The chief sustainability officer (CSO) role is relatively new, having entered the mainstream only about five to 10 years ago, says executive director at global leadership advisory Russell Reynolds Associates’ Michelle Chan Crouse.
During the early years, the role was more reactive, where the officer would manage issues through a public relations and brand reputation lens, Chan Crouse tells The Edge Singapore. “It was a mid-level role, where the responsibility sat under the auspices of marketing or corporate affairs, and had minimal integration with business strategy.”
Today, the role has broadened to encompass all business areas and has a much more proactive agenda. “Sustainability is increasingly seen as a source of competitive advantage and risk mitigation. For example, where previously a manufacturing company might look at its supply chain and sourcing policies as part of its sustainable practices, the role of the CSO now looks at all areas of the business,” she adds.
The role of the sustainability leader has become more complex as it covers the business end-to-end. “The sustainability leader role is becoming more senior with a dedicated team who reports to the CEO or executive committee member, increasing integration with strategy,” says Chan Crouse.
Appointments are not a new phenomenon. In 2020, Fortune 500 companies hired more CSOs than in the previous three years combined, with 31 Fortune 500s appointing their first CSO.
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Rupali Gupta, talent solutions leader at global consulting firm Mercer, says: “As organisations’ boards and employees expect more to be done in the ESG (environmental, social, and governance) space, leaders are also expected to focus more on the issue.”
Nearly two in five business leaders (39%) say that the C-suite management team should be the key stakeholder responsible for driving and overseeing sustainability strategies.
The 200 business leaders surveyed by NTUC LearningHub believe this C-suite role would be more effective than a dedicated sustainability committee (33%), the board of directors (13%) or the chief operating officer (10%).
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But within the company, who is most capable of driving sustainability initiatives?
One study puts this squarely on the shoulders of the chief financial officer (CFO). “ESG progress starts and ends with the CFO,” notes a joint study by Deloitte and American business planning software company Anaplan, released Aug 16.
Developed by American market research firm Harris Insights and Analytics, the study involved 178 CFOs and 532 senior departmental leaders across Singapore, the US, UK, Australia, France, Germany and Japan.
Their survey shows most (80%) of Singapore CFOs polled want to spearhead their sustainability efforts. An even more significant percentage (94%) think they are good at it, ahead of the global average (78%).
The main obstacle, however, is CFOs themselves. CFOs rank the management of ESG initiatives as fifth on their list of priorities (70%), only above ensuring effective cybersecurity (57%).
Globally, CFOs consider themselves the least effective when addressing ESG initiatives (78%), despite the rest of the business seeing it as one of their top three successes (91%).
Their colleagues see the CFO as an ESG champion, with sustainability tasks second (66%) only to the CFO’s leading priority of keeping up with regulatory changes (68%).
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The remaining three responsibilities that others see as CFO-owned are also ESG related: Measuring and reporting on ESG initiatives (36%), addressing new energy and environmental regulations (33%) and leading the business ESG strategy (33%).
The results show that the role of the CFO “has evolved into a driving force for ESG, collaboration and democratised success despite the market volatility,” says Bhavik Vashi, area vice-president of Asia at Anaplan. “For tomorrow’s CFOs to fully realise their new roles as architects of business change, a more democratised approach to decision making is needed, one where CFOs can gather critical insights from every corner of the organisation.”
Meet the CFSO
The chief financial and sustainability officer (CFSO) is an emerging C-suite title. The role could also be placed above today’s CFO and CSO functions to oversee the integration of finance and sustainability into business strategy.
Based on a joint study by the Institute of Singapore Chartered Accountants (ISCA), Ernst & Young Advisory, Singapore Management University, and the Singapore Accountancy Commission (SAC), the study involved interviews with 23 C-suite leaders across 10 sectors.
Unveiled on Aug 25, the Sustainability — jobs and skills for the accountancy professions study says the CFSO will require sustainability reporting and target-setting skills.
The CFSO may be tasked to translate the impact of business activities — such as carbon emissions and pollution — into financial metrics to guide corporate strategy and meet sustainability targets. “The CFSO will also require business partnership skills, such as stakeholder engagement and transdisciplinary thinking,” the authors add.
With their financial reporting background, accountancy and finance professionals with sustainability skills have an edge in driving the sustainability transition in businesses.
Accountancy and finance professionals must be knowledgeable in carbon markets, credits and measurement of emissions, and sustainability reporting frameworks, guidelines and principles.
SAC CEO Evan Law says: “Sustainability is changing how businesses operate, and the professional accountant’s role is at the heart of this transformation. They know how businesses work; thus, they are well-placed to guide businesses in meeting their sustainability goals.”
He also expects greater demand for employees skilled in carbon and greenhouse gas accounting, green financing and sustainability reporting.
But the most crucial skill CSOs need is the ability to influence stakeholders, notes Chan Crouse. “Be it business leaders, colleagues, vendors or partners; you have to be able to sell a vision and a road map to get to the endpoint, where you can get people on board.”
While deep knowledge of climate change, ocean pollution or any of the United Nations (UN) sustainability goals is welcome, they are not critical. Instead, having a passion for the topic is vital. “There’s a pool of experts you can engage with easily to broaden the conversation.”
With the sustainability megatrend growing stronger by the day, some listed companies see value in marketing their greening efforts. Sustainability roles, therefore, have become intertwined with corporate communications.
Mercer’s Gupta says this results from the nascent sector, as companies are trying to identify what skills are needed. “In the past, leaders with a public relations, communications or marketing background who were genuinely interested in sustainability and those who have taken courses related to ESG would be appointed for the role. This is changing rapidly, as more companies integrate the role into different teams such as general counsel or operations.”
Keppel Corp, for example, appointed Ho Tong Yen as its first CSO in March. Ho took on this new role on top of his existing responsibilities as director of Keppel’s group corporate communications team.
As Keppel’s CSO, he leads the conglomerate’s targets to halve Scope 1 and 2 emissions by 2030 and achieve net-zero emissions by 2050.
Like Keppel’s energy business, the agricultural sector has to balance food security with environmental concerns, a delicate area requiring communications expertise.
Last November, Singaporean palm oil company Golden Agri-Resources promoted its senior vice-president for group corporate communications to the new role of chief sustainability and communications officer (CSCO). Now into her seventh year with the company, Anita Neville is responsible for the company’s overall sustainability and communications strategy for the whole business.
Meanwhile, fellow agribusiness peer Wilmar International has had a CSO in Jeremy Goon since 2007, long before sustainability became a hot topic in business. In December 2013, Wilmar announced its “No Deforestation, No New Peat Development and No Exploitation Policy”, a bid to limit the company’s impact on the environment.
Last November, Golden Agri and Wilmar committed to publishing a sectoral road map to clean up its supply chain. Together with eight other global agricultural trading and processing companies, the 10 largest companies in the sector will publish their decarbonisation plans by the 2022 UN Climate Change Conference — more commonly referred to as COP27 — to be held in Egypt this November.
According to Gupta, communication, problem-solving, and self-management are vital skills in sustainability-related roles. “[These skills help] communicate clear storylines to multiple stakeholders.”
One for all or all for one?
Is there value in appointing a single head of sustainability, or would it be more effective to imbue sustainability across various business units?
There is no easy answer, says Paddy Balfour, executive director, APAC at Acre, a UK-based specialist sustainability recruitment firm. “Both cases are prevalent in the market today … Ultimately, it depends on an organisation’s stage in its sustainability transition process.” Embedding sustainability professionals into business units can effectively drive positive change. Then again, positive steps in one part of a business can be contradicted in another without an overarching sustainability strategy.
Conversely, Balfour tells The Edge Singapore that hiring a single head of sustainability without expertise in the business units will hamper their ability to drive meaningful change.
“The most effective way to construct meaningful impact is to combine a sustainability head, ideally with a reporting line to the CEO, with individuals with specific sustainability experience embedded in various business units.”
The mantle of CSO requires industry-specific skill sets. Before Loh Su Kim became senior vice-president of sustainability at Resorts World Sentosa (RWS) in January last year, she served seven years as the integrated resort’s vice-president of procurement and leasing.
“Sustainability is not new to me as I have driven various sustainability initiatives as part of responsible sourcing in my previous role,” says Loh.
She adds that there are synergies between the portfolios, as “procurement played a key role in RWS’s move towards reducing single-use plastics, procuring food waste bio-digesters and sourcing for alternative eco-friendly packaging material.”
Phillip Capital Management found its head of ESG strategy among nature conservationists. Stephen Beng joined the integrated financial house last April, returning to the financial services industry after two decades. In the 1990s, Beng served as a regional account manager at MCM Asia Pacific and was later vice-president at fintech company Allegro Solutions.
Beng founded eco-travel agency and consultancy Sea Hounds in 1999, developing programmes for underprivileged students that the Ministry of Education and SportsSG endorsed. From 2015 to 2020, Beng also served as chair of the Nature Society (Singapore) marine conservation group.
Says Beng: “I see this as an extension of my stewardship to the environment that I’ve always been in, also in service of the people and the community around me.”
Swiss private bank UBS made a high-profile appointment with Desmond Kuek as its head of sustainable finance, Asia Pacific and the global head of UBS’s sustainable finance group.
A former lieutenant-general who served as the Chief of Defence Force between 2007 and 2010, Kuek joined the wealth manager in February 2019 from transport operator SMRT, where he was president and group CEO from 2012 until he stepped down in 2018.
“Sustainable finance is the fastest-growing movement within international finance. It is boosted by a rapidly snowballing virtuous cycle of structurally rising investor demand, maturing products and the development of innovative investment tools and systems,” says Kuek, who also served as Permanent Secretary in the Ministry of the Environment and Water Resources from 2010 to 2012.
Banking on sustainability
The local banks have also followed suit. UOB appointed Eric Lim as chief sustainability officer last April, expanding his portfolio from managing director of group finance, which he has held since September 2013.
Likewise, DBS Bank appointed Helge Muenkel as group chief sustainability officer in January. Before joining DBS, Muenkel had worked in Dutch bank ING as the head of Asia-Pacific, sustainable finance and global capital markets. Muenkel succeeded Mikkel Larsen, who in November last year became chief executive of carbon trading marketplace Climate Impact X.
OCBC Bank, on the other hand, has yet to appoint a CSO. In response to questions by The Edge Singapore, OCBC’s head of group brand and communications Koh Ching Ching points to the bank’s sustainability council, chaired by group CEO Helen Wong.
Koh also says the bank is building its sustainability office, which resides within its global wholesale banking division, adding: “As a bank, there are many aspects of the business. One of the key aspects is lending to corporations because we are the catalysts of change.”
Mike Ng heads OCBC’s “newly established” global wholesale banking (GWB) sustainability office as part of the GWB divisional office. He reports directly to Tan Teck Long, OCBC’s head of GWB.
Says a spokesperson: “Ng spearheads GWB’s sustainability agenda, including expanding the bank’s suite of sustainable financing propositions, supporting our clients’ transition to a low-carbon economy, driving decarbonisation strategies for the bank’s financed emissions, and growing its sustainable financing portfolio to $50 billion by 2025.”
OCBC has increased the sustainability-related headcount by 25% over the past eight months.
On Aug 1, OCBC posted a job listing for a decarbonisation lead. The bank then posted an opening for a vice-president 10 days later, with both roles intended for its sustainability office.
In March, OCBC appointed Benjamin Towell as vice-president of sustainability for the bank’s global commercial banking team. Joining from the Building and Construction Authority, Towell is developing a climate action strategy and roadmap for the bank, under Ng’s team.
The role of the CSO continues to evolve from a more technical, academic position to a role favouring more commercial and leadership capabilities, says Balfour.
CSOs, he adds, are increasingly relied upon to assess risk, identify emerging opportunities and build confidence among an organisation’s stakeholders.
Even though the role of the CSO has evolved over the last 20 years, there is significant pressure to match increasing investor, regulatory and consumer scrutiny, continues Balfour.
“In Asia, this transition is happening quickly but is complicated by the nature of sustainability in the region, especially because ESG and business issues are so closely intertwined.”
Photos: Acre, Russell Reynolds Associates, Mercer, Albert Chua/The Edge Singapore, Resorts World Sentosa, UBS