Sustainability teams are growing rapidly – but do they have enough influence to shape business decisions?
Three-quarters of large businesses have expanded their sustainability teams since 2020, according to GreenBiz Group. But separate research from PwC raises questions about whether sustainability professionals are supported to influence board-level decisions.
The so-called ‘great expansion’ of the sustainability profession is outlined in GreenBiz’s latest ‘State of the Profession’ report, published this week. This report outlines the findings of a survey of 1,500 sustainability professionals, the majority of whom (81%) live and work in the US.
More than half (56%) of the survey respondents are employed by large organisations with annual revenues of $1bn or more. Among this group, 76% said their teams have grown by at least one person within the past two years. The proportion stood at 60% for smaller companies.
A key driver of hiring across businesses of all sizes has been increased pressure for disclosures from investors on Environmental, Social and Governance (ESG) issues; 50% of respondents have hired at least one in-house professional to meet these demands and a further 35% have hired additional consultants. GreenBiz has concluded that ESG reporting will now require at least one dedicated professional at most large organisations.
Pressure from investors is being compounded by changing demands from consumers, stricter climate-related legislation and fast-changing market forces to place ESG firmly at the feet of chief executives, the report states. When survey respondents were asked to assess how involved their chief executive is in their organisation’s sustainability strategy on a scale of one to seven – one being dismissive and seven being extremely engaged – 60% of respondents gave a score of either six or seven, up from 43% in 20202.
With increased hiring, budgets have also increased. 76% of respondents said their organisation has increased spending on sustainability teams and initiatives since 2020. A further 20% reported no change in budget, which is promising, given that there were widespread fears of budget cuts in the early stages of the Covid-19 pandemic.
“The sustainability profession is expanding more than any other time in history,” said Greenbiz Group’s vice-president and senior analyst John Davies. Companies are beginning to embed sustainable practices throughout the organisation. Now is the time for boards and senior management to reward their sustainability professionals with the backing and the budgets to create even greater impact.”
Chief sustainability officer light?
Separate research out this week, from PwC’s Strategy& division, similarly reveals that the number of chief sustainability officer (CSO) positions is increasing rapidly. 1,640 companies were assessed and around 80% had either a formal (30%) or informal (50%) CSO role. The number of CSOs appointed within this cohort of business increased more steeply in 2021 alone than between 2016 and 2020 – 68 hires compared with 65 hires.
Companies headquartered in Europe or North America are more likely to have a CSO than those located elsewhere. Just 9% of the European firms and 13% of the North American firms assessed have no CSO, compared with 33% of firms in the Asia-Pacific region and 52% in the Middle East.
The report summarises: “Sustainability used to be disconnected from important business decisions and typically revolved around minimising safety or reputational risks for the company. Those days are over.
“While not a “silver bullet” in itself, a well-established CSO can make a real impact connecting the dots on ESG and supercharging the sustainability transformation. The role of the CSO will undoubtedly grow as organizations continue to put ESG at the heart of their business.”
Nonetheless, the report concludes that most CSOs are not being properly empowered, through their positioning in the corporate hierarchies and their access to training, education and funding.
On the former, the report raises concerns that most CSOs do not sit on the C-suite. Half of the CSOs assessed sit two ore more hierarchy levels below the C-suite. The report calls these professionals “CSO light”, arguing that they likely don’t have a great deal of influence over business strategy.
Sectors in which CSOs are most likely to be “light”, the report states, are e-commerce and insurance. In the businesses assessed in these sectors, 77% and 58% of CSOs were classed as “light”. On the flipside, the sectors found to be most likely to have empowered and active CSOs were consumer products (50%), chemicals (45%) and energy (42%). This isn’t to say that firms in these sectors will have the most ambitious sustainability targets or have delivered the most impact to date, merely that their C-suites seem to be posing sustainability as more of a business-critical issue than an add-on.