Sustainability and the Rise of the CSO
27 April 2011 Vicky Kenrick
Vicky Kenrick argues that a top-down approach to sustainability adds value to both organisations and society at large. She recommends companies forget 'greenwashing' and take a top-down approach to embed sustainability firmly within their corporate strategies.
This article presents a vision for corporate sustainability.
It has been written to highlight how organisations can add value to not only their bottom line but also to the environment and society at large.
Using current examples of organisations putting their corporate sustainability strategy into action, this article provides a rundown of who is doing what and the skills and people required to initiate and maintain the drive to a low carbon economy.
This article highlights the increase in auditing and tighter sustainability regulation.
It also provides some useful advice on how to avoid the association with 'greenwashing' and explores the variety of ways in which an organisation can really embed sustainability within the heart of its corporate culture.
Investors are becoming increasingly receptive to sustainability.
Corporate sustainability is coming of age. An overwhelming majority of FTSE-500 companies now voluntarily measure, manage and publicly disclose their carbon emissions, and a collection of hi-tech solutions, clean technologies, and market tools have evolved in recent years to meet these demands. Examples of successful corporate sustainability reporting can be attributed to Siemens and GE, recording environmental revenues of £16bn and £11bn respectively, and M&S, showing how a CEO-led sustainability strategy can account for 10% of profit at a FTSE-100 retailer.
The Co-operative Group has also launched an ambitious sustainability plan at the beginning of March 2011, which promises to cut carbon emissions by 35% by 2017 and deploy over £1bn of green energy finance by 2013. By 2017, the Co-op wants to generate the equivalent of a quarter of its energy needs from renewables, but aims to be carbon neutral in its operations by next year. The Group also pledges to reduce its water consumption by 10% over the next three years.
Driving change to a corporate sustainability strategy is a constant challenge, however an impressive 81% of the CEOs surveyed by The Guardian stated that sustainability issues are now 'fully embedded' into their companies' strategy and operations, with many extending this focus to their subsidiaries and supply chains.
It is clear that sustainability is no longer seen as a marketing fad and is now embraced at board level within leading corporations. This is also reflected in recruitment trends witnessed by international sustainability recruiters Allen & York.
Boardroom commitment to sustainability helps build a framework for robust corporate governance.
Writing in Ethical Corporation, Allen & York's principal search consultant Raffaello Raimondi comments on the rise of the chief sustainability officer (CSO): "The first job on a CSO's list is often to challenge accepted norms and radically change a corporation's culture." Describing the ideal CSO's background, Raimondi highlights that several years industry experience coupled with an MBA / masters degree and quite possibly experience in a leading strategic or environmental position features high on his checklist.
By employing a dedicated CSO, sustainability director or head of sustainability, organisations can ensure the corporate sustainability strategy is not only overseen and managed accordingly but is also implemented to the highest standard so that oversights are not made. When discussing his role at UPS, CSO Scott Wicker highlights that: "The long-term success of our company absolutely requires a balance of the environmental, economic and social aspects of the business. Sustainability encompasses all of those areas."
Sustainability offers a proven and legitimate framework for exploiting new avenues for innovation and growth.
Initiatives such as the Carbon Plan, Green Investment Bank and the Electricity Market Reform demonstrate how the UK coalition government is well on the way up the regulatory escalator towards encouraging zero-carbon emissions within business.
The Carbon Plan, a government-wide plan of action on climate change, and the Green Investment Bank are primed to invest in low-carbon infrastructure, such as renewable energy and the development of new, clean technologies. Both, along with the Electricity Market Reform, point towards a movement to monitor and regulate sustainability within business.
In addition, the UK government's CRC Energy Efficiency scheme, which came into effect in 2010, is a mandatory carbon emissions reporting and pricing scheme, with the first report from organisations that use more than 6,000MWh/yr of electricity due in July 2011. While there has been some controversy about the scheme, it still remains that from 2012 participants will be required to buy allowances from the government each year to cover their emissions in the previous year.
This means that organisations that decrease their emissions can lower their costs under the CRC. Companies better positioned to improve their energy efficiency and save on CRC costs will be those with a CSO or head of sustainability in place, who is able to oversee energy management, sustainable procurement and corporate social responsibility issues, coupled with implementing accurate carbon reporting.
A severe management deficit exists in the governance of climate change and sustainability risks and opportunities.
Being a key driver to corporate innovation and growth, a top-down approach to corporate sustainability is required. Regulation, the role of the CSO and embedding sustainability into business practices also ensures that 'greenwashing' is avoided. Greenwashing is the term used for the deceptive use of green PR to embellish a company's green credentials. With a firm policy and strategy in place run by a dedicated CSO or head of sustainability, the company is able to produce clear and transparent evidence of their sustainable measures.
Further trends that Allen & York predict for 2011 include:
- the embedding of sustainability as a core business strategy
- the establishment of a consensus on the role of the sustainable development professional
- the rise of the CSO
- increased transparency, an open society and a decrease in greenwashing
- supply chain engagement, where supplier's performance is also monitored and reported on, forming part of the corporate sustainability strategy
- the exponential growth of IT for green purposes.