Chief Sustainability Officers come together to explore how organisations can deliver system change for a sustainable economy
17 June 2024 - Ben Kellard, Director of Business Strategy, reflects on the challenges and enabling practices that emerged from discussions with cross-sectoral CSOs at our recent Forum.
As recently reported, we recognise that CSOs have a tough role to lead the system change needed to create a sustainable economy. So, CISL convened a Forum for thirty European-based Chief Sustainability Officers (CSOs) from a range of sectors to explore what organisational leadership looks like and how they can contribute to practical pathways to the system change we need. I was struck by the proactive desire across the group to positively collaborate across sectors.
We began by considering what organisational leadership looks like in a global context, informed by insights from our recent Global Leadership Summit. We recognised there are profound shifts taking place as global power moves south and east, creating significantly different regional contexts, fuelled by political uncertainty as almost half the world’s population goes to the polls this year. The business-as-usual focus on financial value is very real, given the ESG backlash, especially in the USA.
Nonetheless, there are also tailwinds with lots of leading practices and opportunities to show organisational leadership. These focused on how organisations can work with other stakeholders to enable the significant shifts needed. These areas were explored in breakout groups, such as how to create a positive and enabling policy landscape or how to scale up innovation and finance for sustainable solutions. We then drew insights together with a panel, made up of representatives from business, finance and government, to identify the leadership areas and role of different sectors.
Some of the areas of leadership that emerged were:
Education & governance - ensuring senior leaders understand the global trends and their impact on the value creation model. This includes the dependencies on natural and social stocks and flows of capital that can jeopardise the current business model, but also open up adjacent opportunities for value creation. Understanding these impacts and dependencies can enable holistic decision-making at all levels of the organisation.
Chief Finance Officer (CFO) partnership – having a positive relationship between the CSO and CFO (and in turn wider financial sector) was critical to enable the organisation to align on how to understand, measure and manage the relationship between financial, natural and social value. We signposted our report that explores the role of finance teams, as do our online courses.
Shared ends – when creating systems change it’s important to have a shared view of the ‘ends’- or what good looks like- to work towards, especially as many value chains or sectors are fragmented. Different stakeholders and sectors can then work back from that together often in a pre-competitive space, to figure out the best means and roles to get there. For example, how to create the capacity in the construction industry to deliver net zero buildings. It’s important to take a ‘good enough’ approach, recognising the complexity of the system and allowing stakeholders to aim for shared learning and impact rather than perfection.
Sectoral roles - each sector has its distinctive role to play, that is likely to require both innovation of traditional roles and alignment with other sectors. While these roles will vary according to the context, we identified general roles. Governments can provide effective (not necessarily more) policies that create consistent incentives and a level playing field. This enables businesses to identify social needs and innovate the products and services to meet them. Financial institutions can then accelerate the transition by providing finance at scale. This is enabled by an informed and holistic approach to risk assessment.
Effective government policy - we recognised the shifting relationship between the state and the market globally, especially with so many elections globally. We explored the combination of corporate voluntarism, disclosure, and pricing in of externalities that would be required in different contexts to create the right incentives for different actors to play their role in the transition. We recognised the need for neutral forums to convene and consult different sectors to shape the right policy landscape.
Balance risk & innovation - effective regulation also enables businesses to take an informed and balanced approach to risk and incentivise them to innovate and invest in the products and services society needs. This would help to align consumption with wellbeing outcomes, within safe planetary boundaries.
We want to thank the CSOs for so creatively and constructively engaging in these important conversations on what leadership we need and how to deliver it. We were inspired by the energy and leadership in the room and look forward to continuing these kind of conversations across our network.