The CSO: A role under self-determined change

The karma chameleon CSO brings adaptable action to its next evolution

Chief Sustainability Officers (CSOs) and their offices may be part of a unique professional group filled with more hope than most. Corporate sustainability and ESG roles are evolving, with many ‘hoping’ that the intense focus on regulations is a transient issue that will yield impact in the future. Every day is like survival.

It reminds me of my early career in technology in the late 1990s. I had never had the introspection to see technology’s potential to shape and accelerate every aspect of modern business, as sustainability now does. Instead, IT was seen as a cost center with little rewards for keeping the lights on. One big challenge was the disconnect between technology and business value.

Today that sounds like a ridiculous statement, especially given the meteoric focus on AI to capture opportunities. IT eventually found its way and established itself as a trusted business advisor, moving to create new opportunities as more advanced digital technologies rushed in. Will sustainability pop in the same way? Well, it might be up to CSOs.

Several reports examining the Chief Sustainability Officer and their offices have recently been released. The findings show a function in transition and something else. These professionals have an opportunity to take action to shape their roles and their business’s outcomes, but to do so requires action, assertiveness, and adaptability.

One report argues that CSOs must be chameleons, but I’m not sure that’s enough. They must also take action and ride karma to evolve into what’s next.

Karma: The force behind a person’s actions that leads to outcomes determining the next state of existence.

Chameleon: A person who can change and adapt.

When you combine these two things, you have the theme song for a professional transformation. Let’s do this.

The demand is predicted to be there

First, let’s level set. Sustainability and ESG jobs aren’t going away anytime soon. Yes, I realize I’m writing this as we enter a contentious global election cycle, but the sustainability train is not stopping.

Per a recent Morgan Stanley report, there is now $3.5T of assets under management (AUM) in sustainable funds. For you financial regulatory nerds out there, they use Morningstar’s assessment of SFDR’s Article 8 and 9 funds, which integrate sustainability objectives or lead with a primary goal of sustainability. This represents 7% of all AUM globally. They report that these funds perform slightly better overall due to the number of equity investments. Still, an improvement is noted.

On the company side, boards are admittedly still mixed on ESG and the business value of sustainability. According to PwC’s latest Corporate Directors Survey, over half of directors (55%) consider ESG in their board’s Enterprise Risk Management discussions, with 47% considering it a regular part of the board agenda. Both numbers are down YoY, but not by much, showing that the focus is maintained.

So, market and corporate pressure remain, but the talent needed to support the focus doesn’t necessarily exist, not by a long shot.

LinkedIn published a stocktake on ‘green talent,’ which states that the available talent pool is not on track to meet the world’s ambitions by 2050, requiring twice as many green professionals as those in the market today. According to the report, these skills are worth adding to your portfolio as job seekers with green skills see a 54.6% higher hiring rate, and the total number of jobs requiring some kind of green skill rose to 7.7%.

You might think these roles are for reporting jobs, but it doesn’t seem so. According to LinkedIn’s definition in the report, “Green skills are those that directly combat the effects of climate change.” LinkedIn appears to report on the ‘depth' sustainability experts, not breadth experts like myself or regulatory savants.

While LinkedIn looks to the future for experts who can drive the necessary action, the CSO and sustainability professions are transitioning today. The primary focus is still on regulatory compliance right now, with pockets of strategic integration. If CSOs will ever help companies realize they need to hire depth experts to progress, those pockets of strategic integration need to grow.

Recognizing where we are today is a key to change

The latest round of reports confirms the regulations are the priority. Global ESG standards and regulations have become the focus of sustainability offices. Trellis (Greenbiz) published a State of Sustainability report that calls out how the regulations have led to the rise in sustainability offices reporting to general counsel (14%), which matches the same percentage that the Weinreb Group found for that reporting structure in its Chief Sustainability Officer Report.

It is important to note that the sustainability function existed before the latest round of regulations. According to the Weinreb Group, the first CSO title was noted in 2004, and their first CSO report goes back to 2011. Still, both reports indicate that recent regulatory launches have shifted the profession significantly. The first section of the Trellis report notes the rise in an “ESG Controller,” a role that didn’t exist two years ago but is now in around half of the Fortune 100.

Even though the idea of an ESG Controller is new, I regularly hear how this role might just be the sustainability office's mental savior. After all, I’ve written about the mass corporate exodus of sustainability talent and burnout due to the near-term transition of the role to carbon accountants. A CSO can offload tasks like data management, regulatory reviews, and compliance processes to a qualified ESG Controller.

A new report from BSR titled The CSO at a Crossroads makes the most compelling case for this ‘carve-out’ of compliance and regulatory focus from the CSO office to an ESG Controller. As with the other reports, this one also clearly recognizes the role's slow evolution and progress over time, followed by a quick and stark acceleration to a regulatory and compliance focus over the past two years.

This statement in the BSR report is an excellent take on the regulations and their effect on the CSO:

This shift has been hardest for those CSOs who enjoyed the entrepreneurial freedom they experienced with “first mover” companies, where sustainability was seen as an innovation factor in an open field and not primarily a function of compliance or enterprise risk management. Indeed, a few CSOs recalled the daring bygone years in the field and expressed that they now feel a sense of dissatisfaction.

Yikes! No wonder CSOs and sustainability offices are burned out and fleeing corporate roles for independent consulting. Those CSOs who remain in the role today have adapted from impact and innovation to accounting and attestation, proving their resilience. However, the result isn’t necessarily what they want, and that hope that something else is coming keeps them pushing through.

Yet, a bright spot exists as an intangible benefit (or internality) to the regulations, which is alluded to in the Weinreb report through the CSO’s expanded networking and influence. If the CSO can adapt around the regulations, they can capture a hidden opportunity to accelerate the transition back to impact and business value. One of their 31 interviewed CSOs in the BSR report directly called this out:

There’s more compliance, and we’re busier and busier on reporting and assurance. The positive element is that there is stronger ownership by parts of the business to meet disclosures and we’re continuously upskilling on sustainability across the business.

This is a point I’ve overlooked myself, so I will attempt to sell you on the contradiction. The regulations force collaboration throughout the company around sustainability, and ownership can be diffused. In other words, sustainability is indirectly mainstreamed throughout the business, out of the regulatory ask. Here’s how this should work:

• The sustainability office adheres to the regulations and has to secure activity data from every business unit.

• As they knock on every office door, hat in hand, for this data, the interaction raises awareness and possibly questions.

• Savvy CSOs can use this to mainstream and upskill business units on why they should care from the business perspective, taking the conversation beyond compliance and influencing without authority.

The Weinreb Group's report discusses this ‘influence without authority’ theme as one CSOs recognize.

…the most important competency CSOs identified is “strategy and vision”: 86% of respondents listed this as a top attribute. CSOs also named “influencing without authority” (68%) and the ability to be a “corporate chameleon” (67%) as critical.

While I agree with the ‘strategy and vision’ competency and will address that in the next section, getting there requires action (influencing without authority) and adaptability. To be a corporate chameleon here means translating the value of sustainability across the business. If you are looking for a similar example, consider how an IT organization might already be doing this. The IT organizations' ability to influence and adapt to business unit language and needs around the technology value is similar.

Effectively, CSOs must adapt to the business, reassert the business value, and drive action.

Again, this is an apparent contradiction, as regulations get in the way of action. Regulations slow the progress of CSOs and sustainability offices and prevent the profession from advancing back to impact, business value, and strategic integration.

In the face of the resulting burnout, take control of your destiny, leverage the opportunity to listen to your business counterparts, and create influence where it seems you might not have any.

CSOs cannot afford to be beaten down in the waiting game of regulatory progression, but they can capitalize on it!

CSOs: Masters of their destiny?

There aren’t many roles that can define theirs or the company’s destiny. Back-office business functions are often consistent from company to company with some nuance. Like a back-office function, the ESG Controller position will likely become a consistent role over the long run, as they would focus on the regulatory landscape from the company perspective.

Unlike established roles, the CSO can shape its future if the regulations can be offloaded to an ESG Controller. The timing couldn’t be better, as the position of CSOs appears to be elevated within companies.

Trellis reports that the number of CSOs reporting to the CEO has increased from 22% to 30%, with 49% reporting one level away. The Weinreb Group found that 99% of surveyed CSOs engage with the board directly. Both report that the engagement revolves around multiple board committees.

With this supporting structure in place, CSOs can now reassert particular directions through their actions to determine their next stage of existence. As stated above, building out on the regulatory pressure internally is a near-term task, but what might lie beyond that for CSOs? Well, BSR takes us through three potential archetypes, and I will give you my take on their definitions here:

• The Steady Manager has an established set of goals with a material lens, focused on reputational risk and compliance rather than long-term transformation. This role may be most appropriate for upstream value chain players or smaller companies.

• The Integrated Strategist appears to be the closest to an actual ‘ESG’ leader, integrating these topics into company strategy with a long-term view of the business and predicting what’s next.

• The Transformative Change Agent is treated as an equal at the CxO level, transforming the business’s fundamentals. Possibly, only the most prominent companies can make this role a reality soon.

Observationally, I believe these would go from low to high influence and internal investments, most near-term to furthest out, and smallest to largest companies. I imagine most CSOs will evolve into Integrated Strategists over time since there are few large companies that can cultivate Transformative Change Agents.

Still, as the BSR report summarizes:

…now is the moment to capitalize on the potential of the CSO as an “Integrated Strategist” and “Transformative Change Agent.”

Agreed.

To do this takes more work than capitalizing on the networking efforts from securing and collecting activity data throughout the business. However, this is an accessible starting point for those stuck in the ESG Controller function or those serving as Steady Managers.

The Weinreb Group’s report contains several pointed recommendations. Let’s transpose their findings on page 7 into a bulleted action list with an ESG mindset.

• CSOs must articulate how their ESG strategy drives business goals. Collected metrics can inform this, but standard disclosures don’t cover every material ESG issue the business should focus on.

• They must know how to manage up by understanding the core business priorities of their leadership team, including pains, influence, budget, and how each is addressed.

• CSOs must translate sustainability challenges and opportunities into the language each individual or group will best receive. I’d consider this the ‘mainstreaming’ competency. Employees are an under-tapped resource for driving sustainable change, as the intersection with the business lies in their intellectual capital. Without guidance, employees will be ambitious and directionless. Channel that energy through enablement, sponsorship, and field empowerment.

As we enter 2025, the halfway point to many 2030 goals, we will see many setbacks but also leaps and bounds. Hope will be tested as goals are reconciled with reality and sustainability is reconciled with the business. The first CSRD reports will be published and (hopefully) operationalized to an ESG Controller or another accounting/legal function. The world will continue to change and affect our companies in new and unexpected ways.

Of course, the CSO role will evolve as IT did during the 2010s. Sustainability is about to transform and underpin our modern business in a similar material way to technology, and those who don’t figure it out will be left behind and at risk, just like running outdated and insecure operating systems.

Unlike CIOs and their IT departments, today’s CSOs have a role in how they evolve if they can escape the thumb of disclosures long enough to do something about it. Whereas IT needed to worry about technological advancements and defense against cybersecurity risks, the sustainability office must remain ever-vigilant against how the world is changing and help the company adapt.

The path to business integration may indirectly run through disclosures, which is quite a contradiction to overcome. To get there, CSOs must act like chameleons, going around the business to convince them of the value through the regulatory requirements and ride that karma to the next evolution of their role.