to inform decision-making
• Prioritise projects intended to decouple emissions from business growth.

Balancing energy costs, security and decarbonisation

While cost is critical, energy strategies must consider energy security and emissions reductions. Business leaders should explore the following approaches:

-Use scenario planning to determine different outcomes, impacts and indicators influencing decision-making

-Manage energy consumption and costs via efficient practices

-Secure energy supplies by diversifying and selective sourcing

-Progress decarbonisation plans by integrating renewables and sustainability plans into operations.

As businesses experience rising pressure from customers, investors and sustainability regulations, it’s critical that the collective C-Suite takes responsibility for driving climate action. Whichever individual is accountable for implementing and supporting climate measures, business leaders play a vital role in supporting a business in achieving its climate goals.

A C-Suite committed to green measures creates a strong message to investors and other stakeholders that a business is serious about climate action. Expecting a chief sustainability officer (CSO) to be solely responsible for the climate strategy of a business is no longer more. Companies that continue to embrace this way of thinking will find it increasingly difficult to integrate a clear and actionable climate strategy. The entire leadership team should take responsibility and individual ownership of supporting climate action within separate areas of an organisation. 

Securing the combined experience and intelligence of the complete C-Suite provides businesses with a higher chance of tackling the challenges of reaching net zero. For any organisation, change will have the most impact when it receives the full support of the leadership team. CEO’s have the power to drive the right direction towards implementing and driving climate action. Showing strong support towards emissions reduction and prioritising climate and sustainability strategies will influence the entire organisation, inspiring other employees to follow the same path. Creating this connection between business leaders and employers strengthens green strategies and positive climate action.

CEO’s also have the responsibility for ensuring their climate strategy is connected with their overall business strategy. This is critical to reducing any loss of confidence from stakeholders, minimises possible distractions for the leadership team and enables a business to build an assured brand for current and potential investors.

CSOs continue to play a critical role in building a climate strategy, measuring industry developments and adapting ESG strategies as required. They focus on determining areas for environmental enhancements within a business, assessing emissions and liaising with stakeholders about business priorities. 

By working closely with the CEO, CSO can have a more effective and impactful role on climate strategies and inform the entire business about the vital role everyone plays in taking climate action.

Other industry professionals like Chief Financial Officers (CFOs) are becoming increasingly important in supporting businesses stay connected with significant climate measures. Similar to measuring financial data, CFOs have the necessary skills and experience to manage additional financial reporting processes.  Measuring and auditing climate data is important to reduce potential reputational damage and avoid any non-compliance penalties. CFOs are critical in the decisions made that are associated with investing in decarbonisation plans and providing the necessary resources to enable this to progress. They have a critical role in delivering a strategy that incorporates the long term economic and environmental benefits of investing in low carbon plans, while minimising the potential short-term costs. 

It’s clear that harnessing climate data is required across all business areas, whether this is reducing the environmental impact of the supply chain or providing the required budget to initiate decarbonisation. The increased pressure of new sustainability measures and rising public scrutiny means companies must adapt their business models to succeed in the long term. This green transition has to start within the business core and requires strong leadership and collective action from the C-Suite.

 

We now work in a human-powered economy. Businesses have reached a defining moment, with many transitioning towards an economy driven and inspired by the minds and the valued traits of people. For many businesses today, the people are the most critical ingredient and these connections generate the value for an organisation, from revenue and innovation to productivity and risk. 

Yet, businesses’ plans to prioritise these elements are falling short, partly due to many being stuck in a legacy mindset, focusing on harnessing value from people, instead of working with them to provide a more proactive and resilient future for both individuals and the business. 

To strengthen the vision of ESG, business leaders should adapt their approach around the concept of human sustainability; exploring their focus on creating value for people, strengthening skill sets, well being and providing opportunities for progression and connections. In the 2023 Global Human Capital Trends Report, the concept of human sustainability focused less on how people benefit their company and more on how much their company benefits people. 

Focusing on human sustainability can help businesses deliver benefits for both sides. While individuals can bring risks to a company, they also offer great opportunities. Studies show that companies engaged in practices associated with human sustainability produce stronger business results. A report by the University of Oxford Wellbeing Research Centre found a distinct correlation between employee wellbeing and business performance, including increased profits and higher recorded levels of wellbeing.

Furthermore, businesses that are considered the most innovative on tackling sustainability issues, consistently outperform their competitors. There are several factors that could influence the connection between human sustainability and enhanced business value:

Focusing on human sustainability may help businesses create the benefits of greater diversity, equity and inclusion. Companies with greater diversity have proven to outperform their competitors financially. 

Companies that invest in skills development will create better business results. A study suggested that over 80% of professionals at high performing companies believe they receive the necessary training to do their jobs well.

Limiting investment on the workforce can have implications. Reduced pay often results in higher turnover, lower sales and productivity, reduced innovation and higher levels of frustration from customers and managers. 

Strengthening employee health and wellbeing reduces risk in the workforce. Many employees state that improving their health is more of a priority than career progression and that they are considering moving to another job that is more fitting for their wellbeing. 

Customers are more likely to support socially responsible businesses. The majority of customers say they are more inclined to buy from companies that are socially responsible.

Based on these factors, a human sustainability approach can help solidify a business, strengthen their access, engage and build a diverse team, become a more productive and rewarding workplace and increase their appeal to customers.

How can business leaders support and drive human sustainability?

Embracing human sustainability requires a business to reconsider the way it assesses its relationships with people. A human sustainability mindset differs from the transactional way of thinking about people, and focuses more on delivering value for each individual connected to an organisation. This transition can create the platform for leaders to implement key actions that support a human sustainability agenda. 

Human sustainability requires a long term approach. The strategies implemented today will help determine whether professionals, companies and society experience and flourish today and in the future. It will deliver a better future, one that prioritises the connection between everything we do and need, including climate action, equity, well being and belonging. It will encourage business leaders to recognise and act on their role as key influencers of human progression.

The concept of human sustainability is based on just a few principles. Firstly, the people connected with your business have the ability and power to influence it in very important ways. Equally, your business has the power to affect each of them and by recognising this value for both sides, the organisation and its employees can strengthen business, work and life for everyone.

The requirement to accelerate the shift to clean energy is more important than ever, but defining this next stage of this transition requires careful consideration.  A recent survey from global law organisation Ashurst, explored the opinions of over 2000 senior business leaders and discovered that companies anticipate their investment plans in green energy to progress quickly.

Where is this investment going?

According to the survey, solar represents the most popular investment technology, with over 70% of the respondents already investing or planning to invest in solar energy.

Aside from solar, multiple existing and emerging technologies are receiving significant financial backing. Survey respondents believe that investment in renewable energy will focus on offshore wind (28%), followed by hydroelectricity (26%).

Aside from these two established technologies, there is a belief from business leaders that new and emerging technologies will progress and secure significant investment. Over half believe green fuels will mature and gain additional investment over time. More than 50% anticipate green fuels to mature as a vital technology over the next five years, with 42% expecting a similar scenario with air storage and tidal generation. The survey highlighted that 60% of respondents believed deploying these new technologies was a top priority for their organisation.

Investors are continuing to explore energy transition options beyond energy generation. Aside from systems that support the energy transition, three energy solutions are considered popular investment choices – electric vehicles, battery storage systems and CCUS. There is a genuine drive for renewable energy investment within the G20. Over 80% of survey respondents believe investing in renewables is critical to their business’s strategic growth, with over 60% expecting a shift away from traditional fuels to accelerate over the next year.

 

Who is supporting and driving this investment?

The driving force for this transition is coming from all directions. Businesses have experienced mounting pressure to commit to their energy transition investment plans. Studies emphasise the rising pressure from corporate boards to display clear energy transition plans. Over 70% of respondents said they face mounting pressure to invest in renewable energy and decarbonisation. The figures from the study highlight that the transition to renewables has strong support from the corporate world.

It’s clear that directors, CEOs and other managers are increasingly focusing on the energy transition, and the data shows that investors are equally committed to seeing clear progress. Business leaders are facing growing pressure to adapt their businesses and meet the expectations of their customers and investors.

 

The challenges of the transition

Scaling your organisation: Companies want to invest, but several factors are hindering the scalable efforts of renewable energy investment. In the report, 40% of businesses said they face challenges with their manufacturing capacity, while others highlighted a lack of raw materials, regulations and skills shortages impacting progress.

Disputes: Companies should consider the potential legal implications in the future. Nearly 70% of businesses surveyed anticipate a rise in legal disputes associated with renewable energy in the coming years, with over 40% expecting an increase in disputes connected with ESG factors. 

Despite increasing global challenges and a geopolitical landscape, sustainable energy investment is a corporate priority. While it’s no surprise that businesses forecast a rise in the energy transition investment, it’s unclear about the next stage of the transition. When exploring the targets created by governments, there are significant opportunities for companies willing to take a decisive and strategic approach. It will be these companies that will make considerable progress in achieving their goals.

Studies have highlighted the considerable turnover associated with CEO’s. A report by Korn Ferry discovered that over 10% of CEOs have stepped down after one year, and after three years, this figure rises to 34% as CEOs pursue other opportunities. 

The study has raised discussions concerning hiring experienced talent capable of filling the CEO role. With supply and demand levels often not in sync, now is the time to consider the recruitment strategy for C-Suite and explore a new phase of executive search.

Today’s CEO doesn’t necessarily look like the CEO of the past. The position requires adaptability and greater agility. Reports suggest that executive roles remain open for extended periods. CEO roles have become more challenging to fill. 

The speed of decision-making will be vital for both clients and candidates. Responding quickly to requests and questions can ensure candidates remain in touch with the hiring process. Ensuring a business accurately represents its organisation, role, and culture will improve the chances that any inappropriate candidates will opt out of the process.

Selecting the best CEO

The costs associated with hiring the wrong person can be significant, and this figure can increase considerably at the C-Suite level. For executive search companies, the impact of getting the hiring process wrong can be very damaging. Reputation can be impacted during the hiring stage and can influence the level of confidence and trust. Having deep industry knowledge comes with experience, and this level of experience can generate an extensive network that can produce a pipeline of potential leaders.

Through in-depth market knowledge and industry recognition, it becomes easier to determine the skills, experience and other features of a candidate against the needs and culture of an organisation. 

Refining your search strategy

Candidates are far more aware of culture, work-life balance and professional development opportunities. These are factors that must be considered carefully by an employer. Flexible strategies can make this possible, especially with executive search firms focusing on the candidate. Focusing on questions such as “Why would a candidate join a business or do their qualities fit with the challenges and opportunities of the organisation?” is critical in defining a candidate’s potential and ability to positively impact a business.

The needs must also meet the requirements of the hiring company. Technology plays a critical role in delivering the best practices for hiring businesses. 

The last few years encouraged many executive search firms to explore alternative processes. The rising turnover rate with CEOs has made it even more challenging. Better agility with the hiring process, combined with strong industry knowledge only improves the chance of finding the right person and enhances the process for both parties. 

Creating inspirational and meaningful change to enable progress must come from the top. Recent events have focused on shifting mindsets and applying a more customer-centric service culture that focuses on developing informed relationships. 

There is mounting pressure for DEI, compliance managers and HSE leaders across all businesses to influence and tackle the cultural shifts to achieve ESG objectives. The challenge is even higher when many companies and C-Suites haven’t accepted this cultural change as the new norm.

According to industry research, it has been challenging for leaders to adapt to rising expectations and the need for people and the planet or maintain the pace of changes. Many companies often view ESG requirements as a box-checking exercise, with a mindset of prioritising short-term results over long-term development and well-being. Focusing on corporate interests over the environment and community underscores the need for more personal and intelligent approaches towards achieving long-term sustainable goals.

The move towards long-term investment results and focusing on environmental and societal outcomes rather than short-term profits is required. Some businesses adopt this approach, focusing on the community and stakeholder needs before profit. Being a stakeholder means listening carefully to the community and delivering what they need.

Focusing on the short term ignores community needs

We should adopt an approach that enables businesses to integrate with communities instead of considering them an obstacle. It takes time for a local community to recognise that a corporation isn’t purely focused on profit. 

Preparing the next generation for future jobs requires businesses to rethink their attitudes towards employment. In 2018, 60% of employment was in jobs that didn’t exist in 1940. Many experts believe we are entering a similar shift, with many organisations anticipating core employee skills will change within the next few years. 

According to the World Economic Forum, some core in-demand skills for employers were management skills, working with others, technology experience and cognitive skills. 

Embracing a skills-first agenda

A skills-first agenda focuses on a person’s skills and ability over education, employment history and job titles. It enables employers a flexible way of observing an individual’s potential and the ability to harness their talent in other sectors. Embracing the skills-first agenda requires employers to think holistically about their existing requirements compared to their future needs.

A skills-first approach requires employers to consider their existing employees, the skills available and the opportunity to source talent internally. Internal mobility provides opportunities for employees and is a great way to retain talent. 

Focusing on the skills required in green jobs 

To achieve our 2030 net zero targets and resolve talent shortages, hiring managers must first prioritise skills. For example, offshore engineers working on rigs extracting gas and oil have these transferable skills required for the offshore wind industry. There are signs that similar skill sets will prove valuable in the carbon-capture industry. To enable this transition, industries must collaborate with government and professional associations to facilitate this movement. Educators must also appreciate the transition in learning, the importance of the skills-first agenda and the need to provide upskilling or reskilling opportunities. 

Prioritising upskilling and reskilling

It’s critical that as we progress towards a green economy filled with green opportunities and skills, this happens together. We must ensure any barriers to employment are eliminated to enable diverse participation in a green future, which is considered critical to tackling the issues of climate change.

Deloitte and Tufts University have delivered a global study exploring how businesses can strengthen investor confidence in their sustainability disclosures.

Investors are increasingly looking to embed sustainability measures into investment plans and new opportunities, with a predicted worth of $43 trillion in global economic growth expected between 2021 and 2070 if the global economy shifts towards a net zero economy. 

In the study, over 80% of investors have incorporated sustainability data into critical analysis. An additional 79% of respondents have created sustainability policies, compared to only 20% five years ago.

While there is a rising demand for sustainability details, investors have highlighted several barriers with clarity, consistency and reliability. Despite new regulations emerging to strengthen data consistency, they are still in their infancy and are yet to provide sufficient reliability for investors. As a result, investors are likely to depend on the data and sources they trust, which generally are in-house systems and assured disclosures.

Building trust with investors is a critical strategy for businesses looking to remain competitive, strengthen their market value and secure capital. Corporate leaders have an opportunity to build investor relationships as capital markets reach a defining stage, fuelled by the shift towards a more sustainable future.  

According to a recent survey, 20% of businesses have had a sustainable investing policy in place for over five years, and over 20% are yet to implement a sustainability plan. The study found that the three main drivers for implementing sustainability and ESG into investment plans are regulatory requirements (39%), Improved financial performance (37%) and Stakeholder pressure (34%).

-Barrier to integrating sustainability data – The three main barriers to integrating sustainability data include a lack of clarity on how to integrate sustainability (65%), inconsistency or incomparability (64%) and over or under regulation (64%).

-Trust to data sources and usage – The three sustainability data sources investors trust and use most include in-house data systems (70%), audited or assured corporate information (69%) and external data sources and ratings (63%).

There are steps which can help secure investor trust in corporate sustainability commitments. 

• Strengthen sustainability governance plans by enhanced coordination within the C-Suite – Each leader has a vital role in consistently performing their sustainability commitment. While the Chief Sustainability Officer may be responsible for the business sustainability strategy, all C-Suite leaders and the executive board have a role to play.

• Invest in sustainability analysis – Investing in reporting and compliance solutions can deliver more accurate and quality disclosures. Many large businesses prioritise their reporting solutions to ensure they remain on track and ahead of new regulatory requirements. Businesses failing to acknowledge emerging policies risk falling behind their competitors.

• Combine sustainability disclosures with 3rd party assurance.

Audited or assured disclosures provide transparency in sustainability details that investors are looking for. These sources are more trusted, and sustainability investors are more likely to use assured or audited data over others. As investors gain more experience in this field, they will increasingly depend on these data sources.

• Prioritise investor engagement to promote your sustainability journey

As sustainable investing increases, businesses are likely to find investors willingly engaging with companies to understand their sustainability plans and progress. The study suggested that those with a few years of operating a sustainable investment policy are more likely to apply an active sustainability investment strategy. Investor engagement allows businesses to manage potential challenges, create transparency, and accountability and build trust.

Addressing the challenges faced with climate change will require a combination of system-level adaptation and multiple changes to other factors, from adapting our daily lifestyles to how we work. Research by Deloitte has been monitoring a rising group of sustainable-conscious people at the leadership level, within the workforce and in society. An overview of these fields indicates that those with higher climate awareness act more sustainably in the workplace and strive to ensure their voices are heard. Business leaders are beginning to recognise the need to change, but is there more that can be done to ensure everyone is participating in the sustainable movement?

In the Deloitte Global State of Consumer Survey, 69% of participants said they want their business to invest further in sustainability plans, including focusing on carbon reduction, using more renewables and reducing waste. This opinion was higher within the younger age groups (18-34 yrs), displaying a stronger affinity to sustainability measures.

The demand for sustainable action is having an impact on potential job opportunities. In the Deloitte survey, 27% stated they are more likely to assess an employer’s stance on sustainability before considering a job. In other words, 1 in 4 job seekers will be actively looking at what an employer is doing to address environmental impacts and could base their decision to join the business on this.

The younger generation is more hopeful that they can influence change in the workplace. The Deloitte Gen Z and Millennial Survey showed that 64% believe they can drive organisational change and that their companies recognise this movement and incorporate new measures. As more young people enter the workforce, many actively support environmental awareness and expect their employers to be responsive to this way of thinking.

This movement in employee expectations could have a detrimental impact on businesses that fail to prioritise sustainability. The Deloitte survey indicates that nearly a quarter of respondents have considered moving jobs to ensure they work with a more sustainable business.

According to the Deloitte survey of C-Suite leaders, employee morale, wellbeing, employee recruitment and retention are some of the main benefits of implementing sustainability plans. These factors emphasise the findings from the Consumer Signals report on how critical sustainability is toward employee satisfaction and retention. This demand for action is starting to have an impact. Within the survey, employee activism is considered a significant driver of corporate sustainability action, with 80% of C-Suite leaders highlighting that their employees have influenced their sustainability plans. 59% of business leaders said employee activism had caused them to increase their sustainability plans in the last year.

One popular measure that many companies are taking is investing in additional training. Over half of business leaders are already training employees about sustainability and climate change, and over 40% intend to introduce a similar programme next year.

While sustainability plans are emerging, only 38% of respondents in the Deloitte survey believe their employer is doing enough to tackle sustainability and climate change. Most respondents suggested they were unsure or dissatisfied with the current progress made. The Consumer Signals survey shows that 45% of employees haven’t discussed workplace sustainability plans with their managers or team leaders.

Business leaders should carefully consider their environmentally conscious employees and harness their insights to implement climate-related business plans, identify potential leadership challenges and drive overall change to the business.

Gaining the assurance and support of employees requires businesses to be more transparent, communicate their climate plans, deliver credible changes to business processes and invest in training opportunities to empower people to participate. Companies should make their employees more active in climate and sustainability plans and enable their voices to be heard. While some employee-focused plans may be small-scale, showing commitment and responding to these suggestions can highlight a commitment to sustainability. 

As we continue to tackle climate change, employees and customers expect to see how a business is facing up to the challenges.