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Owning Sustainability: The CSO vs. the CEO

Is sustainability best centralized or decentralized?

Submitted by: Ellen Weinreb

Posted: Feb 20, 2012 – 10:41 PM EST

Tags: sustainability, chief sustainability officer, leadership, corporate governance, csr

 
Ellen_weinreb

By Ellen Weinreb

Last Fall, the Weinreb Group published CSO Back Story, identifying 29 Chief Sustainability Officers with that exact title working in the U.S. for publicly traded companies. Of the 29, we highlighted five CSOs (from SAP, EMC, AT&T, UPS and Dupont) whose perspectives included the value their role brings to their company's long-term strategy.

In each of their cases, the CSO “owns” sustainability. But what happens when a chief sustainability officer doesn't exist? Who should rightfully own sustainability at companies? 

Accenture’s recently released white paper The Chief Executive Officer’s Perspective makes the argument that sustainability could be owned by leadership in general without making it any one executive's core responsibility, compelling Environmental Leader to ask Are Chief Sustainability Officers on their Way Out?

In September 2011, I wrote a similarly titled article but with a different perspective, wondering whether CSOs are Everywhere, But Are Their Days Numbered?

Owning Sustainability: The CEO Perspective

Coca ColaThere are some CEOs who say that they own sustainability. After all, they are ultimately accountable for a company's performance.

Coca-Cola CEO Muhtar Kent has often emphasized that as CEO, sustainability is part of his job.

"I have not appointed another one and never will. That's me," he told Forbes in a recent interview. His reasoning: "That's my responsibility. It starts at the top and it is driven and permeates through the entire organization from the top."

Coca Cola Chief Sustainability Officer Bea PerezAs Bea Perez's appointment as Coca-Cola's first Chief Sustainability Officer shows, Kent just might have misread his leaves, realizing that sustainability needed one individual to “own” the day in and day out responsibility of the function.

However, this still doesn’t delineate the value a CEO can bring to the sustainability function. Their perspectives are valuable -- open any CSR Report, and you will read the CEO perspective on page one – and while easy targets, their voice is consistently perceived as brand reputation.

I was surprised then to see that Accenture's latest white paper only included two independent CEO perspectives. I can think of a fair number that have gone on the record to share their perspective: Brian Dunn from Best Buy, Carlos Brito from Anheuser-Busch InBev, Andrea Jung from Avon Products, Inc., Anders Dahlvig from IKEA, Fadi Ghandour from Aramex International, and John Donahoe from eBay, to name just a few.

While the white paper produces some interesting findings, I found myself questioning its methodology. The title “CEO Perspectives” is misleading by implying a widely held perspective of chief executive officers, when here are only two independent CEO voices quoted in the report: Clara Gaymard, CEO of General Electric (GE) Paris (a subsidiary of GE) and Idar Kreutzer, CEO of Storebrand, a Norwegian financial services business. 

Other than brief contributions from Accenture’s own CEO, who may or may not be impartial, the report did not interview any U.S. CEOs to offer a comprehensive overview of the chosen topic. Further, the white paper misidentifies Jean-Pierre Clamadieu as the CEO of Rhodia when he is in fact, the company's chairman after a recent merger with Solvay.

Now on to its findings:

Oligarchical Sustainability

“Some argue that the chief sustainability officer is already a dying breed,” states the white paper.

KingIn other words, some companies choose to have one person responsible for sustainability while others have a more decentralized approach.

In the case of GE France, for example, Gaymard suggests that “chief executive officers could decentralize sustainability via ad hoc incentives across the entire management team,” exemplifying GE in the process. She goes on to highlight that the organization appoints leaders to run specific initiatives, such as its major Ecomagination campaign, but otherwise spreads out responsibility across its leadership team.

GE, however, is more the exception than the rule in that it has a very strong culture steeped in rigorous metrics taken seriously by all subsidiaries. Mandates from the top are taken care of without any one individual needing to represent it. This works for GE but not for most other companies.

Sustainability Owned by One Leader

Now let's look at the other end of the spectrum.

The comments in response to the Environmental Leader story I mentioned above suggest that it is necessary to have one person responsible for overall sustainability function within a company.  The CSOs we interviewed for the Weinreb Group report concurred.

Gwen Ruta, Vice President of Corporate Partnerships for the Environmental Defense Fund, recently wrote about managing sustainability. She shared her perspective with me:

“I wish companies were at the stage where everyone was inherently willing to own and operationalize sustainability strategy, but for now I don’t think that’s the norm.  And even if it were, having a focal point is still a good idea.  After all, most people understand that it’s their job to help the company be financially successful, yet we still have CFOs.” 

While the Weinreb Group report focused on individuals with the CSO title, most companies that have a sustainability function also have one individual (with any number of titles) that really owns it the function. By being at the C-level, the chief not only enjoys more access and influence with other senior level leaders, she also has the influence to generate organizational-wide change.

This brings us to today's keyword: Embed.

How Do You Embed Sustainability?

The GE France example is certainly a useful model for embedding sustainability where ownership is divided amongst leaders.

The second buzzword is “sustainable” in the longevity sense of the word. 

What sustainability function has withstood the test of time? What structures put in place today can ensure the long term commitment to sustainability? The answer can be a visionary who as a leader also withstands the test of time. But even the Jeff Schwartz(s) – CEO of Timberland for 23 years – of the world have to leave eventually. 

What could withstand visionary leaders and change makers is a governance model where checks and balances are put into place to ensure the sustainability continues to bring value.

Now that would truly be a sustainable business.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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