Company leadership teams are finding space for sustainability positions. But who occupies them, and what skills are needed for the job?
For the first time in a decade, Jeffrey Fulgham has no one reporting directly to him. The veteran water industry executive prefers it that way. It frees him up, as he puts it, “to do what I need to do”.
So what is that exactly? In short, get GE Water onto a sustainable footing. For a multinational business with operations all over the world, that’s no small task.
Internally, Fulgham needs to steer the company in reducing its overall water footprint. Part of that entails devising water management processes and setting targets. It also involves scoping the market for cleantech investments that will help his company cut water consumption.
Externally, the trained mechanical engineer needs to work with GE Water’s customers – which include giant agribusinesses and food and drink companies, among others – to help their operations and products become more sustainable too.
Little wonder that GE Water decided that the job spec needed clout. Early last year, Fulgham was appointed to the newly created position of chief sustainability officer.
The role gives him a precious seat at the executive management table. Part of the company’s dozen-strong senior leadership team, Fulgham reports directly to the chief executive.
Fulgham is one of a growing number of sustainability professionals to be granted access to the hallowed inner circle that is the C-suite. Ikea, Dow Chemical, Accor, Siemens, Dupont and Albermarle are among those with similar high-ranking positions.
The shift up the organogram reflects the increasing importance attributed to sustainability as a business-focused concern.
Concern for sustainability
Three out four chief executives now say that their board takes an active role in “considering and acting upon” sustainability concerns, according to the United Nations Global Compact CEO Survey 2010. That’s up from fewer than half in 2007.
However, traditional executive teams are not equipped to manage what is a complex, multidisciplinary subject.
Chief executives notethe complexity of implementing strategy across functions (49%) and competing strategic priorities (48%) as the top barriers to implementing sustainability, according to the same report.
“Many [chief executives] are now looking for a trusted pair of hands to lead this right across the business,” says Peter Lacy, managing director of sustainability services at Accenture and co-author of the Global Compact survey.
Terminology varies from company to company. Chief sustainability officer, or CSO, is gaining traction. Vice-president or (global) director of sustainability or corporate (social) responsibility are becoming commonplace too.
Likewise, specific roles differ. Some are more “green” focused, a direct extension of the environmental management field. Others link more to general business strategy. A good number comprise a combination of both.
Broadly speaking, however, the to-do list of a board-level sustainability executive can be whittled down to three main tasks.
First, he or she must fight sustainability’s corner in the boardroom. As Fulgham points out, the CSO needs to continually “question and challenge” business-as-usual thinking. “As a line level function down in the organisation, you wouldn’t have that clout or opportunity to really drive the leadership team,” he adds.
Having that clout allows the CSO to present a long-term perspective when C-suite colleagues are, as their jobs generally demand, looking towards the next quarter.
Second, they need to be the face of the company’s sustainability efforts. A CSO that cannot stand on a conference podium, address a room of sceptical journalists or run a senior-level internal workshop will not be long in the job.
Last and not least, a CSO needs to get things moving. That means driving sustainability through every level of the business.
The CSO skill set
Each task requires its own skill set and knowledge base. One core attribute pertinent to all three roles is the ability to communicate with people, both inside and outside the organisation.
“A lot of people in the C-suite really have trouble speaking to employees on the plant floor. And many can’t speak to neighbours or NGOs,” says Robert Pojasek, sustainability practice leader at consultancy firm Capaccio Environmental Engineering.
Most business leaders now acknowledge that global challenges require cross-sector responses. A core component of the CSO skill set, therefore, is the ability to liaise with non-traditional stakeholders and ensure that their viewpoints inform board discussions.
Indeed, GE Water’s Fulgham credits the flexibility of his role with enabling him to spend time out on the road talking with customers and other stakeholders.
A firm grip on the business fundamentals is a second key imperative. Understanding how sustainability fits into corporate strategy is vital if board buy-in is to be won. The same goes for a CSO’s knowledge of basic business operations.
“Getting things done is all about understanding the business case and the business drivers,” argues Ellen Weinreb, chief executive of Sustainability Recruiting, a US executive search firm.
It’s also, she concedes, “about politics”. Sustainability remains a relatively new concept. If it is genuinely to be integrated, that means change. Change, in turn, means treading on toes.
Raffaello Raimondi, senior search consultant principal at sustainability recruitment firm Allen & York, agrees. The first job on a CSO’s list is often to challenge accepted norms and radically change a corporation’s culture, he says.
“Companies need someone that comes in at board level and sends signals that will impact every single structural function within the organisation,” Raimondi says. The CSO should therefore be ready for a “defensive reaction at first”, he adds.
In-depth technical knowledge of sustainability management is not essential for board access. In this sense, the job spec is markedly different from a functional sustainability role.
Naturally a familiarity with the principles of environmental management, governance, stakeholder engagement and business ethics are important. The 79 lead indicators of the Global Reporting Initiative, however, are not.
“You don’t have to know everything about everything,” says Pojasek, who also runs an executive training class at Harvard University.
More important is the ability to identify “what is important and what isn’t”, and then to ask the right question of the right person.
As a consequence, most CSOs are plucked from career streams other than sustainability.
Describing the ideal CSO’s background, Allen & York’s Raimondi points to a minimum of ten years’ industry experience in an engineering or process-driven role. Time in a sell-side role or another function that requires soft skills also features high on his checklist.
Other basics would include a masters in business administration and quite possibly experience with a leading strategic or environmental consultancy.
Someone who fits Raimondi’s description of having got “their hands dirty” in a business function is Jerry Lynch. A Kellogg School of Management MBA graduate, he became chief sustainability officer at food giant General Mills last year.
Before that, Lynch had spent 15 years in various senior marketing and commercial roles. His CV includes four years as director of marketing for General Mills Europe, Middle East and North Africa.
That is not to say that an exceptional candidate cannot rise through the sustainability ranks. Sophie Goldblum-Flak, for example, was partner in charge of innovation and sustainable development strategies at consultancy firm Accenture before joining the board of French hotel group Accor Hospitality.
As executive vice-president, her tasks at Accor are much broader than sustainability alone. Her brief covers business transformation, innovation and new technologies, as well as sustainable development.
Finding candidates of such pedigree is not straightforward. Of course, there are some with what Weinreb calls the “wow” factor (see box). Goldblum-Flak, for example, entered the boardroom in 2010 at the age of 38.
However, while it’s not “out of the question” to find a single individual with all the requisite skills, knowledge and attributes, Accenture’s Lacy argues that it is “unlikely”.
That leaves companies in a dilemma: on the one hand, the most senior sustainability manager lacks the skill set required of a senior executive; on the other, the board-level executive leading on sustainability lacks the “content or stakeholder skills”.
In most cases, it is important for a chief executive to ensure that whoever takes responsibility at senior management level “has a cluster of experts to fill those gaps”, Lacy says.
But while CSOs are an emerging phenomenon, they are certainly not universal.
Nearly two-fifths of US companies (38%) still have no corporate responsibility function at any level, according to the Corporate Responsibility Officer Association (CROA).
While the term is frequently used to describe a company’s most senior sustainability professional, it doesn’t always correspond to a seat at the board. Usually, in fact, it doesn’t.
Sustainability Recruiting’s Weinreb recently evaluated all the CSO roles in major US corporations. She eliminated those roles without senior leadership authority or a 10-K listing (the Securities and Exchange Commission’s filing identifying a company’s accountability to shareholders). She was left with a list of four.
More typical is for sustainability to be rolled up with other responsibilities into a single board position. According to the CROA, 41% of boards have a member designated to lead corporate-responsibility-related initiatives.
A classic example would be Shell. While the global oil major boasts a sizeable sustainability team, board responsibility falls to the executive director of the company’s upstream international business.
Sustainable development is just one of half a dozen issues in the portfolio, which includes core business activities such as exploration and new business development (not to mention hotspots such as Nigeria and north Africa).
That is not to say CSOs must be on the board to be effective. Much depends on their reporting lines, Weinreb says. “If they are reporting to the COO or the CEO, then they are going to get support from above and below.”
Barton Alexander, chief responsibility officer at US brewer Molson Coors, agrees. Granted a “dotted line” to the chief executive and the executive leadership, Alexander reports directly to the head of public affairs.
As the company’s resident expert, he is regularly called in to board discussions to help advise on issues and inform decision-making.
“Whether I am sitting there [in the boardroom] full time or not seems not as important as the fact that this group accepts this dimension of the business as core to our business success,” he says.
He cites another argument too: ownership. At present, all employees have a degree of responsibility for sustainability. Appointing a board-level role exclusively for sustainability could shift that burden onto one person’s shoulders.
However skilled, such a scenario would test the capabilities of any senior level CSO.
A CV for the C-suite: Steve Howard, chief sustainability officer, Ikea
Steve Howard’s job spec at Ikea makes for daunting reading. As CSO, he’s responsible for the company’s environmental performance, managing product and supply chain impacts, and making sustainability “attractive and affordable for everyone”.
Howard joined Ikea from the Climate Group, a pro-business environmental non-profit that he co-founded. During his six-year tenure as chief executive, he advised and briefed a raft of leading companies, chief executives and government leaders on climate change issues.
Before that, Howard – and strictly speaking, it’s Dr Howard: the man has a PhD in environmental physics – spent 15 years wearing various other advisory hats. For much of that time, he was a partner at environmental consultants ERM, where he led on corporate social responsibility. Before that, he founded the Global Forest and Trade Network for charity WWF International. The job entailed leading an international team that assisted 700 companies on forest and supply chain issues.
Howard’s expertise is much in demand on the non-exec circuit, too. He retains involvement with the Climate Group as a trustee. He is also an advisory board member of Vantage Point Venture Partners and an adviser to the Planetary Skin Institute. He is also a judge of the Virgin Earth Challenge.
In 2009, he won the accolade of “social entrepreneur UK” at the Ernst & Young entrepreneur of the year awards. The Sunday Times has named him among the UK’s top 100 environmentalists.
He also competes in triathlons.
Steve Howard took up the role of chief sustainability officer at Ikea in January 2011. As a member of the global retailer’s executive management committee, he reports directly to president and chief executive Mikael Ohlsson.
Chief sustainability officer: the skills required
- Sophisticated understanding of the global corporate responsibility landscape and best practice.
- Ability to work successfully with people of diverse functional and cultural backgrounds.
- Can anticipate trends and issues in business and society.
- Excellent written and oral communication skills.
- Professional and experienced practitioner in the sustainability/CR space.
- Strategic planner and influencer.
- Strong interpersonal skills and ability to interact with senior executives.
- Excellent reputation for judgment.
- Applicable training in sustainability reporting standards.
- Business acumen.
Source: Structuring and Staffing Corporate Responsibility: A Guidebook, Corporate Responsibility Officer Association