As investors and regulators request or require enhanced disclosures on a variety of ESG issues, including climate risk, human capital, and diversity, equity, and inclusion (DEI), the need for corporate leadership is creating a new type of executive role. That role is rapidly being moved up the corporate ladder.
A
recent article from Russell Reynolds examines current needs for ESG leadership roles and the state of the talent market, highlighting the transitions from early ESG scopes of work to what is expected today.
The article defines the emerging responsibilities:
- Create the enterprise wide ESG policy and framework of tasks and reporting.
- Integrate ESG performance across the whole company through a consistent message and execution.
- Serve as the point person internally and externally, including to investors and customers.
- Ensure external partners (portfolio companies, operating partners, and supply chain elements) are implementing ESG performance improvements in line with your own.
Given that level of responsibility, the article notes that the background profile of candidates is shifting from a repurposed, mid-level employee to a dedicated executive with previous business growth experience and ESG expertise. The typical level has shifted up as well, to a managing director or executive level reporting directly to the CEO, executive committee, and/or the board. The article, looking at the nearly 50 currently serving executives, presents some interesting data on where these candidates are found and their demographics:
- 35% are the first to hold the role at the company and nearly all (93%) were hired from outside the organization.
- 26% have experience in 3 or more corporate functions with ESG or sustainability (80%), finance (39%) and corporate strategy (26%) being the most common. Only 2%, or 1 person in this set, highlighted previous experience in HR.
- To that end, it does not appear a hypothetical Chief ESG Officer would absorb the duties of a Chief Diversity Officer. Rather, the two would likely work in partnership.
- 70% of the newly appointed executives are female.
There is likely significant competition for the top ESG talent. Candidates will want to be a core component of the overall business strategy, to see that ESG is stated priority for the C-Suite (and backed up in practice), and to report directly to the C-suite. Candidates in the emerging ESG space exemplify the shifting work culture often discussed in the press. Finally, compensation, while a core concern, is not the end-all-be-all - mission and culture are at least equally as important.
