The reinvention of the chief sustainability officer

SOPHIA Mendelsohn recalls her days as an intern, when she had to photocopy electricity bills and highlight them in yellow, and then key in the costs onto a spreadsheet.

Now, the chief sustainability officer (CSO) and commercial officer at German multinational software group SAP, she is again tracking and documenting energy use and environmental information – although with rather more sophisticated artificial intelligence (AI) systems.

Mendelsohn is one of the few executives in her position to remain vocal about the benefits of corporate sustainability, almost a year after US President Donald Trump came into office, describing climate change as a “hoax” and started reversing green policies.

She says the backlash has made justifying the commitment in commercial terms even more crucial for companies, and sees it as a “window of opportunity”.

“It’s the opportunity we’ve been building for over a decade – to show there is a business case for sustainability, to show there is either a cost curve going down or a profit margin going up,” she says.

SAP is one of a shrinking number of global companies sticking to a science-based plan to cut emissions by 90 per cent by 2030. Mendelsohn is blunt about the new pressures on her peers to deliver more accurate financial information about companies’ climate plans.

“(We’re) being asked and tasked to rise to the occasion with something much more fundamental,” she says. That means grappling with questions core to company strategy: how products or services generate growth, use natural resources, and create unwanted costs and consequences.

Katy Jarratt, who oversees sustainability recruitment in the UK for global executive search and leadership consulting firms Spencer Stuart, says chief sustainability officers were, until recently, often hired as “strategic storytellers” – generalists able to influence broad strategy, rather than as “technical experts”.

The change in the political climate has made those executives “ineffectual”, she says, adding that many have been let go. Instead, ESG teams that provide specific and essential reporting data are being merged with other functions, such as finance and audit, risk and compliance or investor relations.

Jarratt notes: “It kills two birds with one stone by ensuring audit-ready ESG metrics and messaging consistency. In cases where CSOs can roll their sleeves up, they are being kept on and the bulk of the ESG team let go. CSOs who can’t are being let go.”

It is a swift halt to what was a rapid ascendance for sustainability careers in the boardroom. Just a few years ago, the existential crisis of Covid-19, rising awareness of climate change and threat of regulation meant the CSO role was considered key.

There are still rare instances of progression: the newly appointed chief executive of Hawaiian Airlines, for example, used to be the head of sustainability in Alaska Airlines, Diana Birkett Rakow. But many companies have fallen silent about the role and are reconsidering its positioning.

An analysis by Financial Times of more than 220 US companies with CSOs at the start of this year shows a marked change in the status of the role since Trump’s inauguration. Financial institutions, targeted by a group of Republican US states for restricting funding for fossil fuel companies, were among the first to downgrade or change reporting lines.

Wells Fargo did not replace its chief sustainability officer, Robyn Luhning, after her departure from the US bank last year. Instead, it promoted an existing staff member to the role of “head of sustainability” after an eight-month gap.

HSBC has downgraded the role from board level, and Standard Chartered cut the team led by its chief sustainability officer by more than a third.

Since 2023, the number of CSOs in the US reporting through a company’s legal function has doubled from 10 per cent to 21 per cent, notes the US specialist recruiter Weinreb Group. Many of these executives previously held legal roles, usually as general counsel, before becoming CSO.

This shift followed an increase in the risks of potential litigation, new compliance rules in the European Union, and the fallout from rapidly changing US regulations and policies in the second Trump era.

Chipmaker Nvidia, for example, recruited Josh Parker as head of corporate sustainability from data-storage company Western Digital, where he was assistant general counsel with a background in intellectual property law and engineering.

Double-badging is also on the rise. In some cases, sustainability responsibilities have been added to the chief strategy or chief operating officer jobs, as environmental risks rise in prominence.

When UBS’ head of sustainability, Michael Baldinger, left this year, the bank gave the CSO role to Christian Leitz, who is also its corporate historian.

Unilever’s former CSO, Rebecca Marmot, recently left, less than a year after her role was merged with the chief corporate affairs job.

Vicky Moffatt, chief executive of climate-focused board network Chapter Zero, says the majority of company directors still recognise sustainability as central to their fiduciary duties. But she believes the function will be increasingly folded into other management roles.

In a new survey of Chapter Zero members, including FTSE 100 chairs and non-executive directors, about three-quarters of boards still regarded sustainability as a driver of innovation and growth, and part of core business strategy – but were not talking about it as much.

“(In the future), sustainability may not actually exist as a function at the executive level itself,” Moffatt says.

A smaller group of C-suite executives is expected at the UN COP30 climate summit, in part a result of the difficulties of the location at the gateway to the Amazon rainforest. Their topics of conversation are expected to be more about energy security and costs than the drivers of climate change.

Jarratt argues that less rhetoric around ESG does not mean there is less appetite for evidence. Large asset managers, she says, are explicitly requesting that ESG data is integrated into company strategy and reporting. “The CSOs who survive are those who from the very beginning can demonstrate they have explicitly created value,” she says.

SAP’s Mendelsohn, who held the CSO position at airline JetBlue and IT consulting group Cognizant before joining SAP in 2023, agrees, saying: “Before, the CSO was really tasked with two things: one, to reduce the ‘bad’ for as cheap as possible, and two, to put it in a pretty PDF report and make sure the board and the audit committee are happy.”

Now, political and trade pressures show “why it is so important that sustainability data and product carbon footprint be based on ‘actuals’ – not estimates”, she adds.

She describes the contemporary CSO as not merely a consultant or policy architect, but a multitasker capable of influencing other senior officers and also gathering specific financial, operating and carbon footprint data at a localised level.

She says businesses are demanding details from suppliers to assess their own risks. Investors, too, are “ready for the details”. “They want to get into the nitty-gritty... We have sometimes misinterpreted the lack of questions on a C-suite level as a lack of interest. The dialogue has shifted towards higher quality, and in different rooms.”