The role of chief sustainability officer (CSO) has gained prominence over the last decade as businesses face mounting pressure to address climate risks and integrate sustainability into their strategies. Yet, according to one CSO who spoke to executive search firm Heidrick & Struggles: “My dream is to make the role of chief sustainability officer disappear”.
The results of Heidrick & Struggles’ survey of 17 European CSOs – presented in the article Chief Sustainability Officer Focus: A European CSO Perspective on Driving the Sustainability Agenda – show how CSOs are frequently placed at the centre of leading business transformation.
Some 86% of the top 250 companies in Europe have a CSO and, in regions such as the Nordics, that number sits at 100%. Additionally, 83% of the current CSOs of Fortune Europe 250 companies have been appointed since 2019, which analysts suggest highlights an increasing number of changes in CSO leadership roles, filled by people with fresh perspectives.
The role itself, however, is also in the midst of a transition, balancing risk management, compliance and innovation with expanding responsibilities around climate commitments that are creating new tension, according to Dr Scott Kelly, senior vice president of modelling and environmental analytics at Risilience. As some financial institutions step back from environmental pledges, many CSOs find themselves navigating between sustainability goals and business pressures – shifting perceptions of their role from value driver to cost centre.
Given this, how can companies ensure they set themselves up for success, and what role does an investor play in all this?
Regional variance
Results from Heidrick & Struggles’ report are, of course, just a snapshot of one corner of the globe. According to Kelly, although environmental, social and governance (ESG) frameworks have become a cornerstone of corporate responsibility, their interpretation and implementation vary across regions alongside ESG priorities.
“European companies are compelled by regulatory requirements, such as the Corporate Sustainability Reporting Directive, which demands transparency on carbon emissions, biodiversity and social impact. These obligations push CSOs to adopt a forward-thinking, compliance-driven approach that balances regulatory mandates with innovation,” explained Kelly.
However, by comparison, the position of CSOs is less consistent in the US. “While many organisations have embraced sustainability leadership, the role is often less embedded in the C-suite. This can dilute its strategic impact, especially in firms where sustainability is viewed more as a reputational or philanthropic concern than as a business imperative.
“The fragmented regulatory environment adds a layer of complexity. Unlike Europe’s cohesive framework, the US lacks uniform ESG standards, where CSOs are required to navigate a complex landscape of state-level regulations and voluntary guidelines.”
Ripple effects from US political change
Meanwhile, the withdrawal of major US banks from the Net-Zero Banking Alliance (NZBA) reflects a growing resistance to climate commitments amidst rising political and legal pressures, Kelly asserted. This retreat is likely to have ripple effects on the role of CSOs in both the US and Europe.
“In the US, CSOs will face intensified scrutiny as companies recalibrate their ESG strategies, balancing stakeholder expectations with a fraught political climate. The diminished public commitment to net-zero goals, and declining ‘climate spirits’ may weaken the CSO’s mandate,” explained Kelly.
“In contrast, in Europe, the NZBA exits highlight the risks of fragmented global initiatives. European CSOs may find themselves under pressure to compensate for the perceived backtracking of their US counterparts, reinforcing the divide between transatlantic sustainability priorities.”
Harmonising sustainability strategies in such disparate regulatory and cultural environments will require adaptable, forward-thinking leadership, he added.
“European companies, bolstered by stringent regulations, may continue to set the pace in sustainability innovation, but they must also address growing scepticism and legal scrutiny surrounding their claims. US companies, meanwhile, must contend with political resistance to ESG principles while maintaining credibility with investors and stakeholders who increasingly prioritise sustainability.
“CSOs will need to act as bridge-builders, aligning global sustainability ambitions with local contexts. Their success will hinge on their ability to demonstrate tangible progress, foster collaboration and anticipate regulatory shifts.”
CSOs are here to stay – for now
While the adoption of net-zero targets has prompted companies to define their strategies and develop detailed roadmaps on how they hope to achieve their goals, an increase in regulatory requirements and a wave of anti-greenwashing litigation has also tightened scrutiny, Heidrick & Struggles’ report highlighted.
With investors, customers and employees also increasingly asking for ESG performance metrics, companies are feeling the pressure to be accountable and transparent – all of which means the CSO role is here to stay, for now at least. However, over the long-term, the CSO’s role is expected to be subsumed into other aspects of the business.
“Twenty years ago, most businesses had chief technology officers, and I even remember a chief internet officer,” Seb Beloe, partner and head of research at WHEB Asset Management said. “This was important at the time because companies were still coming to terms with an online presence and needed someone internally to champion this new agenda.”
This, he argued, is analogous to sustainability, given that it is still a relatively new agenda for many companies that need a figurehead to lead efforts internally and to act as a focal point for external interest.
“Although most investor relations teams have become adept at answering basic questions about sustainability, a CSO plays a key role in providing more granular information. The vast majority of companies that we speak to are not reducing their commitments to sustainability. They may not use the acronyms ESG or DEI (Diversity, Equity and Inclusion) anymore, but they see value in addressing these issues. So, while they want to avoid being caught in political controversies, they remain convinced that this work is important to the value of their businesses.”
Spreading responsibility across the C-suite
As time passes, however, many of the operational responsibilities are expected to be rolled into strategy, product development, marketing, risk, operations and so on.
Liz Scorer, managing director of corporate affairs at Foresight Group, said that with so many business functions to consider beyond what one senior C-suite member can accomplish, and to ensure investment decisions are 100% focused on delivering the strongest returns possible, it may be necessary for businesses to spread responsibility across the C-suite, allowing sustainability to be integrated within those decision-making processes.
“There’s still a desire for businesses to accelerate their sustainability impact awareness. But there’s a shift away from that internal, dedicated role, and that’s largely a function of how the role is developing, because it is so integrated within all elements of a business,” Scorer argued.
“To have a standalone role becomes slightly challenging: which committees should it be involved in? Where does it sit in terms of all those different structures? Having that broader remit helps to ensure that sustainability has a seat at the table in all aspects of business.”
Additionally, for investors, a CSO represents additional key personnel risk, which Storer said is particularly relevant for Foresight’s private equity business.
“If you have a standalone CSO, it’s easier for a partner to not have to think about sustainability and just defer. That becomes another relationship that needs to be managed in the jigsaw puzzle.”
A value-added role
Whether some businesses can or should integrate sustainability across all operations, rather than rely on a dedicated CSO, depends on several factors.
“We invest in small- to medium-sized enterprises that are high growth, focused on generating profit. For pharmaceutical businesses in this space, for example, climate and environmental factors are not going to be material to the bottom line of that business for at least the next 10 to 20 years – they don’t have fixed premises, the raw materials are not influenced by climate change, etc. – and sustainability, from their perspective, is probably seen as a secondary consideration,” argued Scorer.
Having someone in a position with the expert knowledge to identify business opportunities in sustainability, perhaps also making that a unique selling point for a product, can lead to a benefit from a commercial perspective for those portfolio companies. In this way, while it may become less important to have a figurehead within the organisation that offers a perspective on sustainability, for most organisations, that’s still at least a decade away, concluded Beloe.
Scorer agreed, saying that maintaining the role’s commerciality is key to its longevity.
“We don’t want a CSO’s role to be just a ‘Yes/No’ tick box exercise, they should add value to a business while prioritising risk reduction. If they are those two things, then businesses will have support from investors. Likewise, from an investee company’s perspective, if an investor can show those are their CSO’s priorities, businesses will invite them into all the right meetings to add that value.”
“So, although I don’t think the CSO role will disappear, do I think that it will look the same in 10 years? Absolutely not.”
