The Growing Importance of the CSO/Head of Sustainability

Navigating complexity, driving ESG strategy integration and adding long-term value to organizations

In today's rapidly changing world, sustainability has gained significant importance, especially so in the built environment, which contributes an estimated 40 percent to global carbon emissions making rapid decarbonisation of real estate essential if we are to limit warming increases to the 1.5C threshold to mitigate the worst effects of climate change by 2050.

As businesses increasingly recognize the importance of sustainability and responsible business practices, the need for a Chief Sustainability Officer (CSO) or Head of Sustainability has emerged as a crucial position within organizations to drive change, navigate complexity and unlock the true potential across environmental, social and governance (ESG) dimensions. The role itself is new, with over 60% of respondents in a recent survey conducted by CBRE and the US Green Building Council noting their role was only created in the last three (3) years.

Sustainability—sometimes used interchangeably with ESG—encompasses such a wide and broad spectrum of issues, ranging from climate change and human rights to board diversity and corporate governance. A fast moving regulatory and legislative environment with increasing reporting and compliance requirements, mounting stakeholder pressures, climate change risk mitigation and adaptation, and rapid technological change - all combine to make the world of ESG Increasingly complex and challenging to navigate.

A CSO (or head of Sustainability) therefore plays a pivotal role in navigating complexity, integrating ESG considerations into an organization's overall strategy and ensuring that sustainability becomes an integral part of decision- making to add ongoing value to the organisation.

In the Asia Pacific region, the role of CSO is rapidly gaining prominence as investors display increased appetite for sustainable portfolios and occupiers seek energy efficient and healthy buildings in line with their own net zero and sustainability commitments. With increasing new regulations requiring even greater sustainability disclosures, the role of a CSO is becoming mission critical, and the hunt for talent in APAC is on.

So, what are the priority focus areas for CSOs? In a recent CBRE and US Green Building Council survey of over 67 APAC Built Environment Chief Sustainability officers, respondents indicated that they have a broad remit, with key responsibilities identified as conducting ESG monitoring and reporting (96%) and to implement Sustainability related projects (85%).

Increasingly, and importantly, the CSO serves as a bridge between the organization and its stakeholders, including investors, customers, employees, and communities. Internally, they must collaborate with various departments to develop and implement sustainability initiatives, identify opportunities for innovation and efficiency improvements, and build organisational capabilities.

Eighty-four percent (84%) of survey respondents noted managing stakeholder relationships and fostering cultural change (76%) as key elements of their roles. They must develop and maintain transparent communication channels, addressing stakeholders' concerns and expectations, both internally and externally.

CSOs also indicated concerns regarding future regulatory changes and the nascent stages of understanding risks that climate related disasters pose to their portfolios. They acknowledge much more work needs to be done to promote the long-term benefits that sustainability adoption has on corporate branding, talent attraction and climate risk mitigation. Embedding Sustainability takes time, strong business acumen and stakeholder management – and a powerful desire to make a positive change recognising that people, planet, and business performance are interdependent.

CSOs have a broad remit to track ESG project progress and enhance transparency

In response to the tighter regulation of sustainability-related disclosure, the primary focus of CSOs is ESG monitoring and reporting, as well as implementation of related projects.

CSOs are also responsible for fostering corporate change to promote and align with their company's ESG goals. This includes assisting different business lines to develop ESG capabilities and acccountability.

As many CSOs tend to focus on implementing internal corporate priorities, relatively fewer are engaged with lobbying policymakers on related policies. However, as the path to decarbonisation involves significant regulatory change and policy support, this is an area CSOs cannot overlook.

At CBRE, we have witnessed the benefit of having the clarity of leadership and direction with our first Chief Sustainability Officer Rob Bernard, who joined CBRE last year with 20 years of experience working at the intersection of sustainability, business and technology—including serving as Microsoft’s first Chief Environmental Strategist. His leadership has galvanised the integration of sustainability across our business globally to better serve our clients and deliver on our own commitment to achieve net zero carbon emissions by 2040. We are positioned to simplify complexity so that we can accelerate sustainability progress through clear and executable strategies for our clients. We do this for clients big and small, global, regional, and local.

We have significantly invested in tools, partnerships, technologies, and services that have the power to drive change at scale and transform the industry for a sustainable future. And we also recognise that to champion sustainability within the built environment, our efforts begin at home as we tackle the very same challenges faced by our clients.

The role of the CSO will continue to evolve as sustainability matures, and organisations that have invested in this role are better placed to manage risk, drive cost savings and operational efficiencies, engage stakeholders, foster innovation, and promote employee engagement. The CSO is multi-faceted and affects all parts of the organisation, reflecting the wholesale change that is needed to gain a competitive advantage as we transition to a decarbonised world. The role is critical in creating long-term value, enhancing brand reputation, and positioning their organisations as leaders in sustainability and ESG practices.