No match found
The role of the Chief Sustainability Officer (CSO) is evolving rapidly in response to the increasing importance of environmental, social, and governance (ESG) issues within organizations and in society at large. In 2022, a global Strategy& study found that Chief Sustainability Officer appointments were growing fast: more CSOs were hired in 2021 than in the previous five years combined.
To deepen our understanding of the role and responsibilities of the CSO today, we looked more closely at listed companies in Germany, Austria, and Switzerland. The study of CSOs in 40 DAX, 20 ATX, and 20 SMI listed companies allowed us to identify five CSO archetypes, based on their position within the organization. While some CSOs are members of the C-suite and report directly to the CEO, others hold less visible positions, one or more levels below the C-suite. Some lead standalone sustainability departments, others are subordinated under core business functions such as operations. They all differ in their level of influence and their ability to drive ESG transformation across the business. This plurality of archetypes is not unusual for a relatively new function and mirrors the broad remit of ESG, which allows for different starting points to improve performance across environmental, social, and governance-related factors.
Regarding Germany, there are three things you need to know about Chief Sustainability Officers:
“The ESG transformation is now visible in the economy, as the prevalence of CSOs underlines. Of course, the creation of the role is only a first step: CSOs need to be given the right position, mandate, and resources to drive the integration of sustainability in the corporate strategy and all business functions.”
Dr. Peter Gassmann,
Global Strategy& Leader
The finding that some of the DAX CSOs operate on the C-level and have a direct reporting line to the CEO while others do not led us to split them into two distinct categories: “CSO with impact” and “CSO light.” The former tend to have the required seniority and mandate to drive a holistic ESG transformation, while the latter tend to have less influence to shape the pace and depth of large-scale transformative sustainability initiatives.
In this year’s study, we looked more closely at CSOs’ reporting lines and where they sit in the organizational structure. As a result, we were able to further refine the distinction between the two categories with the help of five CSO archetypes:
Our analysis shows that around half of the top listed companies in Germany, Austria, and Switzerland – those with a “CSO with impact” – have understood the rising importance of ESG regarding their long-term financial future and value creation. At the same time, we believe companies should be paying even more attention to where the CSO sits within the organizational structure, as this is often a crucial enabler of a successful ESG transformation that goes beyond regulatory compliance. While it is true that ESG challenges vary between companies and sectors, in almost all cases, a “CSO with impact” – who reports directly to the CEO and holds a top-level position in the firm – will have more authority to articulate a shared vision of a company’s ESG goals and more influence to achieve them. In short, the CSO’s role is to ensure that ESG becomes integral to financial value.
The data in this study was gathered in March and April 2023 through outside-in desk research of the largest publicly listed companies in Germany (40 DAX companies), Austria (20 ATX companies), and Switzerland (20 SMI companies). For each company, the person with overarching responsibility for sustainability was identified (“Chief Sustainability Officer”) and categorized in two categories “CSO with impact” and “CSO light,” whereby the company-specific job title of the CSO, e.g. Head of Sustainability or Sustainable Lead, was not the sole criterion.
The sources used for the data analysis were openly available sources including corporate homepages, sustainability reports, non-financial reports, and annual business reports. Furthermore, information from paid databases such as XING and LinkedIn was used for the analysis.
Dr. Franziska Poprawe, Lina Kaniewski and Francesca Viefhues have also contributed to this report.