With More C-Suite Titles, ESG Gets A Seat At The Big Table

Newly minted ESG teams, chief ESG officers and chief sustainability officers are becoming more common in the corporate world.

The roles of environmental, social and governance (ESG) concerns in corporate strategy and operations are increasing exponentially, while the corporate positions mandated to support such goals are as well. Newly minted ESG teams, chief ESG officers and chief sustainability officers are becoming more common in the corporate world.

Yet ESG leadership roles remain largely undefined, unlike general counsel or CFO roles, which have long histories and are supported by legal requirements, especially for public companies. Many ESG multidisciplinary functions often overlap with the corporate mandates of chief financial officers, general counsels, chief operating officers and chief information officers.

As of June 2021, according to executive search firm Weinreb Group, 95 Fortune 500 companies had a chief sustainability officer (CSO), a significant increase since 2011, when only 29 had one. A decade ago, only prominent brands such as Coca-Cola and Verizon had CSOs; now, diverse sectors and firms hire both internal and high-profile external CSO candidates.

According to a 2020 survey by the Society of Corporate Governance, the most typical department for ESG functions to be situated within an organization was Legal, for 22% of organizations, followed by many companies with a cross-functional team. Also, according to this survey, 26% of ESG managers report directly to the Legal leadership, while 24% report—if at all—to various functions within the organization, such as Investor Relations or Enterprise Risk.

While some companies charge mid-level executives with ESG-related responsibilities, other companies prefer to add a C-level position to the senior leadership. The head of ESG brings a unique added value by transforming the corporation into an ESG-oriented organization and also coordinates the various functions and identifies potential conflicts within the corporation that impact ESG metrics.

Bank of America, for example, appointed Andrew Plepler as global head of ESG to give the function a unique place within its senior leadership, and the past couple of months saw a push in that direction. AIG, a major global insurance company, recently announced Constance Hunter’s appointment as executive vice president and global head of Strategy & ESG, reporting directly to the president and CEO and joining the executive leadership team.