It feels like there has never been a more challenging time to lead CSR at a corporation – but in every challenge also lies immense opportunity.
Recognizing this, CEOs are asking even more from their CSR leaders. 97% of high-level executives at large companies around the world expect climate change to impact their organizations’ strategy and operations over the next three years, according to Deloitte’s 2023 CxO Sustainability Report. Indeed, even given the current macroeconomic climate, companies are still pursuing sustainability initiatives – a significant shift from the days when sustainability was viewed as ancillary to core business priorities.
The business case for doing so is abundantly clear, and a swell of new reports in the early months of 2023 make it even more so: a new study from McKinsey and Nielsen IQ showed that “Products making ESG-related claims averaged 28 percent cumulative growth over the past five-year period, versus 20 percent for products that made no such claims.” Sustainable products and brands also have greater consumer loyalty. Beyond customers, corporations also see financial returns on investment in sustainability from their employees. A new report from Net Positive shows that ⅓ of employees have resigned because of a lack of corporate values and impact, and nearly half of Gen Z and Millennials would consider taking a pay cut in order to work for a company that shares their values. And these are just a few of the research-backed reasons to invest in CSR.
But even with the clear business case to invest more in CSR, progress is slow. Acknowledging that sustainability is inextricably linked to core business priorities is not enough on its own; executives and leaders need to take accountability for achieving those targets, beyond lip service. And that’s where companies are falling short: a new report from the CDP shows that just 0.4% – 1 in 200 – have a transition plan in place to achieve environmental targets.
It’s great that executives are acknowledging sustainability as a strategic priority, but now it’s time for them to actually treat it like one. That means setting measurable KPIs for the ways each business function contributes to the broader sustainability strategy, and evaluating compensation and performance accordingly. Sustainability isn’t “someone else’s job” – and placing the mantle of responsibility for achieving a company-wide sustainability strategy on a single CSR or sustainability leader is basically designing to fail.
In an interview with Economist Impact, the chair of the ISSB, Emmanuel Faber, shares that responsibility for sustainability initiatives – namely setting targets and reporting on them – needs to migrate from Corporate Social Responsibility or Sustainability leaders to the Desk of the Chief Financial Officer. The CDP report finds the same thing, and adds that Board Level oversight must also be included.
If companies can do this successfully, the rewards are tremendous. A new report from Edeleman shows that business is the only institution viewed as ethical and competent – well ahead of governments – and is seen as a force for good in a polarized world. Companies that lean into that role, rather than shying away from it, have an unprecedented opportunity to secure their position as a market leader in the ‘new normal.’
Companies are well aware of this, yet are not likely to move quickly enough given the current market conditions. However, efforts are shaping to coalesce corporations around the idea of ensuring that their future success will be achieved by fixing the issues they are sowing today in the pursuit of short-term profits.
The new role for CSR leaders
According to the UN Global Compact Network SDG Innovation Report, “In light of these immense challenges, we all must do things never asked of us before. It often requires SDG innovation– “doing new things” or doing “new combinations of things” – a not as commonly discussed, yet pivotal, component of achieving the sustainable development agenda.” The operative word there is “all” – not just CSR, not just sustainability leaders, but ALL executives, board members, and employees. In growing numbers, CSR leaders are also becoming responsible for leading and/or contributing to their company’s environmental, social, and governance (ESG) targets and reporting. While these two functions do have overlap, they have typically been separated, but this is starting to change.
And here lies the massive opportunity for corporate sustainability leaders in 2023: put yourself out of a job. Or, put another way, make your job everyone’s job. As Faber recounts, “It worked (at Danone) in 2009, when we decided that there would not be a CSO position anymore – sustainability would be everybody’s responsibility and in 15,000 managers’ bonus.”
I’ve heard of many nonprofit leaders who dream of closing the doors of their nonprofit because it would indicate that they have achieved their mission. It’s a lofty vision that is rarely achieved, but it’s a mindset that CSR leaders should be embodying. In a 2021 report, we showed that innovative leaders were finding ways to integrate their programs across business units. In 2022, we further explained the 10 most common business functions of doing so.
And business leaders are looking for leadership on this. A study from Competent Boards explains that, in growing numbers, Boards of companies are looking for ESG knowledge and experience. In other words, leaders are waiting for you.
So how do you “put yourself out of a job”?
As with the nonprofit leader who dream of closing their nonprofits, this is not an overnight task. Rather, it’s a compass, an orientation, to guide the actions we take today for a better tomorrow. As the proverb says, “The best time to plant a tree was twenty years ago. The second best time is now”.
So how do you start to sow the seeds to integrate CSR across every aspect of your company? How can you use the energy around ESG to maximize your impact? As with any change-management effort, you need to pursue both bottom-up and top-down strategies. As shared in this case study with our client SAP, “If employees aren’t learning about the future of the social enterprise movement and SAP’s impact on creating a better working world, then they don’t have the full perspective and experience to do their jobs fully.”
In both cases, educating employees and executives on the future of business and the role CSR/ESG plays in that, then creating opportunities for real-world exposure to social innovation are going to be fundamental to your efforts. And there is hope here. In Ernst & Young’s 2023 CEO Outlook Pulse, despite a likely recession, “CEOs are (increasingly) embedding ESG into strategy to create brand value and build trusted relationships with customers, employees and other stakeholders.”
If there was ever a time for CSR leaders to pursue this, it is this year. Impact Entrepreneur argues that it is the end of the Friedman Doctrine as we know it. As Chobani’s CEO, Hamdi Ulukaya, shared, the notion that businesses exist to maximize profits for shareholders was the dumbest idea he’d ever heard.
In our work with the TRANSFORM Support Hub, we have engaged new hire employees as well as Chief Executives from Fortune 100 companies in programming that does just that by exciting people to learn about sustainable business models, building knowledge on sustainable business innovations, and then providing real-work experience with social innovators for help seeing what the future of sustainable business can look like – in large part by partnering with social enterprises.