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Chief sustainability officers and CIOs are poised to become the dynamic duo of corporate environmental efforts. But success will take work.
The complexity involved in ESG reporting highlights the importance of the CSO-CIO partnership. Working together, sustainability leaders and IT leaders can streamline this endeavor and drive sustainability throughout their organizations.
"If you have better alignment and understanding between the CSO and CIO on business strategy and business processes, then you can deliver against commitments that are being made and raise the ambition," said Cheryl D'Cruz-Young, senior client partner in the ESG Center of Expertise at Korn Ferry, a global organizational consulting firm headquartered in Los Angeles.
In other words, achieving ESG success requires the chief sustainability officer and the CIO to become true partners.
"[The relationship] should be close because the entire organization is relying on them to report progress toward big, ambitious, public goals," said Chrissa Pagitsas, founder and principal of Pagitsas Advisors, an ESG-focused consulting firm, and author of Chief Sustainability Officers at Work: How CSOs Build Successful Sustainability and ESG Strategies.
These two roles must have the ability to capture and present this information in a systematized fashion.
What makes the CSO-CIO partnership challenging
Attempting to achieve sustainability success is a significant undertaking whether the discussion is about ESG frameworks or about the United Nations' Sustainable Development Goals.
"It's a very technical field when we talk about data elements," Pagitsas said. Furthermore, sustainability leaders are still debating on the data capture methodologies that will produce the best results.
"That's why the relationship between the CSO and the [CIO or CTO] needs to be so clear, and they need to be in constant communication, because these two very challenging elements make both their jobs very difficult," Pagitsas said.
The developing sustainability compliance landscape also contributes to the complexity.
There is a lot of uncertainty associated with emerging regulations, D'Cruz-Young said. The rapid change in ESG and sustainability pressures -- driven by outside forces such as investor activism -- also requires chief sustainability officers and CIOs to work in alignment.
What a sustainable partnership looks like
At Hillenbrand Inc., an industrial processing equipment manufacturer headquartered in Batesville, Ind., Tory Flynn is the company's chief sustainability officer. She looks to CIO Bhavik Soni for help in choosing the right technology to streamline ESG reporting.
"A lot of the time, we're reacting to new regulations or a disruptive change in the world," Flynn said. "And then you have technology, which is constantly evolving."
Soni said his role involves optimizing Hillenbrand's IT footprint and deploying smart factories. At the same time, he is focused on providing Flynn with solid sustainability data, as well as technology that will help her gain insight on operations and supply chain.
"We have quite a bit of overlapping interests and needs, and the relationship is maturing as we go forward," Soni said.
Flynn can attest to the difficulty of keeping up with developing legislation. As the CSO of a global company, she must understand emerging developments across the world.
"The regulatory environment is very much in flux right now," she said.
Flynn cites European supply chain due diligence laws and pending U.S. Securities and Exchange Commission requirements as examples.
"It's different in every country, so we're looking at it through a bunch of different angles," she said.
Sustainability compliance requires data, which is a major focus for Soni.
"At a tactical level, the challenges are around data," he said. "It's making sure we have good access to the data that we want, and that the quality of the data is good and the traceability is there."
As attention on sustainability grows exponentially, more sustainability and IT leaders must work toward common goals. Here are a few steps they can take toward success.
Focus on a narrow data set
Leaders must make an array of decisions about what data to gather, especially at the beginning of a sustainability journey.
To ensure success, CSOs and CIOs should focus on a narrow data set, Pagitsas said. For example, those working in publicly traded companies should zero in on the data elements that will be included in the organization's 10-K and other filings. They should also apply this narrow lens to data that the company will be reporting voluntarily to bodies such as the Task Force on Climate-Related Financial Disclosures or the Sustainability Accounting Standards Board.
Chrissa PagitsasFounder and principal, Pagitsas Advisors
Understanding the top ESG reporting frameworks is important as the landscape changes.
Pagitsas encourages what she calls "ruthless prioritization" to ensure data quality.
"It's better to have fewer data elements that are backed up by strong methodologies, versus having 300 that are inconsistently captured, inconsistently reported and have weak methodologies," she said.
Especially because IT leaders are balancing a number of different priorities -- such as technology upgrades and enhancements across the organization -- leaders should understand that building a solid ESG reporting infrastructure takes time.
"You're going to build the system incrementally, and you're going to focus on the data points that mean something to the rest of the business," Pagitsas said. "You cannot just collect data because you want to collect data."
Accept healthy tension between the 2 roles
Leaders who focus on sustainability and leaders who focus on technology each have their unique challenges and goals. There is overlap, but there are also important differences that can create friction.
For example, the pace of change in the ESG arena will likely create some tension between sustainability leaders and IT leaders, said Craig Stephenson, senior client partner in the North American CIO/CTO practice at Korn Ferry.
Chief sustainability officers are often under pressure to deliver on goals established for 12 or even 24 months into the future, Stephenson said. In the fast-moving IT world, CIOs and CTOs might find it difficult to make accurate predictions that far down the road.
Create official partnerships
Sustainability endeavors must be cross-organizational to succeed, which means it's best not to leave collaboration to chance.
At Hillenbrand, assigned business and tech partners act as internal consultants to the sustainability team. For example, Flynn has a partner on the IT team she meets with regularly to discuss her technology requirements and any concerns she has. IT, then, provides software suggestions based on this.
"[Collaborating on technology] has been very helpful because I know enough to be dangerous, but I don't want to be dangerous in this role," Flynn said.
Her IT partners assist in providing technology that works for her as well as for the tech department, she said.
"Having a partner that helps me vet technology and [discuss] the needs I have, and also the needs that Bhavik has, is really crucial," Flynn said.