Given that ESG and sustainability can drive value, leaders must navigate these with cross-function expertise.
According to an industry expert, Scott Lane, CEO and founder of Speeki, a full-service ESG and sustainability reporting and management partner to large multinationals, fund managers and corporates must bring in cross-function ESG generalists to boards, rather than experts with a narrow expertise in sustainability or diversity.
This intervention comes in the wake of a widespread ESG and sustainability rollback this year (Bloomberg), as boards feel the cost-cutting pressure from higher interest rates and inflation, as well an increasingly ESG-hostile political climate.
Lane believes that ESG and sustainability initiatives can still drive value for large corporates – but they need to be helmed by individuals with broad, cross-sector expertise who can connect ESG to wider corporate strategy, rather than narrow specialists like chief sustainability officers or heads of diversity and inclusion.
"Across the corporate world, ESG and sustainability are under fire. Large multinationals are tightening their belts, and ESG and sustainability professionals have not been able to prove the value added by ESG commitments, initiatives and directives," says Lane.
"At the end of the day, like with any decision, the C-suite have to be able to show how ESG and sustainability drive value for shareholders – and they haven’t been able to do this, so ESG and sustainability initiatives have been on the chopping block."
Lane explains that this failure stems from companies hiring sector specialists to represent ESG at the board level. "Chief sustainability officers are now commonplace, and these are usually technical experts with deep knowledge of sustainability, but in my experience, these specialists struggle to connect this to wider corporate strategy and growth."
The Speeki CEO adds that if ESG is going to survive the current headwinds, ESG and sustainability professionals have to be able to demonstrate the concrete and tangible benefits that it offers.
He notes that siloed projects, like having an environmental awareness day, are not going to cut it, as ESG and sustainability has to drive revenue for shareholders whether it’s by targeting core consumers, addressing the needs of clients, or reaching new demographics.
"Doing that requires bringing in generalists, with cross-function ESG experience, and exposure to the wider corporate world. Specialists with siloed knowledge are important for implementation, but ESG and sustainability has to be led by individuals who have cut their teeth across the business."
Lane further explains that integrating ESG and sustainability into core company functions requires a vast range of tools and techniques that go far beyond narrow expertise in sustainability or diversity.
"Leaders need to be able to analyse data, change behaviours, understand regulation, drive new policies, collaborate with the CEO, deploy emerging technologies, and think strategically. You don’t get all that from sustainability or governance experts with narrow specialisms – you need generalists who understand the whole ESG and sustainability spectrum."
