Photo source ©Beth Caldwell Photography, LLC.
The need for sustainable business is clear, from companies facing billions in losses due to global warming to mounting social pressure for employers to incorporate sustainable practices. But how do companies set out to create ambitious ESG goals and actually achieve them?
In her new book, Chief Sustainability Officers At Work: How CSOs Build Business Growth Through Sustainable Strategies, Chrissa Pagitsas set out to answer the many “how” questions of building a sustainable business. She delves into the hard-won business leadership lessons of twenty-four senior executives at Fortune 500 companies and globally recognized brands such as BlackRock, Amazon, HPE, Verizon, and Procter & Gamble, seeking to drive change for a better future.
Christine Bohle Boyd, Managing Director at Bridge Partners, had the opportunity to sit down with Chrissa to discuss her experience building a sustainability function at Fannie Mae and then comparing with other senior leaders she interviewed as part of her book to find the hard-fought lessons learned that can be applied immediately to make progress against net-zero goals.
Read on to tap into this conversation, and if you would like to hear from Pagitsas, watch our on-demand webinar, “How Sustainability Leaders Integrate Their Strategy & Achieve Progress.”
While your book is about the “how” of building a sustainable business, I’d like to learn “why” you wrote this book?
Pagitsas: The sustainable business field is relatively new, and there’s no manual. I wanted to demystify for business leaders in non-sustainability roles what it takes to achieve ambitious ESG or sustainability goals.
It’s important to pull the curtain back on what a “sustainable business” is and how do you lead both as a company and an individual business leader. This is incredibly important as companies and their leaders need to adapt to a landscape that is still shifting.
I see these leaders grappling with the growing, yet differing demands from investors. Simultaneously they are also balancing the rapidly developing regulatory requirements from multiple governing bodies in the United States to Europe and Asia.
This book gives a bird’s eye view of how companies in diverse industries have successfully executed a sustainability strategy for the last five to 15 years — and the critical role the CSO plays in the success.
Tell us about your own experience as VP of ESG at Fannie Mae, and how that relates to that of the sustainability leaders you interviewed for your book?
Pagitsas: One of the themes that came across consistently was how important it is to focus on your priorities. What’s important to Fannie Mae, which focuses on affordable housing, is going to be different than what’s important to Owens Corning, which is different from what’s important to Procter & Gamble. Yes, each company is focused on the “E,” the environment, and the “S,” the social, but issues are different per industry. In housing, a large focus is on the energy efficiency of the buildings. That is a different environmental issue than the use of recycled materials for product packaging, which is a focus for Procter & Gamble. What resonated for me was the importance of priorities and yet their diversity.
Another theme was the creation of partnerships with internal and external peers. At Fannie Mae, I led the Green Financing business, but it was the partnership with Fannie Mae’s network of lenders that resulted in borrowers choosing green mortgage loans over non-green loans. For MGM Resorts International’s Jyoti Chopra, it’s critical that she partners with the chief operating officer, who oversees all properties and their centers of excellence, including food and beverage, to the SVP of human resources, who oversees and champions the goal that relates directly to human capital and people. Through partnerships across the company, she can drive meaningful activities and actions across the enterprise.
The key takeaway here is that successful sustainability strategies are integrated into the business, not a standalone activity.
In what ways can CSOs address short-term goals while driving plans that have sustainability targets that won’t be met for another 5, 10, or 20 years?
Pagitsas: Companies usually look one to two years out to plan their business strategies, and try as best they can to predict the business landscape three to years out. While this is a totally valid time frame, it is short-term relative to sustainability goals that are set a decade or more beyond today, such as 2040 net-zero goals.
As a CSO, it’s important to recognize that the vast majority of your peers’ goals are different from the sustainability team’s. Therefore, your peers running the business and product lines need to have the sustainability goals communicated on their time horizon.
Pia Heidenmark Cook, former CSO of IKEA, did just that. At IKEA, they have a three-year business planning cycle. So, she took her ten-year sustainability goals and broke them down into three-year chunks. Once you break it down, then people can start acting on it. So the takeaway is to make it smaller.
Can you share advice for other sustainability leaders just getting started in their journey?
Pagitsas: It is important to recognize that inherently the role of the CSO is to hold on to tensions. One tension is between quarterly and annual business targets and decades-long sustainability targets.
A second tension is that the sustainability leader doesn’t own the profit and loss statement; their peers do. Being able to influence is critical in order to help the business line owner to integrate sustainability into its core products and services.
A third tension is constantly assessing when a company is ready to move forward on a business and sustainability integration point, and when it needs to be slowed down by the sustainability leader. If employees have enthusiasm but don’t have the right tools to execute, the momentum will die out quickly. It’s the role of the sustainability leader to call out if the company is not ready to move forward, as much as it is their role to cheer on and speed action on climate issues and others.
For sustainability leaders moving large sustainability strategies, it’s important to raise these tensions to leadership. This allows you to talk about them, and hopefully ultimately resolve them so that all leaders and the company are successful.
To learn more about the “how” of CSOs implementing sustainable strategies, purchase your copy of Chrissa Pagitsas’ best-selling book, Chief Sustainability Officers At Work, at major booksellers including Amazon, Barnes & Nobles, Waterstones, and SpringerLink.
Watch our on-demand webinar, with Chrissa Pagitsas and Bridge Partners for a deep dive into what it takes to lead a credible, scalable, and successful sustainability strategy.
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