Over the past two decades, as the awareness around sustainability has increased, its place in businesses has also evolved. Historically, few companies had organisational structures designed to treat sustainability as a material business issue but after being framed as a corporate social responsibility (CSR) in the early 2000s it began to emerge more seriously as its own function in the mid-2000s. Although at this time the role of Chief Sustainability Officer became more prominent, it was often an internal appointment that was still seen as something of a side function, only developing into a more strategy-focussed approach in the mid-2010s. Now, sustainability has become a standard function in business in the UK, but it has struck me that the jury is still out regarding where it sits and who should be leading it.
These are both questions where one correct answer doesn’t seem to apply, as it appears to depend on a number of factors, such as the evolution and scale of the organisation. For example, if a business is at the beginning of its sustainability journey, it may make sense to have a centralised team that stands separately from other areas of the business. That way, it is able to act like a consultant, moving between different functions, bringing each one up to standard to a point where the sustainability team is no longer needed and can then move on to a different function. Karen Hamilton, who most recently held the position of Global VP, Sustainability at Unilever, told me: “My view increasingly is that sustainability needs to be a powerful independent voice, because you’re bringing the outside in for the company. This means you need to be able to articulate the risks and the company’s responsibility.”
However, for those organisations which are further along, having a separate team may not be necessary, as integrating sustainability with another area – for example in buying because of supply chain implications, logistics because of final mile or even finance as budget is so key to progress in this area – would be the most efficient and effective route.
“While the most important thing is to have a powerful voice around the table, that doesn’t mean you need a separate Chief Sustainability Officer.”
Sharon Flood, former Non-Executive Director of Pets at Home, The Go-Ahead Group and former Chair of Environmental Sustainability at Network Rail tells me that in this set-up, sustainability could be led by someone who is already a leader in the organisation, as this would mean they are already communicating effectively with the Board and ExCo. She tells me: “While the most important thing is to have a powerful voice around the table, that doesn’t mean you need a separate Chief Sustainability Officer.”
This is the strategy at FatFace, where sustainability is ingrained in the business in the form of a three-pillar strategy. Two of these, product and community are led by functional directors, while the third, planet, is being taken on by Trading & Sustainability Director, Nick Stevenson and CEO Will Crumbie himself because reducing emissions under net zero will require working collaboratively both across the entire business and with partners.
However, if a business does not appoint someone who is on the ExCo, it is paramount that there is an executive sponsor as this gives more weight and means there is less chance of sustainability slipping down the agenda. Noel Kinder, Senior Vice President, Sustainability at Lululemon and former Chief Sustainability Officer at Nike explained that this was the case at both businesses. “At Nike, it sat within supply chain and reported, initially, into the Chief Operating Officer and then to the Chief Supply Chain Officer. At Lululemon it’s similar – I report into the Chief Supply Chain Officer.”
Considering whether a sustainability lead has sufficient business experience is key, as being able to bridge the gap between the sustainability agenda and business priorities is critical to its success. Karen explains: “It is hugely helpful to have a foundation in business so that you can understand the minutiae of how businesses operate. Where are the pinch points in the company and where are the opportunities for change?”
For example, although Group Sustainability Officers tend to be deep subject matter experts, sometimes they haven’t had the necessary experience in senior leadership roles which, in the end, can hinder progress. Sharon explains: “You have to think about what it is that you’re solving for in sustainability. Are you gaining competitive advantage or are you mitigating a huge business risk? If you can’t answer the strategic rationale for what you’re doing on sustainability, it’s likely to be the thing at the bottom of the list that doesn’t get done.”
Regardless of which direction a business decides to go in, it is clear that the individual leading sustainability needs to be genuinely committed to progressing the agenda. Despite significant improvements over the years, sustainability can still feel as though it comes as an afterthought to the core operation, particularly now the economic and geopolitical landscape has become less supportive. In a similar vein to DEI, in the face of this shift, some companies are continuing their efforts internally despite broadcasting them less while others are simply doubling down.
Businesses should also consider reporting requirements when thinking about who and where the sustainability function should sit. Sharon told me that this can sometimes be prohibitive for smaller listed companies. “Because of the constraints of PLC governance, progress can really stall, she said. “This is because, at smaller companies, all the resource can end up getting swallowed by red tape, rather than going to things like planning your supply chains better.” In the UK there are mandatory ESG reporting requirements, including the Climate-related Financial Disclosure Regulation which mandates climate-related disclosures for large companies and LLPs with over 500 employees and £500 million turnover.
“It is hugely helpful to have a foundation in business so that you can understand the minutiae of how businesses operate. Where are the pinch points in the company and where are the opportunities for change?”
Will says that these reporting requirements need to be a consideration when hiring, even when you do have the resources. He told me: “Going through the cycle year one was very difficult, but now it has effectively turned into another month-end process. Sometimes businesses might not resource and recruit with reporting in mind and that can make it harder.”
Ultimately, the question of where sustainability should sit within a business – and who should lead it – is less about hierarchy and more about influence. As ESG requirements in the UK tighten and the geopolitical and economic backdrop changes, sustainability needs to be championed by leaders who are not only committed to the cause but are also able to navigate the business. Whether embedded across functions or driven by a centralised team, sustainability needs to be held by someone with strategic clarity and operational credibility in order for the agenda to firmly embed in businesses and to keep progressing.
