Every day we experience new initiatives, national and EU proposals or even conferences, events and publications related to sustainability and namely regarding the environment and human rights. The marketing and communication departments of companies and, in particular, on their boards of directors appear overwhelmed by the word sustainability or ESG jargon. This phenomenon first spread to academia, and political discussions soon began to take over social media.
While this trend is inevitable and, to some extent, was already emerging from newspapers, commercials or even companies' social media (increasingly claiming to be sustainable), it also entails a thorough modification of production and consumer relations. In this new sustainable reality, entrepreneurs and consumers are no longer sovereign and in control of their own choices but should adapt them to the new context of ensuring respect for the planet and its resources and human dignity.
Concerns about intergenerational justice or the preservation of resources for coming generations have now become urgent for present generations - to meet their needs, but towards a new direction (sustainability) and renewed purpose.
In a drained and unequal planet, there is an effort - regardless of the benefits and advantages of innovation, technology, and disruption - to rebalance the cards and direct efforts to technologies, processes, policies, products, and services that, rather than being disruptive, innovative or simply advanced, are (also) sustainable or ESG-compliant. Not just because the label is cute... but because it must be so.
By turning voluntary practices of prevention, management and remediation of ESG risks into concrete obligations to perform due diligence in the companies' value chain or to develop and integrate plans to manage, monitor and correct ESG risks in their activity and commercial relations, the (national and European) legislator challenges economic stakeholders and, in particular, companies, to rethink the limits of their freedom of initiative in the light of the social, environmental and economic context in which they operate.
And as such, the contracting decision - with whom, where and the object of the contract - or, if so preferably, the freedom as to the choice of commercial partner, the business model, the type of production or the characteristics of the product and service offered, undergoes, nowadays, an intrinsic reassurance by the guarantee of sustainability in its various dimensions.
It is in light of this process ( with no retrocession) of legalisation or of the conversion of the desire into an obligation that it is crucial to reassess the structure of the company itself, gearing its internal organisation and governance structure towards the integration and concrete management of considerations that are no longer confined to image, reputation or simple cosmetic exercises.
In this regard, and within the boundaries of the applicable legal framework for companies, the provision of corporate bodies that allow the company to i) adjust to a new and constantly shifting legal framework; ii) adapt the organisation, the business model and perhaps the relationships established within the value chain to the ESG requirements; and iii) provide the management with the tools and know-how needed to adopt informed decisions and avoid significant risks - is essential.
This is why the appointment of a Chief Sustainability Officer is of the utmost importance.
However, this role is not free of intrinsic peculiarities and challenges. While its mission may be relatively well identified - that of ensuring that the company's corporate governance structure includes sustainability factors in its decisions, being aware of the risks and applicable due diligence obligations - its practical and organic features must reflect the singularities and characteristics of this new reality and of the company itself, especially considering the specific environmental, social, reputational and economic risks associated with its activities and value chain, in addition to the relationship that the company will establish with its business partners, customers and supervisory authorities.
We are therefore facing a role whose tailor-made design overcomes the one-size-fits-all trend, and the internal functions are articulated with an externalisation that cannot be ignored. And it cannot be overlooked. First and foremost, because of the EU legislation in preparation concerning the due diligence duty of companies in matters of sustainability, which foresees the emergence of new players: the supervisory authorities that will be appointed as responsible for the supervision of companies' due diligence duties, and which are expected to be granted several powers, such as the power to request information and to carry out investigations, or to impose pecuniary penalties calculated upon the company's turnover.
All in all, since what is currently allowed, competitive or accepted may very quickly turn into what is condemned, forbidden and heavily sanctioned, the internal governance of the company needs to be reviewed to ensure that a new, plural and multidisciplinary voice is heard - with a certain degree of autonomy - within the company. A unique voice that internalises ESG risks from several perspectives: strategy, risk, finance, information technology, compliance, human resources, communication and internal audits ... In short, a voice that, regardless of the title (we decided to call it Chief Sustainability Officer), enables the company to keep up with the pace of demands, which are not only from legislators or regulatory authorities, but are also coming increasingly from customers, suppliers and investors.
It is no longer a fashion trend... And the clock is already ticking.