Sustainability executives increasingly key in finance firms
Hiring a Chief Sustainability Officer (CSO) is nothing new. Every business worth its environmental salt has one. Or something equivalent, like a Head of ESG.
But what is new is the importance now being placed on CSO shoulders to help steer the organisation, with the Chief Sustainability Officer (or its equivalent) increasingly regarded as one of the most crucial members of the C-suite, helping to guide organisations towards what is set to be a new economic reality.
This is true for many industries, but increasingly so for the financial industry, which has witnessed a surge of CSO hires in the past 18 months, according to research by Deloitte UK.
C-suite sustainability hires in financial firms on the rise
According to new research from the Institute of International Finance (IIF) and Deloitte UK, 75% of financial firms surveyed report having CSO or equivalent position in place.
Goldman Sachs Asset Management, BlackRock and JP Morgan were three early adoptees. JPMorgan Asset Management debuted its first-ever global head of sustainable investing at the start of 2019, while Goldman Sachs made a senior sustainability hire at the end of 2019, and BlackRock appointed its first global head of ESG Integration at the start of 2020.
More recently, JPMorgan has made further sustainability inroads, securing former high-profile Labour politician Chuka Umunna to leads its European ESG work, while asset manager Vanguard has selected its first head of ESG with ex London Stock Exchange Group executive Fong Yee Chan now setting the firm’s strategy for the UK and Europe.
CSO as an organisation’s ‘sense-maker’
An increasingly crucial role for financial firms, the CSO is expected to become more prominent over the next few years, with the role emerging as a “sense-maker in chief”, according to Deloitte.
After all, not only are financial services firms exposed to the physical, transition and liability risks from climate change, but they also have a critical role to play in transitioning the global economy to a low carbon reality through systems of sustainable finance.
Financial firms are vital in “helping transition the world to a low-carbon economy through sustainable finance as well as driving their own evolution”, states Axel Weber, Chairman of the Institute of International Finance (IIF) and Chairman of the Board of Directors of UBS Group AG.
With the pace of change in sustainability increasing, and international standard setters, national legislators, and industry-specific regulators all reflecting this changing landscape, the CSO as a “sense-maker” needs to bring insight into the organisation, triage external initiatives, and make connections among different developments. They also need to “prioritise the urgent and the important”, and act as a catalyst for change.
CSOs need to be strategic, influential, and responsible for making the repercussions of ESG concerns tangible for business lines. In pursuit of this, networking, organizational knowledge, and a thorough grounding in the business are viewed as essential attributes.
The report predicts that financial industry CFOs have a central role to play in “helping drive efforts forward”, in understanding, and predicting, changes in the external sustainability environment, and subsequently re-positioning the business model of firms to tackle this head on.
According to Anna Celner, Global Banking & Capital Markets leader, Deloitte Global, “CSOs focused on measurable, decisive action” can help make climate change a reality, and “the more empowered we can make them, the more impact we will see across all areas of an organization”.
Four CPG giants to fund sustainable accelerator programme
Breakthrough ideas can come from anywhere and anyone. That’s the premise behind the coming together of The Coca-Cola Company, Unilever and Colgate-Palmolive in the funding and support of world-leading brewer AB InBev’s 100+ Accelerator program.
These four consumer packaged goods multinationals will leverage both their size and resources to fast-track a shift toward sustainable solutions by mobilising some of the world’s sharpest thinkers to solve some of the world’s most pressing sustainability challenges.
The aim of this collaboration is to “supercharge adoption of sustainable solutions by funding the accelerating fantastic innovations that will change the world by making all of our businesses more sustainable”, says Tony Milkin, chief procurement, sustainability and circular ventures officer at AB InBev.
“Sustainable business is smart business, and we are working to solve huge problems that no one company can handle alone. With our combined global reach, we can accelerate progress towards a more sustainable future.”
What is the 100+ Accelerator program?
Originally launched in 2018, 100+ Accelerator is a global incubator program that aims to solve key supply chain challenges across water stewardship, circular economy, sustainable agriculture and climate action.
It offers size and scale to passionate entrepreneurs to help bring their solutions to market faster, and the program’s first two cohorts have already piloted 36 innovations in 16 countries, with participating startups raising more than US$200m to help them scale globally.
Among the established innovators are those already creating huge impact on sustainability, with projects including the first solar thermal plant in Africa, recycled electric vehicle batteries that store renewable electricity in China, and upcycling saved grains from the brewing process to produce nutritious foods in the US.
- The implementation of green cleaning solutions to reduce water and energy use in brewing operations in Colombia
- Solutions delivering traceability and insurance for smallholder farmers in Africa and South America
- The collection of more than 1,000 tons of glass waste in Brazil
- Piloting returnable packaging in the United States
- Recycled electric vehicle batteries that store renewable electricity in China
- The ability to upcycle saved grains from the brewing process to produce nutritious foods in the United States
- The first solar thermal system to be installed at an AB InBev plant
How will the new program work?
So, how does it work? Applications are invited from entrepreneurs or small businesses (deadline for cohort 3 is May 31 2021) and the partners will choose 20-25 ideas which are then provided with funding.
Project aligned with goals of the CPG multinationals
The participation by all three consumer packaged goods giants is in line with each of their own sustainability goals, with each passionate about transforming global supply chains towards a greener future, and knowledgeable that “we can achieve our purpose faster and more effectively with equally committed partners”, says Patricia Verduin, CTO of Colgate.
Since launching its World Without Waste sustainable packaging platform, Coca-Cola has actively engaged the startup community for inspiration and innovation and is an inaugural investor in Circulate Capital, a fund launched in 2019 focused on ventures, infrastructure and innovations preventing the flow of plastic into oceans.
The program’s social inequality component is also aligned with Unilever’s values. “This year, we made commitments to ensure that everyone who directly provides us with goods and services receives a living wage by 2030,” says Marc Engel, chief supply chain officer of Unilever. But that’s not all. “We’re increasing our spend with suppliers from underrepresented groups and committed to train 10 million young people.”