The Next ESG Leader: An Evolving Profile

Examining the rising demand for ESG leadership across industries and functions to identify the evolving profile of future ESG executives

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NEXT ESG Leader: An Evolving Profile

{Want more of the NEXT series? Check out volume 1 exploring the evolution of the supply chain leader, volume 2 showing the evolution of the chief revenue officer, and volume 4 discussing the demand for chief marketing officers.}

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There’s no question that environmental, social and governance (ESG) and sustainability concerns have become a major force in the corporate world, and the current level of demand for leaders experienced in ESG is unprecedented. According to investment research firm Morningstar, funds with an ESG focus attracted more than $51 billion in net new funds in 2020 and another roughly $70 billion last year.

Despite the growing pains around ESG and finding leaders who are experienced in the space, it is widely acknowledged that it is here to stay and that its core principles are good for business.

So, who are the leaders shaping ESG and its future? For volume 3 of our NEXT Series, ON Partners leaders examine the rising demand for ESG leadership across industries and functions to identify the evolving profile of future ESG executives.

A recent Thomson Reuters article notes that “ESG issues are quickly emerging as cross-disciplinary areas of responsibility of C-level leaders. In fact, chief sustainability officers, chief legal officers (CLOs), and chief financial officers (CFOs) see the most expansion within their corporate functions as the growth of ESG duties begins to impact these roles.”

Notes partner Joe Olson, “We’re seeing ESG leaders coming from all different areas. I’ve recently seen ESG executives come from VP of Internal Audit, Corporate Treasurer, VP of Investor Relations General Counsel, VP Quality and VP of Supply Chain roles.

 

“The common theme is that these executives are strong business partners who can execute ‘non-revenue’ projects across an entire organization. These are challenging roles and it’s a natural opportunity for senior leaders who enjoys the internal operations of a business and are passionate about sustainability to come in and really influence the future course of global commerce.”

Adds partner Sean Cantarella, “A Google search of the company around their values and what they are doing and saying – or not – is important to candidates. People care a lot about the club they are joining. How a business markets themselves on social issues will be indicative of the talent they will be able to obtain.”

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ESG Leaders – Where Do They Come From?

 

So, what’s the career path for an ESG leader, and where do they come from? From an executive search perspective, more and more companies are demanding ESG expertise within functional leadership across a range of industries.

Additionally, ON has seen that the combination of industry and functional leadership expertise combined with ESG experience is critical in a leader’s profile moving forward. When evaluating the last few years of ESG-related executive roles across a variety of industry verticals, ON identified four main functional paths for ESG leadership and identifies how they got there:

Supply Chain and ESG – A Necessary Combination

According to ON’s Heidi Hoffman, “Companies are no longer focused on simply making money. Of course, they want to make money, but underlying their actions is a growing attention to values and global impact. How a company’s leadership approaches and strategizes around these topics indicates their level of responsibility and accountability to the greater ecosystem. ESG and social justice are significant topics of conversation in the supply chain world.”

The best supply chain leaders possess business and technical knowledge and are adept collaborators and communicators. Building and maintaining relationships translates to supply chain success.

Here are a few ESG leader profiles within the ON community who started in supply chain:

Chief Sustainability Officer – A leader from supply chain management in a well-known F500 consumer packaged goods started her career in supply chain global management. She moved from supply chain management to leading manufacturing across various category lines to eventually merge sustainability into her role and responsibilities. From there, she evolved to leading global responsibility for corporate sustainability and supply chain strategy, ultimately becoming the company’s current chief sustainability officer.

CVP Supply Chain and Sustainability Management – This leader started her career in lower-level finance roles before shifting over into business operations for a popular global telecommunications and wireless provider. From there, she evolved into leading a variety of supply chain and operations teams for a F100 technology organization. Eventually, she merged her supply chain and operations leadership role across technology devices into an additional sustainability role and responsibility.

Finance Factors In

Increasingly, finance can drive success in ESG and, in the process, strengthen the strategic role of CFOs and chief accounting officers. And according to the CFA Institute, investors are now including non-financial ESG factors as part of their analysis process to identify material risks and growth opportunities.

Here are a few ESG leaders from the ON community who started in finance:

Chief Sustainability Officer – The chief sustainability officer for a multinational manufacturing company spent his early career in finance. He was elevated from a plant controller to an operator when he took on a significant manufacturing role. That balance between operations/supply chain and finance got the attention of the company’s chairman/CEO, and he was promoted to lead EHS&S.

SVP Strategy, Business Development and Sustainability – A former investment banker, this leader is a very successful change agent who has been involved with significant global deals and understands how to operate in an M&A-driven environment. The senior executive’s company will continue to grow through M&A, and her mix of experience within the finance function and the company’s split leadership combines to create a unique fit for this stage in its evolution.

Evolving Priorities in Marketing & Communications

Successful ESG marketing shows both internal and external stakeholders how they are linked to an organization’s specific values and goals. Communications leaders who understand how to successfully integrate ESG messaging throughout a company’s brand are in high demand.

“We recently collaborated with a large consumer organization that placed the highest priority focus on deep ESG experience for their new Chief Marketing Officer role.  This was a 75+ person marketing department with what we see as very traditional marketing functions but with an ambitious agenda ahead for the brand and community.  I expect we will continue to see the evolution of ESG experience being prioritized along with what we historically expect to be the strongest attributes of a marketing executive, like brand and growth expertise,” states Lynda Robey, partner at ON Partners.

 

“For this particular role, we identified executives across public relations, corporate responsibility, legal and existing marketing roles that had social, environmental, and community responsibility as part of the remit,” added Robey.

Here are a few ESG leaders from the ON community who started in marketing:

Chief Sustainability Officer – After nearly two decades in marketing roles with a consumer goods giant, this senior executive was tapped to lead its sustainability initiatives, serving for the last six years as its chief sustainability officer. Leveraging relationships developed during her marketing tenure, she has focused on educating other leaders in the company on the benefits of sustainability and helping them to implement sustainability-led innovations.

Senior Director, Local Giving, Global Community Impact team – After spending a decade in senior marketing roles, this leader joined one of the world’s largest healthcare companies to guide its corporate citizenship and sustainability strategy and implementation. From there, he drove approaches that leveraged business expertise to positively change outcomes of individuals and strengthen communities around the world. This led to his current role, bringing together experts in local giving, employee engagement and corporate social responsibility, all with the goal of addressing critical health inequities and social challenges in communities across the world.

Legal Expertise

In today’s environment, managing an organization’s legal considerations intrinsically means considering ESG issues. Investors and other stakeholders expect businesses to address sustainability and commit to diversity, inclusion and equity, and standards and regulations around ESG continue to expand. More than ever, organizations need legal experts who can navigate ESG demands.

Chief Sustainability Officer, NA – After starting her career as a lawyer focused on international mergers and acquisitions and corporate compliance, this leader transitioned into sustainability, where she stewards the beauty company’s sustainability platform in North America. Her background developing partnerships and a collaborative spirit are key attributes of this effective sustainability leader.

Chief Sustainability, Corporate Responsibility and Governance Officer, and General Counsel – After serving as General Counsel for his two previous employers, this senior executive joined a F500 food and beverage company, where his current position encompasses both legal and sustainability roles. His experience negotiating corporate acquisitions and advising on governance issues primed him for his role leading the company’s sustainability initiatives.

With ESG front and center among a quickly growing number of organizations, their customers and their potential customers, expect more to come in this rapidly developing space.

{Want more of the NEXT series? Check out volume 1 exploring the evolution of the supply chain leader, volume 2 showing the evolution of the chief revenue officer, and volume 4 discussing the demand for chief marketing officers.}