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

February 2023

Sustainability in the Spotlight

In the first of a series of explorations into the state of sustainability leadership and the sustainability function, Spencer Stuart has revisited its 2016 “License to Thrive” study. We set out to explore the realities facing today’s sustainability leaders through a global survey and interviews with leading practitioners.

We are living in the “decade of delivery,” a time when sustainability has become not only a core strategic consideration and direction for businesses, but a driver of innovation and attractor of talent. All leaders need to embrace sustainability, and sustainability leaders in particular have newfound prominence and an expanded mandate.

But what is the nature of this mandate today? How are sustainability leaders and their teams interacting and connecting with the rest of their organizations? Do they have access to the necessary resources, and the license to influence mindsets and culture? In a nutshell, what drives success for today’s sustainability leaders, and what is getting in the way?

1. For sustainability leaders, success means transforming their business to be fit for the future: The modern mandate of CSOs calls for a wide range of skills. Sustainability today encompasses a vast range of issues from climate change to human rights to living standards, so transformation can only be achieved by working across the whole organization to address these issues.

The success of this transformation depends on CSOs having a deep understanding of the “nuts and bolts” of their organizations: a familiarity with the business model, culture, operations and practices that underpin it.

2. There’s a difference between supporting your CSO’s agenda and giving them all they need to succeed: Today, 91% of sustainability leaders say their CEOs are actively supporting their sustainability strategy — a significant change since 2016, when only 49% of them said so.

Support from the CEO is important, but support alone is not enough. Sustainability leaders must have the commensurate authority and resources. When asked what CEOs could do to help them, they highlighted the need to integrate sustainability into the core business strategy and spread accountability for sustainability beyond their office.

Sustainability doesn’t sit in a box alongside the business any longer — it touches all aspects of business now.”

3. Some parts of the business are used to working with sustainability — others are not: The significant cultural and operational transformation that embedding sustainability entails means that sustainability leaders need to be interacting with the rest of their business.

Progress is still very unequal. Sustainability leaders are working well and frequently with communications teams, for example, but elsewhere, in operations and supply chain, they are struggling to turn ambition into reality. This is exacerbated by a lack of skill sets in the business to implement sustainability strategies.

4. The modern sustainability function requires a new and diverse set of skills: While they don’t necessarily expect their teams to grow in size, sustainability leaders expect their budgets to increase and are focused on securing the right skills to support their mandate.

Today, data analytics are essential to companies trying to understand and report on complex sustainability issues. Intersectional and interdisciplinary thinking, as well as change management, are also essential to handling the multiple facets of ESG in a strategic manner, and to bringing that thinking into the business.

5. The sustainability function can guide the rest of the business: As sustainability becomes embedded in a business, some might ask if the role of the CSO will disappear. Leaders we spoke to reject this idea; companies will need experts to provide guidance on the development and delivery of strategy for a long time to come.

In the immediate term, sustainability leaders are focused on delivery: 70% of sustainability leaders said that they were focused on developing more detailed implementation plans, and more than half are planning further investment in them over this coming year.

1. What sustainability means to business has changed: The issues addressed in sustainability strategies have broadened. At the same time, sustainability goes deeper into the business, starting with engaged leaders and moving through different parts of the organization.

Sustainability leaders can bring their insights and perspective to a much wider range of business issues, from product development to risk, from diversity and inclusion to wholesale business transformation. And they are increasingly having those conversations with the CEO and the board.

2. Performance measurement for sustainability leaders is different than for most other leaders: Unsurprisingly, most sustainability functions’ performance is measured according to the timely achievement of goals like decarbonization and other core ESG indicators.

By contrast, bottom line contribution rarely forms part of the performance measurement of sustainability, despite their perceived mandate to transform the business. Sustainability leaders select different measures to define good practice, such as being radically transparent and adopting a systemic, intersectional approach to sustainability.

3. Understanding the core business is a crucial skill for modern sustainability leaders: Driving change across the organization means leaders need to understand the realities of different roles and functions. General business experience can help, but getting to know your own company deeply is even more valuable.

4. Every part of the business needs to upskill in support of sustainability: A fifth of sustainability leaders said that the culture of their organization was not aligned with sustainability objectives, while 41% cited a lack of skills in the organization to implement sustainability strategies as one of their main challenges.

At the same time, sustainability leaders recognize gaps in their own knowledge; 22% said that there were aspects of climate change and other environmental challenges that they don’t understand well enough to act on today. Eighteen percent said the same about social and governance aspects.

To stand a chance of success, sustainability leaders need to work with other leaders and teams across the business to build a deep understanding of the sustainability strategy and its connection to other strategic priorities. Our results show that when other leaders understand and are bought into sustainability, the CSO’s job is easier.

5. Moving from building strategies to delivering them requires a new approach: Seventy percent of sustainability leaders said they were focused on developing more detailed implementation plans to deliver their existing goals. Many feel the urgency of living up to the name of the “decade of delivery.”

Delivering on goals will require sustainability leaders to assemble teams with a range of skills and background — from subject matter expertise through to operational and change management backgrounds. For sustainability leaders, now is the moment to establish whether their teams and their relationships with the rest of the business are in the right place for the job at hand.

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