A recent report by Deloitte and the European Banking Federation (EBF) explains the role of the Chief Sustainability Officer (CSO) in a company, the qualities they should have and what the purpose and future of their work is.
The role of Chief Sustainability Officers (CSO) in companies is sometimes unknown, although in recent years this figure has become one of the main pillars of thousands of companies worldwide.
Their role is essential: they analyze and predict a company's practices with the aim of ensuring that the organization’s environmental and social impact is managed, all the while ensuring maximum profitability in this management.
To clarify exactly what their functions are and why their role is so valuable, in mid-June, the international professional services firm Deloitte and the European Banking Federation presented the report: The Future of the Chief Sustainability Officer. Sense-maker in Chief. This report compiles the views of more than 80 qualified professionals from more than 70 companies with the aim of understanding the financial sector's perception of the new role of the CSO.
Moreover, the study delves into the possible reasons that support the appointment of a CSO by certain companies, the expectations generated by the CSO and the possible corporate governance models that have worked best with this new role.
The objective of the report was to understand how financial services companies are mobilizing to address the environmental, social and governance (ESG) challenge. It also sought to understand how these companies view the role of the Chief Sustainability Officer (CSO) in meeting their aspirations. The researchers aimed to explore:
- Why some companies have Chief Sustainability Officers and others do not.
- What mandate companies typically give to their CSO.
- What skill sets and leadership attributes are needed to fulfil that mandate.
- How CSOs contribute to governance.
- How their role is likely to evolve.
The sustainability professionals interviewed work in banks with a total market capitalization of €1.4 trillion. Collectively, these banks fund nearly $16 trillion through their loan portfolios, with total managed assets of more than $19.7 trillion.
The findings of this report highlight the materialization of the three general responsibilities of CSOs within their companies:
- To make sense of the external environment and its implications for the banking business to integrate it into decision making.
- To help the organization to reshape its strategy.
- To provide thought leadership and help align teams through engagement and education on sustainability.
One of the participants in the event to present this report was Javier Rodriguez Soler, BBVA's Global Head of Sustainability since 2021. “At BBVA we believe that in order for banks to fulfil our mission and channel the large amount of investment that is going to be necessary for sustainability in general and decarbonization in particular, we have to manage sustainability as a business. From the sustainability unit we coordinate with all the bank's business areas to ensure an aligned and integrated vision,” he said.
Javier Rodríguez Soler is in charge of designing, proposing and driving the execution of the Group' strategic sustainability agenda, developing the necessary capacities to enable its implementation and ensuring the Bank's positioning. He leads sustainability as a global area, including the development of sustainable solutions and their total integration in the business plans in all countries. All business development teams are co-dependent with the sustainability area.
One of the report's main focuses is to try to explain when it makes sense for a company to have a CSO. The research reveals that there are three conditions that drive organizations:
- The external environment is changing faster than inside the organization, so it needs someone to help it adapt.
- External stakeholder scrutiny is intensifying, as are the expectations placed on the organization.
- The company recognizes that ESG risks are important enough to be strategic.
“There are new business models that are emerging on the road to decarbonization. And if we are not able to adapt and support the technologies that are part of them, we will all fail,” insisted BBVA's Global Head of Sustainability after the presentation of the report's most significant data.
The most important skills a CSO should have, according to the study, are strategic skills. Influencing skills come second. Strategy and influencing are valued even more highly than the also indispensable technical skills, such as quantifying climate science data and regulatory competencies.