When a Fractional Chief Sustainability Officer Makes Sense
More companies are hiring Chief Sustainability Officers (CSO).
It's often a response to increasing demands by investors, shareholders, employees and customers. These stakeholders seek out environmentally friendly brands and products.
To satisfy these stakeholders and their employers, CSOs must align climate and commercial interests to create new value for their companies and the planet.
But that is no easy task.
This type of shift requires a mix of business and digital transformation skills. It also requires some specialized skills such as GHG accounting, carbon calculations, and regulatory compliance.
Many companies elect to go with a fractional Chief Sustainability Officer.
These professionals can be a good fit for companies that need specialized expertise on a budget.
A fractional Chief Sustainability Officer is typically a part-time, contract-based resource that brings significant experience, best practices and know-how to the company.
But what exactly do they do?
Here's how we provide this role and service to our clients.
A Fractional Chief Sustainability Officer Role
Every company has unique climate-related goals. So, the role must be adaptive and flexible.
However, results are normally achieved from a short list of actions. Here's how we define the success factors to achieve outcomes that create company differentiation, competitive advantage and business growth.
Climate Champion
A climate leader must educate, engage and collaborate among several stakeholder groups to achieve enterprise-wide momentum.
That starts by building internal relationships and clearly sharing the vision and benefits. Managers throughout the company must recognize the upside potential and the consequences of inaction.
Support is bolstered when it is financially rewarding.
So, the CSO should align the company's climate agenda with its financial goals. That means showing how decarbonization levers can positively impact revenues and profits.
Technology Sponsor
Software technology is needed to efficiently drive a company climate program.
We have assembled a climate tech stack and decarbonization toolkit to bring prioritization, sequence and measurability to GHG emission reduction programs.
It starts with an application management system such as Salesforce Net Zero Cloud. You need an underlying platform to capture, categorize and report the company's GHG emissions. That carbon inventory must be parameterized to measure and compare emissions by business unit, office, geography, asset and other factors.
We then apply What-If analysis models to find the least time and cost route to the maximum carbon reductions.
With this information we can advance from carbon reporting to decarbonization execution.
Finally, we implement application workflows for process automation and dashboards for performance measurement. We use AI to deliver recommendations that improve progress and outcomes during the journey. The end result is an automation system that creates efficiency, optimization and insights.
Decarbonization Leader
The CSO must lead the decarbonization strategies that lower GHG emissions. This includes things like energy reduction, reduced waste and electrification.
This often begins by identifying the biggest spenders, expenses and cost anomalies across locations.
The CSO can then identify the least cost and highest impact carbon reduction programs, organize the teams, and project manage their implementation.
Governance is important. So, get some senior stakeholders for your steering committee.
Finance Liaison
The CSO needs to partner with the finance team to collaborate on the carbon reduction levers and their impact on cost and revenue.
It's important to show the financial effect of climate strategies on things like energy cost and supply chain savings. It's equally important to deliver data-driven projections of how a more environmentally friendly company can drive the next wave of growth through new target audiences and price premiums.
Finally, the CSO should collaborate with the accounting department to assess the many tax incentives, credits, rebates and exemptions available for green investments. Our experience has been that these subsidies along with clean energy credits can fund anywhere from 10% to 60% of your budget.
Change Agent
The CSO is also a change agent. That's because even when you know what to do transformation can be elusive.
Embracing change is not the norm and can be a difficult journey. So, the CSO needs to lead with a change management program. This will accelerate the shift from a current state to a defined future state. And do it with less business interruption.
At Johnny Grow, we use a change management methodology called TEAMS. An illustration of the process is shown below.
A best practice is to create a comms plan that delivers progressive messaging along a four-phase continuum from Awareness, to Interest, to Understanding, to Engagement.
It is also helpful to brand your climate program. This helps demonstrate importance, generate interest and create something that staff want to be a part of. It can also be used to align climate goals with the company's brand and culture.
Regulatory Guardian
Climate-related regulatory compliance is an essential part of the role.
But that's challenged as statutes and regulations are fluid and often ambiguous.
In the U.S., regulatory sources such as the state of California and the SEC have started, stopped, restarted and changed their compliance requirements multiple times.
The EU and UK have done the same. But their changes require more analysis as their requirements are much more complex. Updates to things like the double materiality assessment, introduction of scope 3 reporting, and ESRS guidance continue to evolve.
None of this can get short rift as climate compliance reporting must stand up to the scrutiny of independent third-party reviews.
The CSO should take the lead and collaborate with legal or risk analysis colleagues as needed.
Provider of Insights
Finally, the CSO must transform data into information and insights.
He or she must link company data and market trends to identify and exploit carbon reduction and company growth opportunities.
He or she must show how to use data for data-driven decisions that lower carbon emissions and create company value. These types of insights often lead to innovation of new products and more efficient processes.
The best reporting assembles data into dynamic models that forecast future carbon reductions and company growth.
Also recognize that reporting is much more than numbers and metrics. You are telling the company's story. You are sharing how the company assumes its role of global steward, corporate citizen and contributor to a carbon free world. It is this part of the reporting that creates the most trust and goodwill with stakeholders.
The Value Proposition
Fractional executives can be a cost-effective alternative to full-time executives. However, a fractional Chief Sustainability Officer does more than just lower a significant labor cost.
Getting a skilled resource will dramatically reduce ramp up time, learning curves and extended planning periods. In fact, for most companies, it jumpstarts the program and shifts execution from a journey of experimentation to an optimized pursuit of financial driven metrics.
It can also offer resource flexibility. For example, at Johnny Grow our fractional staffing programs can allocate time for related specialists when needed. This may include carbon accountants, technology consultants, tax incentive specialists or regulatory experts.