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What’s important to chief sustainability officers in 2024
Five topics shaping the sustainability leader’s agenda
Companies are catching on to the game-changing strategic opportunities created by sustainable business processes. From building sustainable products and services and decarbonizing supply chains and operations to tapping into regulatory reporting, sustainability offers extraordinary business insights that can drive rapid growth. In turn, that’s led to chief sustainability officers (CSOs) quickly gaining a leading voice in the C-suite.
The evolution of the CSO role comes at a critical time for companies seeking to understand how sustainability matters can transform their organizations. While even experienced leaders can’t always anticipate what’s around the corner, CSOs can help their companies get ahead of trends and help find areas for growth — and in doing so drive positive shareholder sentiment. To do that, CSOs should reach across multiple business functions and the value chain to lead execution of efforts that can shape the future of the organization.
ESG regulations and your company
The latest SEC climate disclosure rules highlight the importance of expanded ESG reporting. Here’s how these regulations will impact your business and the steps you can take toward compliance.
Stay informed and take action to meet these regulations head-on
Embrace the CSO’s growing mandate
Companies are poised to hire or appoint CSOs over the coming years — many for the first time. These leaders should understand a range of complex business topics, from company strategy and climate technology to supply chain logistics and human capital management. What's more, PwC's 27th Annual Global CEO Survey found that 67% of respondents are planning to or had already implemented initiatives to upskill or reskill their workforce on climate change — key to the CSO's success.
Looking ahead
To meet the challenges of a sustainable future, companies should develop an onboarding process that empowers new CSOs, build high-functioning sustainability teams and upskill their workforce in this area. By embracing the evolving role of the CSO and investing in holistic upskilling programs, organizations can drive the execution of their sustainability strategies and help create a more sustainable future.
“I’ve watched the CSO’s role become both more critical and more complicated. Every company is different, but one thing holds true for almost every organization: CSOs can’t go it alone.” — Emma Cox, PwC Global Climate Leader
Source: For CSOs, decarbonization is just the beginning, February 2024
Drive growth through sustainability
An effective sustainability strategy will likely include the various processes and steps of how products are designed, manufactured and sold. This may eventually point to new business opportunities your company hadn’t identified before this work began, but you may not be able to capture the value or drive growth if your sustainability strategy is developed and implemented in isolation.
67%
of CEOs have plans to or have already innovated new, climate-friendly products, services and technology.
Source: US CEO views from PwC’s 27th Annual Global CEO Survey
Looking ahead
The successful implementation of your sustainability strategy may depend on the relationships and trust you build with your C-suite colleagues. Work with the CFO to secure funding for these initiatives and with the CIO to build out technology that can help measure, manage and reduce emissions. You’re likely to cross paths with others in the C-suite, too, including human resources on staffing opportunities and talent management, the tax function on using available incentives for project financing and legal to interpret sustainability regulations and confirm compliance.
Lead sustainable operations efforts
While developing and implementing a sustainability strategy may require input from multiple business functions, your success as a CSO will likely be measured by how you execute. To show your impact, work with your C-suite colleagues to demonstrate how sustainability strategies can lead to supply chain efficiencies, energy savings or the development of products and services that can drive the next wave of growth through higher premiums.
Looking ahead
Many companies are reducing their energy usage or renovating their facilities to make them more efficient. But the hard truth is that sustainability initiatives can be complex and capital intensive. Achieving a return may take years. Be laser-focused on execution, leverage tax incentives to defray costs and communicate progress to your leadership team, the board and the audit committee so that sustainability efforts maintain momentum and those stakeholders can see the future opportunity ahead.
80%
of consumers said they would pay up to 5% more for sustainably produced goods.
Gain insight from ESG compliance
The SEC’s climate disclosure rules are part of a new wave of regulations transforming corporate reporting. In turn, CSOs are helping lead their organizations just as they are on the verge of publishing more ESG data than ever before. Even companies that have reported nonfinancial data in the past will probably need to expand the nature and extent of their disclosures.
Addressing stakeholder demands for high-quality reporting likely means developing a reporting strategy that builds a sustainable path to clean ESG data. A key collaborator could be an ESG controller who leads efforts to establish the internal controls and processes necessary to provide investor-grade reporting.
85%
of executives and investors say that reasonable assurance would give them confidence in sustainability reporting.
Looking ahead
Prepare to have your ESG data examined by an independent third party. Doing so can build stakeholder trust at a time when many investors believe ESG reporting contains unsupported claims. But it’s also important to look beyond compliance to help unlock value. Companies that analyze this data and understand the insights it uncovers can cut costs and reduce inefficiencies from their operations, make their supply chains more resilient and design sustainable products that consumers are increasingly demanding.
Tell your sustainability story
One result of publishing expanded ESG disclosures is that the information will likely be scrutinized by external stakeholders such as investors, regulators and activists. Investors, for example, could incorporate ESG data into their analysis, allowing them to differentiate your company and competitors as they make decisions on how to deploy capital.
Looking ahead
Collaborate with the chief marketing officer to tell a clear and compelling story that can build brand reputation with consumers. Provide visibility to employees so they feel part of the effort by showing where you are today and where you’re going. Then, extend that story externally in a way that resonates with each stakeholder group. Being candid about your progress can provide stakeholders with valuable context and establish trust in the market.
94%
of investors believe corporate reporting contains at least some level of unsupported sustainability claims.
