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May 23, 2024

Orchestrating Sustainability Returns

Sustainable transformation, in which sustainability objectives are actively embedded as key outcomes and criteria in an organization’s capital spending and operational decisions, cannot be treated as a standalone project. Influenced by market demand, financial performance, and regulatory pressure, this holistic transformation requires a role that can tie these different silos together and move the organization in a coordinated manner. Enter the CSO. 

How does this affect you? 

  • The board of directors needs to set the tone and enforce an actionable agenda for sustainable transformation, ensuring it permeates through teams across the organization.

  • C-suite executives need to plan for and implement sustainable transformation as a strategic investment in future business resilience, asset safety, and financial competitiveness.

  • Chief Sustainability Officers need to collaborate with finance, R&D, operations, and other teams to implement long-term decisions that go beyond compliance.

  • Investors need to pressure and prioritize companies that align sustainability and financial performance. 

In a survey of over 1,000 executives spanning various industries and regions, 33% identified sustainability as a high-demand function. With tightening international climate regulations, the demand for sustainability experts is growing, not only in compliance and reporting but also in leadership. The CSO role is evolving beyond its traditional scope, emphasizing the need to integrate sustainability strategically and systematically.

Sustainable transformation within an organization can be visualized in two different ways: the Sustainability Return Nexus and Accountability Zones. By examining what drives the impact on policy, financial performance, and market demand, we can identify the focus areas that overlap in responsibility for various positions.


Sustainability Return Nexus. The primary categories within the nexus—policy, financial performance, and market demand—are interconnected. While the EU may prioritize policy pressure over the other two, it is important to note that all three factors influence each other on a global market. 

Policy ↔ Market Demand: Stringent regulations across regions, including the EU and California, significantly influence market demand. For instance, biofuel regulations in the EU impact demand on automobile models, varying with the speed of each Member State's energy transition. Similarly, bans on new gasoline and diesel vehicle sales in California and other states will drive up EV sales.

Financial Performance ↔ Policy: The EU has established reporting frameworks for companies and financial institutions, quantifying climate impacts like water and energy usage or biodiversity livelihood directly on balance sheets. In the Boyden survey, private equity is the strongest believer in sustainability by sector. Nearly 50% of executives prioritized sustainability as an area of focus, signaling the importance of asset resilience in the future market. Consequently, mere compliance poses risks to future investments.

Market Demand ↔ Financial Performance: The pace and willingness to embrace sustainable transformation will affect various industries.

  • Automobile: As policies shape market demand, automobile manufacturers must holistically analyze various market regions and invest in EV innovation and alternative fuel vehicles to stay ahead of the game. 

  • Oil & Gas: As renewable technologies and alternative fuels become cheaper, oil & gas economies must prioritize advancing hydrogen technology or biofuel to secure key IP rights and compete with other energy commodities.

  • Consumer Goods: Consumers are inclined to purchase products compliant with the EU's Greenwashing Directives, which prioritize transparency and sustainable supply chains.


Accountability Zones. From C-suite executives to internal teams like procurement and R&D, there are evident overlaps in responsibilities with CSOs. Within the Nexus (seen above), only the CSO spans all three categories, underscoring the necessity for systemic sustainability implementation in an organization.

  • Board of Directors: For a successful transformation, the board of directors must fully align and drive internal emphasis on sustainability in fostering a resilient future through top-down leadership.

  • C-suite executives: The CEO, CFO, and COO must lean on CSOs to strategically plan for long-term competitiveness, enable significant financial investments, and prioritize internal objectives.

  • Internal Teams: From supply chain management to fostering sustainable innovation, CSOs must collaborate across departments to drive forward a sustainable transformation as defined by leadership. 

Portfolios with initiatives focused on innovation and transformation outperform the S&P 500 index by 92%, while those weighted towards mere advocacy underperform by 70%, highlighting the importance of execution and follow-through of sustainable objectives in an organization. The maturity model from the Imperial College of Business and Emeritus delves into this link between sustainability implementation and financial performance, representing the highest level of organizational maturity.

Harald Neidhardt, CEO of Futur/io Institute, portrays the CSO's role as that of an orchestrator, where every member of the organization, be it violins, pianos, or drums, plays a crucial part. The CSO must ensure everyone is in sync and harmony. At the end of the day, a resilient business can only be ensured if the entire organization is playing to the same tune. Everyone needs to be a CSO – sustainability is not a one-person or one-team job.

Until next time,
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