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HBS Case Study Suggests Need for C-Level Sustainability Officer

Leon Kaye | Thursday September 30th, 2010 | 0 Comments

The Harvard Business Review recently sparked a buzz with the online publication of one of its classic case studies—this time a fictional one, and it discusses the evolving conversations that a fictional electronic components manufacturer holds over a potential decision to hire a chief sustainability officer (CSO).

HBR case studies are to business courses what scientific calculators are to advanced mathematics classes—you are not going to get by without them.  Most are well-written, though some come across as a dialogue fit for an instant coffee commercial or a telenovella script—did Zara’s executives really nibble on octopus tapas as they pondered the future of their firm’s clothing supply chain?  But this screenplay works, once you get past the smirk over the 17-year-old granddaughter explanation of why “Narinex” should hire a CSO.  The narrative surrounding this fictitious Michigan company poses many compelling thoughts.

This $3.2 billion dollar company has been hammered by its competitor, losing contract after contract, and its CEO is sorting out how to stop this slide.  The upshot is that more requests for proposals require transparent disclosure of companies’ business practices, and Narinex never put any thought into its environmental and social impacts.  So now what should they do?  Bring in outside consultants?  Start to embed sustainability into the firm’s DNA?  Or should they bring in an CSO, even though the company has resisted bringing in the latest C-level executive to handle the latest business challenge?

The comments following the article are actually more riveting than the actual case study, which is a compliment to the joint authors’ work.  Some fear the CSO could just become another marketing executive—others feel that the organization should have sustainability ingrained throughout the org chart, and then there is the question of whether the CSO should be hired from within or not.

Issues of sustainability and how an organization approaches it are quite similar to corporate strategy.  Both are important, difficult to quantify, and there is no clear formula as to how to staff and pursue this function.  Sometimes strategy (and sustainability) is carried out by an executive team. It could be a c-level position, or just relegated to a vice president or director-level function.

The challenges of prioritizing sustainability is that the concept is relatively new, and it is often just dismissed.  Analysts, deeply engaged stakeholders, and shareholders can often name a firm’s CFO, COO, and maybe the highest-ranking sales or marketing officer.  But when asked about who the CSO is, chances are the shoulders will shrug.
Although businesses have paid more attention to sustainability in recent years, many of us still do not understand it.  I was reminded of that conundrum at the Global Reporting Initiative’s conference this spring.  During a panel we were placed into groups and shown pictures of global leaders.  Politicians, CEOs, artists, and of course celebrities were easy—but this room of knowledgeable professionals could not name a single sustainability thought leader or advocate, although once named, the nods and “ohhs” would rise in chorus.

Will sustainability have a chair at the C-suite?  Not everywhere, but recent developments are encouraging.  If integrated reporting became mandated, shareholders demanded even more accountability, or regulations analogous to Sarbanes Oxley meant that C-level executives were required to sign off on their compliance reports, that could occur down the road.  But the most realistic scenario is that sustainability, CSR, or ESG will function differently from company to company.  If everyone at a company behaved like a CSO and such thought became the norm for employees at all levels, we will all move in that positive direction, title or no title.

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