Investing Playbook

What Is a Chief Sustainability Officer?

Corporate executives have begun making room in the C-suite for a new member: the chief sustainability officer (CSO). The position first appeared in 2004, when DuPont hired Linda Fisher, formerly of the United States Environmental Protection Agency. Ten years later, Weinreb Group reported 36 CSOs among public US companies. Many more organizations, they noted, have employees in dedicated corporate sustainability positions located in compliance, strategic planning, and operations departments.

The Value of Dedicated Sustainability Personnel

As sustainability becomes increasingly important to consumers and investors alike, the role of CSO may become more common and its actions more crucial to long-term business success. By having a centralized person in charge, companies with CSOs may pivot toward sustainability more efficiently and get more done overall.

What an impactful CSO does will vary from industry to industry. For clothing retailers, a CSO may focus on monitoring complex supply chains and ensuring that stores are energy efficient. At manufacturing firms, CSOs may look for ways to reduce water consumption. A professional services organization may design new lines of business that help meet client sustainability needs. Each CSO deals with different sets of relationships with customers, communities, and regulators.

This is not to say that hiring a CSO is the only way to go. Companies could elect to hire several lower-level sustainability officers to manage different business sectors, or the existing C-suite may already demand accountability on sustainability issues. But codifying the role and elevating it to the status of other top-level executives suggests a new level of dedication to sustainability excellence.

Real Change vs. Greenwashing

However, critics have noted that the installation of a CSO does not necessarily translate into innovative sustainability efforts. As Christine Bader points out in The Atlantic, the “obvious concern” about the CSO role is its significance: “How can onlookers know whether a CSO (or equivalent by another name) is driving real change, or is just the Chief Greenwasher?”

In other words, while making a commitment on paper (and in the budget) does indicate a step forward, having a CSO doesn’t guarantee that an organization is following through on sustainability. The challenge for environmentally conscious investors and consumers is to make sure that the sustainability office is an active site for making a difference in the field.

To thrive in such a complex role, the chief sustainability officer must have the vision to make changes as necessary to ensure a firm’s long-term health. Sustainability affects all aspects of a business, and so can the projects and initiatives spearheaded by CSOs. As such, their work may be difficult to isolate in specific dollar amounts, as Bader notes. In many cases, they’re “so embedded in the core business of the company that they’re practically invisible.” Sustainability rankings and reports may prove helpful in validating that a CSO’s efforts are actually making waves and moving a company toward a sustainable future.

As more companies add chief sustainability officers to the C-suite, the role will likely mature into a more solidified state increasingly central to a firm’s core business. Eventually, it is possible that companies who don’t fill this role will stand out—and not for a good reason.

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