The evolving role of the Chief Sustainability Officer in partnership with KPMG

Holly Addison 24 Jan 2025

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Insights from our roundtable dinner at KPMG

 

Last week, KPMG and Leathwaite co-hosted a roundtable dinner with leading CSOs from across industry to discuss the evolving role of the Chief Sustainability Officer (CSO).

The conversation was rich with insights and forward-thinking strategies, highlighting the critical importance of sustainability in today’s business landscape. Here are some key takeaways from our discussion:

Tenacity and ambitious thinking

 

As the role of the CSO evolves, it is crucial to retain bold thinking and stretch the planning horizons of organizations. This forward-looking approach will help anticipate and navigate the complex challenges of sustainability.

A relentless focus on the business case for sustainability is necessary to remove the debate around the “why.” Instead, we should concentrate on the “how” and the “what,” driving actionable strategies that integrate sustainability into the core commercial strategy of our businesses.

Expanded remit and skill development

 

The responsibilities of CSOs have grown exponentially, evolving from environmental compliance to strategic advisors focusing on value creation and risk management. This expanded remit underscores the importance of sustainability in driving business success.

With finance functions increasingly taking on reporting responsibilities, CSOs and their teams can focus more on strategic tasks. To deliver effectively, CSOs must ensure they have the right mix of skills and capabilities. This includes not only subject matter expertise but also strong business acumen and emotional resilience. Alongside a broad and deep understanding of the business, this role requires diplomacy, commercial agility and the ability to navigate increasing complex governance frameworks.

Communication and collaboration

 

Transparency in communications with key stakeholders, both internal and external, is essential. By honestly highlighting what we are and aren’t doing, and the challenges we face, we can foster better collaboration across value streams and between the public and private sectors.

Competition law is a barrier to progress in some cases; preventing collaboration, common standards, and cost savings, even in situations where there is clearly no competitive risk to knowledge sharing.

Environmental technology concept. Sustainable development goals. SDGs.

C-level representation and the board agenda

 

CSOs now play a crucial role in core business strategy, collaborating closely with CEOs, CFOs, the board and investors. To be effective, sustainability must be embedded into all functions, making all departments accountable for achieving sustainability goals.

ESG must be a consistent item on the board agenda. It was noted that a high proportion of Non-Executive Directors (NEDs) have a poor understanding of ESG. However, there is an increasing number of mandates for NEDs to bring knowledge of sustainability. Ensuring that ESG is regularly discussed at board meetings and that NEDs are well-informed can significantly enhance the strategic integration of sustainability within the organization.

Addressing financial disconnects

 

There is often a disconnect between TCFD disclosures and the application of discounted cash flows in financial reporting, leading to inaccurate valuations and misallocation of capital. A more consistent approach to valuations and the impact of climate change is needed.

Exploring how AI can drive sustainability objectives and targets is an exciting frontier. AI has the potential to enhance our ability to measure and achieve sustainability goals effectively.

Bridging sustainability and growth

 

More mature organizations recognize sustainability as a growth driver, enhancing brand reputation, driving innovation, and future-proofing operations. This perspective is crucial for integrating sustainability into long-term business strategies.

Rising consumer expectations for ethical practices and varying regional regulatory requirements highlight the demand for sustainability. However, suppliers are often expected to bear the costs, which can be a significant challenge.

Complexity of the role and the talent lens

 

The role of the CSO is complex, often requiring individuals to double-hat and address questions that have yet to be asked. Despite these challenges, the role attracts incredibly talented people who thrive on complexity and possess high levels of intellectual agility, passion, humility, and curiosity.

In conclusion, the role of the CSO continues to evolve rapidly, with increasing levels of responsibility and strategic importance. By embracing bold thinking, fostering collaboration, and focusing on the business case for sustainability, we can drive meaningful progress and create lasting value for our organizations and society.

Thank you to all who participated in the roundtable dinner. Your insights and contributions are invaluable as we navigate this critical journey together.

If you are interested in joining future events and discussions please contact, Holly Addison.

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Holly addision

Holly Addison

Holly co-leads our global product, sales and marketing practice and also our Board, CEO and general management practice. Specialising in CEO and C-level talent that drives growth, with a focus on digital transformation, leadership succession and value creation, Holly is best…

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