Tuesday, July 19, 2016

Corporate Sustainability in 2016: The Rise of the CSO

Sustainability and corporate social responsibility (CSR) enable businesses to reduce their costs by being more efficient, build social capital by being more responsible and earn more revenues by offering products and services that customers find socially or environmentally attractive. There are also a host of ancillary benefits including enhanced employee recruitment and retention. One of the most cogent reasons why businesses are getting serious about sustainability has to do with risk mitigation. Sustainability helps to insulate a firm from the legal and business threats that include new regulatory environments and possible supply chain disruptions due to things like extreme weather or resource scarcity.

A number of studies have made the business case for adopting sustainability. In the wake of the Paris Climate Agreement sustainability has reached a tipping point. For years now many schools are offering CSO training.

There are a host of new expectations from government regulators, supply chain partners and consumers. This means that companies must now put forward a wide range of sustainability objectives and show that they are meeting these commitments through detailed reporting and transparency. Sustainability is also becoming synonymous with competitiveness. Sustainability also lends legitimacy to profitability.

To help realize these aspirations organizations need dedicated personnel and a Chief Sustainability Officer (CSO) is the individual that is most often charged with overseeing these responsibilities. CSOs function alongside the chief executive officer (CEO), chief financial officer (CFO), chief operating officer (COO) and chief technology officer (CTO). Some organizations have been working with a CSO for more than a decade. They tend to focus on compliance and environmental health and safety, corporate affairs, marketing, and community relations.

Sustainability marketing and public relations in the absence of organizational efforts led by a CSO can make a firm vulnerable to charges of Greenwash. Saying without doing comes with serious reputational risks. That is why integrating CSOs into the formal organizational structure is so important. CSOs go beyond simple legal compliance as they work to integrate sustainability and corporate social responsibility (CSR) into a firm's DNA.

Organizations commonly start with compliance and then move to issues related to cost efficiency that offer direct financial benefits, they then include things like emissions reduction initiatives. Ultimately the responsibilities of a CSO is about accountability and this extends to a corporation's core values.

The sustainability imperative is driven by the powerful logic of market dictates, However, a book titled Connect: How Companies Succeed by Engaging Radically with Society indicates that many corporate executives still don't fully appreciate the extent to which CSR and sustainability can drive bottom line success or even address societal problems.

You need only look at the costs associated with Volkswagen's epic greenwash to realize that there are serious consequences to bad corporate behavior.

According to Ethical Corporation's “State of Responsible Business Report 2016” more than 7 in 10 corporate/brand respondents said that their CEO is convinced of the value of sustainability. The report also says that there has been a 9 percent increase in those who feel that sustainability is integrated into broader business strategies.

When it is done well (which often implies the involvement of a dedicated CSO), sustainability has been proven to be profitable. In 2016 sustainability is not is a choice it is a competitive necessity and a strategic imperative.

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