License to Transform: A Guide for CEOs on the State of Sustainability Leadership

But what is the nature of this mandate today? How are sustainability leaders and their teams interacting and connecting with the rest of their organization? 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? How can CEOs help?

Five things CEOs need to know

1. For sustainability leaders, success means transforming their business for long-term success

Ask a CSO today and they’ll tell you that their remit is to transform their business. Almost half (47%) of leaders said that their sustainability strategy is already “very” embedded in the overall business strategy of their organization.

The large majority of sustainability leaders say that their role is to transform and future-proof the business.

Q. Please position yourself on this scale. [Place yourself on this 1 to 10 scale according to how reflective the statements are of your role.] N = 94.

The modern mandate of CSOs calls for a wide range of skills. Not only does sustainability today encompass a vast range of issues from climate change to human rights to living standards, it also requires working across the whole organization to transform the business and embed these concepts in the ways people work.

The success of this transformation process depends on CSOs having a deep understanding of the “nuts and bolts” of their organizations: a familiarity with the business model, operations and practices that underpin it. They also need emotional intelligence to be able to interact and collaborate with a range of leaders and functions.

2. CSOs need their bosses to do more than support their agenda

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. Back then, 25% of CSOs cited a lack of engagement from leadership as one of the main barriers to the implementation of the sustainability strategy. That figure has since dropped to 6%.

Support from the CEO is still important — CSOs who report directly to the CEO (46%) are more likely to declare their strategy as “very ambitious” and to say that they are “very well positioned” to deliver it. But support alone is not enough.

To achieve such a fundamental mandate as business transformation, sustainability leaders must have the commensurate authority and resources. And they need others to share their ambition. When asked what CEOs could do to help them get their job done, sustainability leaders highlighted the continued need to integrate sustainability into their company’s core business strategy. The other most common answers centered on spreading accountability for sustainability.

Sustainability leaders want their bosses to do more to put sustainability at the core of the business, including by using it to define responsibility and success.

Q. What are the top three ways leadership could help you get your job done? [Please select exactly three responses.] N = 94. Other options offered in this question have been excluded from this chart.

3. Some parts of the business are used to working with sustainability — others are not

Given the significant cultural and operational transformation involved in embedding sustainability, sustainability leaders need to be interacting with the rest of the business.

Our results show that progress is still very unequal in terms of buy-in and cooperation from other parts of the business. Sustainability leaders are working well and frequently with communications teams, for example. What’s more, 40% say that their sustainability strategy has had a substantial positive influence on attracting talent, and 29% say the same about building positive customer perception.

But elsewhere, in operations and supply chain, sustainability leaders are struggling to turn their ambition into a reality. This challenge is currently exacerbated by the absence of the skill sets in the business needed to implement their sustainability strategy (41% of sustainability leaders highlighted this as one of their most pressing challenges).

Sustainability leaders interact frequently with many parts of the business. However, sustainability leaders find it far easier to achieve positive outcomes with functions like communications and strategy with which they have old ties. Interacting with the wider business is harder.

Q: How frequently do you interact with the following functions/parts of your business? [On a scale of 1 to 4 where 1 = “Never or almost never” and 4 = “Very frequently,” or select “No opinion”] and Q: How easy do you find it to achieve good outcomes when interacting with each of the following functions/parts of your business (e.g., get the information you need, have a material influence on decision-making, get support for a certain initiative, etc.)? [On a scale of 1 to 4 where 1 = “Very difficult” and 4 = “Very easy,” or select “No opinion”]. N = 92. Responses converted to a weighted score. A score of 100 is equivalent to all respondents having selected “Very frequently” or “Very easy.”

The challenge leaders face in integrating sustainability into the core business is reflected in the fact that only a small proportion of CSOs say that sustainability strategy is having a substantial positive influence on revenue or cost reduction (18% and 7%, respectively). Achieving such an impact on the bottom line will require CSOs to succeed in working with more central functions of the business.

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 are focused on securing the right skills to support their work and mandate. In 2016, 46% of sustainability leaders said they were most in need of communications skills; today only 8% say the same.

Instead, data analytics (45%), interdisciplinary/intersectional thinking (38%) and change management (34%) were highlighted as the most in-demand skills for the sustainability function, illustrating the diverse skills needs of shifting focus toward transformation.

Sustainability leaders see a greater need for skills that will support reporting demands and efforts to embed a nuanced understanding of sustainability across business.

Q. Which of the following skills will your sustainability team need more of in the future? [Please select up to three.] N = 94. Other options offered in this question have been excluded from this chart.

Data analytics are essential to companies trying to understand and report on complex sustainability issues in their supply chain. This task is all the more challenging since ESG standards and frameworks are still very diffuse.² A quarter of CSOs highlight complex and/or onerous reporting demands and practical difficulties in measuring impact as frequent challenges today.

At the same time, intersectional and interdisciplinary thinking and change management are also essential to considering the multiple facets of ESG in a cohesive and strategic manner, and to be able to bring that thinking into the rest of the business.

5. The sustainability function can guide the rest of your business into the future

If the ultimate goal is for sustainability to become embedded in a business, some might ask if the role of the CSO might eventually disappear, just as the chief digital officer role has mostly faded away with widespread adoption of digital skills across the enterprise. But the leaders we spoke to reject this idea, on the premise that there will always be a need for a center of excellence that acts as a central hub and shares a deep understanding of sustainability and its latest developments, and provides guidance and input into the development of company strategy.

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 to invest in them further over this coming year.

A delivery focus doesn’t necessarily mean a big team. While the vast majority (80%) of sustainability leaders say that they expect the budget of their function to increase in the coming two years, only 35% expect their headcount to grow in the same period.

Sustainability leaders are focused on delivery of their strategies. They intend to build on those existing plans with further detail, and bring in more skills and talent to support them.

Q. Which activities are you focused on today, and what activities are you most likely to increase your investment in in the next 12 months? [Please select up to three.] N = 92.

Leading change

The role of the sustainability leader continues to evolve in a world pressed by urgent climate and social challenges. Sustainability leaders now have more executive support than ever before and a mandate to fundamentally transform the business by influencing new business models and driving innovation and new products. Although this transformation is being executed with varying success, sustainability leaders will also need to work with their CEOs to drive a profound culture change and embed a sustainability mindset across the enterprise.

In this crucial decade of delivery in which so much must change, Spencer Stuart will be checking in with sustainability leaders more often by repeating this study on a regular basis. We’ll be tracking their efforts to further embed sustainability in the business and drive progress, unpacking the new challenges and new drivers of success that emerge.

This article highlights a selection of findings from Spencer Stuart’s 2022 Survey of Sustainability Leaders. If you would like to learn more about this research and contribute to its future iterations, please contact us.

¹ Strategy&. Empowered Chief Sustainability Officers. 2022.

² Berg, F., Koelbel, J.F. and Rigobon, R., 2019. Aggregate confusion: The divergence of ESG ratings. Forthcoming Review of Finance.