The More, The Merrier: Sustainability Is A Collective Endeavour!

The More, The Merrier: Sustainability Is A Collective Endeavour!

As sustainability becomes a business imperative and is embedded into everything an organization does, the structural transition requires the collaboration and contribution of different business functions and individuals. Sustainability decisions increasingly involve the participation of new players and diverse personas within firms from the very top – the CEO and the board – to those deeply involved in day-to-day business operations.

Since ESG and sustainability have become critical parameters for business performance, the role of the board of directors has also evolved to directly engage with these matters (see Verdantix Strategic Focus: The Evolving Role Of The Board In An ESG & Sustainability Landscape). Although ESG implementation is entrusted to specific business units, boards play a vital role in laying down a clear strategic direction, with a strong focus on the long term. We are also witnessing the beginning of a trend of corporate directors being held personally accountable for ESG inaction. Case in point: in 2023, we saw ClientEarth launching legal action against the board of directors of Shell, arguing that the energy firm’s ‘flawed’ transition strategy was putting shareholder value at risk. Although the lawsuit was eventually dismissed, it serves as an important reminder that sustainability must be given a prominent place on board agendas.

The Verdantix 2023 global corporate survey, which features 400 executives from 35 countries, reveals that even though CSOs continue to hold leading responsibility for defining and funding sustainability strategies, CEOs are critical influencers and their vision for sustainability strongly propels ESG commitment (see Verdantix Global Corporate Survey 2023: ESG & Sustainability Budgets, Priorities And Tech Preferences). Our 2024 survey, currently in the field, is showing similar results.

Additionally, the growing influence of CFOs in sustainability-related strategy and funding decisions is driven by the integration of ESG and financial disclosures, as a result of ESG and business alignment. Their role has become even more critical due to increasingly mandated assurance assessments that are driving a strong focus on the integrity of ESG data and disclosures.

Further, with businesses facing a constant threat of reputational damage due to the inadequate management of ESG and sustainability risks, along with intense ESG-related regulatory movements impacting organizations globally, risk and compliance functions have also emerged as key internal stakeholders for sustainability decisions.

Interestingly, a domino effect of the increasing internal touchpoints of sustainability is that ESG consulting firms are now also interacting with a wider variety of organizational stakeholders – ranging from audit to investor relations – as owners of ESG and sustainability engagements (see Verdantix Green Quadrant: ESG And Sustainability Consulting 2024). Therefore, the consulting firms that will maintain leadership in this space will be those that can successfully engage with diverse owners of sustainability engagements and speak the languages of different business functions (see The ESG And Sustainability Consulting Market: The Road Ahead).

If you’re interested in learning more about how ESG is a team sport – and why effective stakeholder engagement, including with the board, is critical for success – please join us for our free webinar on 30^th May 2024.