The Challenge Of Chief Sustainability Officers: Creating A New Mindset Throughout An Entire Global Organization

The number of Chief Sustainability Officers (CSOs) at corporations globally is skyrocketing. According to a May 2022 study in Reuters, the number of CSOs holding an executive level position increased to 28% in 2021, more than tripling from 9% in 2016. A recent PwC study found that global companies in 2020-21 appointed about as many CSO’s as in all prior 8 years combined.

While historically sustainability may have been thought to increase corporate operating costs, it can lower them over the long-term and provide competitive advantage in operations, customer satisfaction, and brand image. Increasingly, Wall Street is rewarding companies who systematically focus on sustainability throughout their value chains. A 2021 BCG financial analysis of market multiples found a strong inverse correlation between emissions intensity and company valuation. Another analysis showed climate leaders in most sectors achieved higher total shareholder return than laggards.

Increasingly CSOs are part of C-Suites reporting directly to CEOs, and there’s a strong parallel between the rise of CSOs and the rise in importance of Chief Digital Officers. In both cases the functions started as specialty silos and over time, ways of thinking both digitally and sustainably have spread throughout the entire organization and are incorporated into the everyday practices of all functions.

To better understand what the best CSOs do and how they steer multi-faceted, large organizations to think about sustainability as part of routine decision-making, I had the privilege of interviewing Virginie Helias, Chief Sustainability Officer (CSO) of P&G. She’s a corporate sustainability pioneer and visionary, having requested and created her position as the first dedicated sustainability employee at P&G back in 2011, long before sustainability was in the consciousness of most companies. Virginie described her goal as making her job obsolete, because if she does her job well, sustainability will be a business way of life across operations, supply chain, marketing, and the communities P&G serves. It will be a constant presence in every employee’s mindset and actions. She also likened her role to being a cheerleader, helping direct, motivate and operationalize sustainability.

Virginie comes at her role from a leadership and change management perspective and she’s a certified coach. She doesn’t have a background in science, sustainability, or environmental studies. Rather she looks at her job from a lens of how she can make the need for change and P&G’s goals understandable, clear and exciting to all functions globally. Since Virginie’s role spans many different types of knowledge, and improvements can come from everywhere in the value chain (materials, purchasing, manufacturing, distributing, consumer use and re-use, recycling and upcycling), part her role is to encourage and capture ideas from all functions in the company.

Key Activities Of Highly Impactful CSOs

1) Ensuring the right data is captured systematically to identify where the needs are greatest, measuring which areas of the company’s value chain, and customer end product use activities contribute most to C02 emissions.

1) Helping prioritize which sustainability initiatives the organization should get behind. With data and science as key inputs, helping the company identify the criteria and constraints for selecting which sustainability initiatives warrant the most focus and investment. Since most consumers have shown they won’t trade-off performance for sustainability, P&G’s criteria include speed and environmental impact, while simultaneously offering ‘irresistibly superior” products.

2) Putting the best cross-functional task force in place to identify and form the strongest partnerships and alliances internally and externally to accomplish corporate and sector goals, and facilitate internal process changes. Virginie’s 20-person team is made up of representatives from each of P&G’s key functional groups.

3) Facilitating process changes and partnerships:

· Internally, between brands, R&D, logistics, and innovation

· Externally, with suppliers, research and government institutions, the industry/sector at large, and even competitors

· Externally with consumers to change their behaviors

4) Creating programs that systematically motivate and inspire the entire organization to start thinking about sustainability in everything they do

5) Ensure internal and external communication professionals make key sustainability initiatives understandable and compelling to end users

6) Monitoring pending government regulations related to sustainability all over the world

7) Balancing science and sustainability imperatives with business imperatives

Specific Actions P&G Is Implementing At Corporate And Consumer Levels

Changing the Actions of Internal employees

• Starting in 2021, ESG goals were made a part of executive compensation bonuses
• For the past 5 years, P&G’s annual “It’s Our Home Award” shares the best company-wide sustainability initiatives to encourage more great ideas

Change Through Partnerships[AP1]

Since most of P&G’s products need water to be manufactured, and consumers need water to use 70% of its products, water has been a key sustainability focus for the company. P&G spearheaded:

• The 50 Liter Home Coalition with partners including Kohler, IKEA and Electrolux to collaborate on require significantly less water to use and manufacture each company’s products.
• A coalition with the California Water Action Collaborative, Business For Water Stewardship and Change The Course organizations to address shared water issues

Changing Consumer Habits

Up to 60% of the carbon footprint/ CO2 impact from doing laundry comes from energy in homes to heat water for washing clothes. In the U.S., Tide’s Cold Callers ad campaign with Ice-T and Stone Cold challenges consumers to wash their laundry with cold water, significantly saving energy and household expenses

Product & Packaging Changes

· The Ariel laundry detergent brand in Europe has a new cardboard box that significantly reduces the plastic in its package. A QR code was added to enlarge the type, making it easier for people with visual impairments to read the product description and usage information

· Cascade’s new dishwasher detergent formulation saves water by eliminating the need for consumers to pre-wash dishes before running their dishwashers

Key Take-Aways For CMO’s

- If your company doesn’t already have a Chief Sustainability Officer, now is the time to define the position and search for a great candidate

- Because the responsibility is so broad, no individual can be an expert in all areas. Traits to look for include curiosity, an appreciation for science, data, operations, and knowledge of the workings of the entire organization and change management fundamentals

- The position requires strong, visible support from the CEO, to signal to the entire organization that it’s a priority they have to get behind

- The 17 United Nations 2030 Sustainability Goals are incredibly broad and should be reviewed carefully to determine where to focus in the short and longer term

- Data must be developed to capture the sustainability impact of all of the organization’s value chain activities as well as end user product usage, as a key input for setting priorities