The Rise of the CSO: Sustainability in the C-Suite
By Sunil A. Misser, CEO, AccountAbility
Chief Sustainability Officers (CSOs) are no longer an oddity on the C-suite roster. In 2004, the first CSO was appointed to a publicly-traded U.S. company.i In 2010, a study of 650 companies found that 42 percent had a CSO or other senior executive with a similar title, such as Corporate Responsibility Officer, Director of Citizenship, Chief Responsibility Officer, Vice President of Sustainability, Director of Sustainability, etc.ii We can be certain that CSOs have swelled the C-suite ranks even more by 2012, but the jungle of nomenclature is indicative that the role, responsibilities, and reporting construct of the CSO are still evolving.
At AccountAbility, we find that senior executives and board members often raise the following questions about this emerging role:
1. CSOs have proliferated in recent years for several reasons:
- CEOs and business leaders have realized there is tremendous value to be gained by mainstreaming sustainability into business practices;
- Companies are increasingly approaching sustainability with the same level of discipline (i.e. planning, execution, measurement, reporting) that is demanded in other functional areas; and
- Companies have been pressured to elevate sustainability to the C-suite by regulators, media, shareholders, consumers, competitors, and other stakeholders.
Accordingly, the CSO position has evolved to address these needs.
2. Who do CSOs typically report to?
Companies are choosing an organizational design that puts the CSO close to the Board or the CEO, especially since more CEOs are being compensated based on aspects of sustainability performance. Among publicly traded U.S. companies with a CSO in 2011, ninety percent of CSOs were one or two steps away from the CEO.i Thirty-five percent reported directly to the CEO and 55 percent reported to another C-suite executive such as the Chief Operating Officer, Chief General Counsel, Chief Marketing Officer or SVP External Affairs. CSOs were typically controlling a budget ranging from $800,000 to $1.5 millioniii and had on average 4.2 direct reports.i
3. How are leading companies defining the CSO's responsibilities?
The role and responsibility of CSOs vary by industry, but the most common responsibilities include:
- Reducing costs by improving energy, supply chain, and resource efficiencies;
- Establishing processes to monitor, manage, and mitigate sustainability-related risks;
- Managing and monitoring the stakeholder engagement process;
- Spearheading innovations that increase revenue;
- Enhancing the reputation of the company and the value of the brand;
- Reporting on sustainability issues with both an internal and external focus; and
- Influencing the company’s external messaging and relationships.
4. What are the skills of an effective CSO?
At AccountAbility, we have found that the most successful CSOs often have the following profile:
- 50% Business Leader: The ideal CSO should be an experienced executive with established business experience and an excellent track record of working with people at all levels of the organization. A CSO with proven business acumen will be able to influence and challenge senior management thinking and gain credibility on a wide range of complex and contentious issues.
- 25% Relationship Manager: The ideal CSO must have the people skills to inspire others to follow his or her lead, the communication skills to manage the stakeholder engagement process, and the ability to work with others to “get things done.” The CSO should also be able to act as an ambassador to relevant external bodies that influence and shape the company’s operating environment in broad CR and community matters.
- 25% Sustainability Expert: The ideal CSO should be able to set the sustainability strategy and assume responsibility for the overall sustainability performance management system. The CSO should have the technical expertise necessary to embed sustainability throughout the organization and demonstrate the business value of sustainability efforts.
5. What is an appropriate compensation package for a CSO?
Salary levels for CSOs vary significantly depending on the industry and geographic location, but CSOs’ salaries are often commensurate with other members of the C-suite. In the U.S., CSO base salaries are typically $200,000 - $250,000iv, and some salaries have been reported as high as $400,000.v In the United Kingdom, typical CSO salaries are between $290,000 and $570,000.vi The variable element of their compensation depends on the industry and timing of economic cycle.
As paradoxical as it may sound, the success of CSOs in fulfilling their mission may also obviate their existence. In the same way that “e-business” of the 1990s became simply “business” today, sustainability will inevitably become fully integrated into business practices. This does not mean that CSOs should worry about finding themselves unemployed. With their innovative thinking, diverse skill set, and proven business acumen, former CSOs may be first in line to help companies tackle the next game-changing challenge.
i Weinreb Group, “CSO Back Story: How Chief Sustainability Officers Reached the C-Suite.” September, 2011.
ii Corporate Responsibility Officer Association, “Structuring and Staffing Corporate Responsibility 2011.”
iii Acre, Acona, Ethical Performance, and Flag, “The CR and Sustainability Salary Survey 2012.”
iv Tripoli, Lori. “Corporate Outlook: Does Every Major Company Need a Chief Sustainability Officer?” Sustainability: The Journal of Record. April 2010.
v Recruiter.com: http://www.recruiter.com/salaries/chief-sustainability-officers-salary/
vi Acre. “The Emergence of the Chief Sustainability Officer.” February 2011.
For more general background, please see:
Weinreb, Ellen. “In Search of the Chief Sustainability Officer.” The Green Economy Post. July 29, 2010.
Verdantix. “Who Should be the Chief Sustainability Officer.” April 28, 2010.
Deutsch, Claudia. “Companies Giving Green an Office.” New York Times. July 3, 2007.
“Whither the CRO.” Corporate Responsibility Magazine. March/April 2012.