Where Sustainability Executives Fall in Today’s Organizational Structure
“As sustainability initiatives become ever more closely tied to risk management, and as companies do more reporting of their sustainability efforts and liabilities, the issue is moving out of its organizational silo into a more-prominent place…” –CFO.com
Does the business world need a Chief Sustainability Officer? Where would this role report in a traditional business structure?
The article, One More Job for the CFO: Sustainability, examines a recent Ernst & Young report focused on this very topic of organizational positioning of sustainability. Highlighting increasing expectations of stakeholders and a more direct tie to corporate performance, the E&Y research points to a need for more financial oversight and alignment.
“There is a definite increase in the number of CFOs recognizing the importance of the sustainability function. It’s a business opportunity. It isn’t just about reporting. It’s about the opportunity for increased revenue generation and reduced costs.” – Ann Brockett, Ernst & Young
Traditionally positioned as a Corporate Affairs function, today’s view of business sustainability has elevated this mindset to a more strategic and financially relevant function within the organization. As E&Y explains, “sustainability trends are shifting the role of the CFO in three key areas”.
• Investor relations: Shareholders are speaking much louder and much more stridently than they did just a few years ago.
• External reporting: More than 3000 multinationals issue sustainability (or CSR or ESG) reports, and more companies are having their sustainability reporting audited by third parties.
• Operational controllership and financial risk management: What was once tangential to the costs of running businesses has and will be central to the financial risks that come when running a company.
For executive boards currently discussing the topic of business sustainability and its role in their company, now may the perfect time to revisit traditional business plans and organizational structures.
photo: Alex E. Proimos.
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