Natural resources are a dominant feature of the Middle East, with Saudi Arabia alone home to 17% of the world’s petroleum reserves. The region has great responsibility to contribute to global efforts to reduce carbon emissions and restore the environment, with government initiatives such as Saudi Arabia’s Vision 2030 or UAE’s Net Zero by 2050 vision focusing on the environment and renewable energy.
The good news is that 73% of businesses in the Middle East are working towards or have committed to carbon-neutrality, according to a report by PwC in May 2023. For business leaders in the Middle East, sustainability has become a non-negotiable in their agenda. Many clients now evaluate a vendor’s sustainability program as a differentiator. One infrastructure company’s regular practice includes educating clients whenever possible on innovative green products; or including a greener option in the contract even if the tender does not explicitly ask for it. These actions have clear benefits, and an increasing number of GCC clients have opted to go for the green option even if it was not the most cost-effective choice.
The rise of the CSO
Since consumers are leading demand for sustainable practices, the issue has a direct impact on revenue. So it is unsurprising that leadership teams have started to welcome the chief sustainability officer (CSO) to their ranks to drive the agenda. The CSO role started to gain traction over the past three years, and PwC’s report shows that just over a quarter (27%) of organizations in the Middle East now have one as part of their leadership structure.
Ideally, a CSO should be identified from within. This has been the typical approach globally for the past decade, with companies appointing CSOs from internal departments such as communications, corporate social responsibility, environment, health and safety or strategy officers and consultants with experience in advising the organization on how to manage energy transition and reduction in carbon emissions.
The advantage of this approach is clear in that existing executives know the company and are likely to have good stakeholder relations. However, as expectations have evolved for sustainability leaders to be more dedicated, bring in global perspectives, introduce creative solutions and exert more independent judgment on ESG risks and opportunities, we see a growing number of corporations hiring from outside, despite the relative newness of the CSO role making experienced talent difficult to find.
What companies should look for when hiring a CSO
Involved in every aspect of the business, from dealing with suppliers to reaching customers, the CSO plays an impactful role. As such, organizations should look for a candidate who is comfortable engaging with every part of the business cycle and with business leads. In our searches for CSOs, top CSO candidates include those who have done a lot of work in corporate affairs, are experienced in networking with the right people across industries, have worked in decarbonization strategies, and business leads experienced in low emission industries.
To truly enact change, the CSO often faces an uphill battle within the organization. For example, a large industrial organization looking to reduce emissions may first need to invest in new infrastructure. The CSO needs to work collaboratively with the CEO and other members of the C-suite so that the hard decisions made to get to where the organization wants to be in terms of sustainability can be widely understood and smoothly rolled out.
The reporting line of a CSO is also another important area to consider and we are seeing more CSOs become part of the C-suite. CSOs can report into a variety of functions like Marketing Communications, Operations, Strategy, Legal or Finance, but an experienced CSO is most effective as part of the executive team reporting directly to the CEO.
While a CSO can drive the initiatives and programs for sustainability, every leader has a role to play. One international building company has a sustainability program that is formalized with measurement metrics, and the leaders of various business units are expected to drive it. At another infrastructure and renewable energy company, a percentage of the top leadership’s bonus is linked to sustainability initiatives.
The shift to sustainable business doesn’t happen overnight. A CSO can be a key catalyst and even ringleader to spearhead change, but all leaders in the company must buy into the same vision to usher in meaningful progress.
Suvi Kitchloo is principal in Heidrick & Struggles’ Dubai office, member of the global Industrial Practice
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