Business Leader and “Futurist”: Tomorrow’s Sustainability Leader

In our work at Spencer Stuart advising the top industrial companies, we have seen the value in meaningful investments and well-thought-out plans for sustainability. And with that, a central theme is emerging: There is growing demand for sustainability leaders who have a remit to work with other functional leaders, the CEO and the board to incorporate sustainability into everything their companies do.

To understand the rise of the sustainability leader — whatever the title, be it chief sustainability officer, chief environmental officer, or another title linking it with environment, social and governance (ESG) issues — and the success factors for the job, Spencer Stuart’s Industrial Practice interviewed a dozen leaders across the world, both to discuss with them how they are making an impact today and how they envision their positions in the future. The group of interviewees, covering a range of backgrounds, expertise and sectors, both within the industrial industry and in other sectors, includes those who recently became sustainability leads for the first time, as well as those who have been in the role or similar ones for 20 years; those at publicly owned companies and those from private equity and the non-profit sector.

In this article, we explore the key themes that emerged from our discussions.

Sustainability leaders take a key seat at the corporate table

Whether a company is just beginning the sustainability journey or is decades into it, the issue is now a major corporate concern for all organizations — as a business issue, as a matter of competitive advantage and as a leadership topic. Sustainability is now central to most organizations’ business and transformation agendas, with companies in search of leaders who can drive cross-functional collaboration and change. For career sustainability executives like Ellen Jackowski, who has more than 15 years of experience, first at HP and now at Mastercard, the recent rapid change has been breathtaking.

“The pace of change at the moment is unlike anything the function has ever experienced,” Jackowski said. “There’s a desire to integrate additional rigor and measurement formally into actual business operations and business strategy. In the early days, there was a lot of talk about the ultimate goal for the sustainability function being an integral part of the entire business — and now, we’re at that moment.”

This moment has thrust the chief sustainability officer position into many C-suites. Sustainability functions and their leaders are expected to drive real change today, in terms of innovation, new technology, supply selection and many other topics. Armed with strong data, they must quantify their companies’ progress, the steps that still need to happen and the impact of their efforts.

A recent Spencer Stuart survey of CSOs, completed in partnership with Kite Insights, found that 71 percent of sustainability leaders strongly believe that their role is to fundamentally transform their business to be sustainable and future-proof the business.

SUSTAINABILITY LEADERS ARE FOCUSING ON TRANSFORMATION AND FUTURE-PROOFING

Source: License to Transform: Spencer Stuart's 2022 Survey of Sustainability Leaders.

“In the early stages, the priority was just to ‘paint everything green’ — launch some corporate initiatives, show social responsibility,” said Gaia Ghirardi, head of policy and sustainability at Cassa Depositi e Prestiti (CDP), the Italian national promotional institution, and a board member at Renovit, an Italian firm focused on energy-efficient buildings. “A lot has changed. Sustainability has become more relevant to regulators, investors, companies and consumers. The KPIs for assessing sustainability, ex-ante and ex-post-impact models, and reporting standards are becoming more and more sophisticated. Companies today have to invest on one side, but they also have more sources to understand and concretely guide a sustainability evolution.”

The sustainability leader’s expanding skill set

The sustainability function’s transformation is also fraught with leadership challenges. For one thing, the range of experience at the company-by-company level is extraordinarily varied; there are companies that have been embedding sustainability in their operations for years, while others are just now beginning. It means there’s no one-size-fits-all solution to finding the right leader; every company’s situation is different. The demand for true experts is high, yet there isn’t an immediately accessible talent pool to tap into.

The Spencer Stuart–Kite Insights survey pointed to a range of skills that CSOs say they will need more of from their teams in the future: data analytics (45 percent of respondents), interdisciplinary thinking (38 percent) and change management (34 percent) were the top three.

DATA ANALYTICS, INTERSECTIONAL THINKING AND CHANGE MANAGEMENT SKILLS ARE IN DEMAND

Source: License to Transform: Spencer Stuart's 2022 Survey of Sustainability Leaders.

“The profession has gotten much more sophisticated,” said Dave Stangis, the chief sustainability officer at Apollo Global Management, the global alternative asset manager. “Not only are there new companies at play, but there are new expectations. And they’re either looking for very talented people that have done this before or for a very specific capability, which is resulting in disruption in the talent supply space.”

So, what skills are most important? In our interviews, several key skills emerged.

A master communicator: promoting the sustainability mission

It’s always been important for sustainability leaders to align stakeholders both internally and externally in a way that demonstrates an understanding of the importance of sustainability, shows that the company knows why it matters and proves that a plan is in place.

However, a strong sustainability leader today has to do more. The person must be able to speak the language of the business while transcending silos to embed sustainability across the entire organization.

“It’s not just about less CO2, but about transformation and about questioning business models,” said Christine Betz, chief sustainability officer at German home appliance manufacturer BSH Hausgeräte GmbH. “You also have to provide proof. How does sustainable behavior benefit the business? Ultimately, it’s not just reporting the numbers, but communicating what sustainability means to the company.”

Indeed, part of it is how you are explaining your efforts to external stakeholders. In an era of polarization — when even the term sustainability can engender outsized debate — a sustainability leader will need to clearly articulate a company’s efforts to people who may be initially skeptical.

“The reality is that ‘ESG’ is just an acronym for critical work that can help drive long-term value for shareholders if done right,” said Carletta Ooton, head of ESG, private equity, at Apollo Global Management. “While there is purpose behind much of the work, there can also be extraordinary financial value, sometimes in the very near term. We’re focused on continuing to find ways to unlock this value, without getting distracted by the evolving vocabulary.”

Internally, it’s crucial for the sustainability leader to ensure cross-company collaboration.

“You have to have the capacity to interconnect the different functions inside the company, and to create value that way,” said Giulia Genuardi, head of sustainability planning, performance management and human rights at Enel, the Italian utility company.

Beyond reporting: data and analytics are essential

Boards, investors and the general public are demanding more robust reporting and measurement. As noted above, a few nice stories about sustainability are far from enough to placate the consumers, investors and regulators who are demanding more corporate accountability.

“Sustainability is now a strategy rather than merely a marketing activity,” said Alison Rowe, the Australia managing director for The Nature Conservancy and former CEO of the Australian Energy Foundation, an organization dedicated to the energy transition. “That has changed the reporting element. This is about a lot more than checking the box on some reporting requirement. If we think about sustainability now, it’s all about accounting — these are real numbers with an impact on the organization. You need the discipline to crunch them correctly. And it’s moved from a project-by-project issue to the core business.”

Sustainability leaders must understand the metrics at their disposal, which ones are most important for their companies and how best to analyze them. Then they have to be able to convert that into a set of recommendations and priorities that everyone in the organization can digest. In summary, they need to have an action orientation, where measurement is in the service of quantifying change and driving results.

“My role is to support the company with a complete action plan that can be monitored and reported over time,” Ghirardi said. “I am in charge of measuring the business success and demonstrating completely the work we are doing backed by data.”

Ability to drive business value and manage change

In short: Sustainability leaders must be strong business leaders, with an appreciation of the bottom-line impact that can enable them to gain organizational buy-in and long-term success.

“You truly need to be able to see the value of sustainability and the connection with the business, and be able to articulate it,” said Isidora Diaz Heredia, chief sustainability and health, safety and environmental (HSE) officer at Parque Reunidos, a global theme park operator. “You have to be able to demonstrate to the heads of teams that this new way of doing things will bring value to their departments and to the company.”

All told, perhaps the key element of this is change management expertise, and in particular, getting large and complex organizations with set ways of doing things to change their habits for the sake of longer-term ambitions.

“Chief sustainability officers and their teams have a responsibility to bring the right information to the right people in their organizations,” said Anisa Kamadoli Costa, chief sustainability officer at the electric vehicle maker Rivian Automotive. “You have to embrace collaboration opportunities internally. It’s really important to co-create as much of the work as possible, so that the expertise does not lie within any one department on any given issue. The most impact and the greatest change will happen when we bring together different modes of thought, different levels of thinking, and get all of the experts in one room to break apart the traditional ways of doing things.”

A “futurist” attitude

Although sustainability is hardly a new issue, it’s impossible not to stand in awe at how much has changed in just a decade. At the level of business, as we have discussed, the chief sustainability officer has risen in stature across industries. And at a global level, the global stream of headlines about floods, droughts and other climate-related crises has more and more leaders thinking about how to solve for this.

As George Bandy, chief sustainability officer at textiles manufacturer Fiber Industries, sees it, true sustainability leadership is about bringing back a holistic form of capitalism where leaders balance short-term, bottom-line goals with broader, longer-term vision.

“Yes, you do need to satisfy your shareholders’ pocketbooks, but you can do that and still do the right thing by the environment, and ultimately make a broader impact along the way,” Bandy said. “I think when you limit your scope for how much you think you can achieve, you limit your opportunity to become an organization that delivers greatness.”

What kinds of changes can we expect? Stan Ryan, the board chair at Pacific Basin Shipping, a global dry bulk shipping company, and former CEO at Darigold, a Northwest U.S. agricultural cooperative, told us that it may in fact be another industrial revolution ushering in untold changes to how businesses operate — and indeed how people live.

“The literally trillions that need to be spent, and the innovations that have to happen — we may be in another industrial revolution, even if we don’t realize it yet,” Ryan said. “Truly doable innovations are in front of us, and they are of such magnitude that we’ll have whole new industries, data, tech, software, everything. And it’s actually a massive opportunity, and honestly I think people should be excited about it.”

Several interviewees linked an organization’s sustainability with the “social” element of ESG — including human rights, environmental justice, poverty and hunger.

“If we’re going to be truly adding value to our firms, then we are futurists,” said Dave Stangis. “I think we, as professionals in this field, have to be much more sophisticated on those geopolitical, socioeconomic topics to help our companies prepare. And it means that companies need to figure out how to leverage our expertise to their best advantage — putting us in the organization in the right place, and holding them accountable for the right things.”

The tremendous changes of the past few years — not just environment- and climate-related, but also the COVID-19 pandemic and associated socioeconomic and geopolitical upheaval — have highlighted the complexity of the world today, the rapidity of change, and, perhaps most importantly, companies’ ability to pivot and adapt in the face of these conditions.

The sustainability function’s growing importance and the key skills needed point to how sustainability leaders can best lead in these circumstances — with both a keen understanding of where we are today and an ability to see and influence the path forward.

“The whole idea is that this isn’t just something only the sustainability team has responsibility for,” Ellen Jackowski said. “Your goals and ambitions can only be achieved if you leverage the full power of the company to transform toward a sustainable future.”