10 hours ago
- Business
- Wall Street Journal
Sustainability Chiefs Are Recalibrating in Bid to Keep Decarbonization on Map
A year ago, chief sustainability officers were taking stages at company events and conferences to present bold climate strategies as a very public face of their business.
Now, many are having to rethink how to do their jobs from the backroom.
'It's turbulent times for sure,' said Annette Stube, chief sustainability officer at Lego Group.
Recent months have brought a wave of backlash against ideas like sustainability and net zero, with many investors pushing for faster returns, rising share prices and more investment in artificial intelligence.
Startups have ditched sustainability language from their websites in favor of terms like 'defense' and 'security,' while other companies tout initiatives in 'resilience' and 'risk mitigation.' Meanwhile, references to 'climate,' 'ESG' and 'carbon-neutral' have dropped from corporate statements amid a general rollback in green commitments.
Jim Andrew, chief sustainability officer at PepsiCo, said that when his company was putting together its PepsiCo Positive strategy in 2020, there were a lot of tailwinds driving progress in the sector.
Infrastructure, cross-collaboration, funding to address climate change, grid modernization, electrification, recycling and waste management and changes in packaging were among the areas that had support previously, Andrew said.
'Now if you sit here in 2025, those tailwinds have almost universally become headwinds. Infrastructure development is lagging at best,' he said. 'The policy and the regulatory landscape is complex. There hasn't been harmonization, it doesn't enable scale, it's fragmented. There's not enough global participation of companies and countries in moving some of these things forward.'
This means that for many CSOs, the first half of 2025 has required a degree of soul-searching—not only in how they go about doing their jobs but also in what exactly corporate sustainability looks like these days.
We are going through a period of uncertainty 'where companies are rethinking and recalibrating,' said Ioannis Ioannou, an associate professor of strategy and entrepreneurship at London Business School who specializes in corporate social responsibility.
Ioannou said sustainability had started to become an elitist project, where the language used was too opaque, led by academics, regulators and executives. He said that for ordinary people trying to understand what companies were doing, it had become hard to decipher.
'Ultimately it collapsed because we failed to create a narrative infrastructure [around ESG],' Ioannou said. 'How it creates value both fundamental and broader stakeholders value.'
A number of CSOs are now being more upfront about the challenges they face in navigating the energy transition.
'We are having very realistic conversations about challenges associated with energy transition,' said Heather Zichal, global head of sustainability at JPMorganChase. 'Nobody has done this before, there is not really a playbook for how you create and deliver [clean] energy, how we think about market decarbonization. We are going to try some things that work and some that do not.'
Others are trying to narrow their focus. Instead of setting wide-ranging goals, they are trying to influence only the areas that are core to their company's business model. For a consumer goods company, where food security represents a material risk, that might be looking at regenerative agriculture. Airlines, meanwhile, might see carbon tax as an issue and target development of sustainable aviation fuel.
'The focus now is on urgency and scale,' said Rebecca Marmot, chief sustainability and corporate affairs officer at Unilever. Last year, Unilever changed its sustainability strategy by lowering its targets on plastic packaging while keeping its net-zero emissions target of 2039. It also merged the role of corporate affairs and sustainability, sensing that regulations would also likely steer corporate policy in the future and so lobbying directly would be important.
'If you want to make an impact, that is going to be in areas material to the business,' said Marmot. 'You need systems change and scale. You can work on your goals, but you also need a policy angle.'
For some, the backlash has actually been a positive change. 'Before, the persona of a CSO was sustainability expert, not business model expert,' said Lane Jost, head of ESG advisory at consulting firm Edelman Smithfield. 'In the last 12 months, the CSO equivalent now has a business operational and finance skill set rather than sustainability skillset.'
For others, these changes have led to a closer working relationship with the chief financial officer, where arguing for changes has to be justified on the company's balance sheet. Instead of making an investment because it aligns with your sustainability goals, those investments also have to boost financial performance.
'It's less about promoting the topic and proving the topic's relevancy and instead more about prioritization, integration and execution,' said Sophia Mendelsohn, chief sustainability officer at SAP.
Mendelsohn added that the CSO role itself was maturing, with it now more likely to command a profit and loss directive as part of their goals. 'The work still is proving the profitability of long-term value creation and risk mitigation on a quarter-by-quarter time basis,' she said. 'Maybe the questions have gone from the quarterly call to investor relations in one-on-one meetings, but they're still being asked.'
One other area of revision has been companies' relationships with external stakeholders. Groups like the Science Based Targets initiative, the Net Zero Banking Alliance and the Glasgow Financial Alliance for Net Zero have come under pressure in the past year, with some questioning how effective being part of large institutions are.
'I think we are moving from a place where we were putting out very large aspirational targets which did not have too much foundation,' Lego's Stube said.
Stube said that companies now have a better understanding of the climate crisis and so being more considered in their approach is a good thing. 'We can't just let companies and everyone else get away with targets that are too fluffy and too stretched,' she said. 'We have to demonstrate that we are actually solving for it and not just talking about it.'
She did, however, praise SBTi for its role in setting standards for corporate climate targets. 'It is the only place you can go, really, at this point in time, to know what is a good standard,' Stube said.
One area that hasn't changed for CSOs is the challenge of dealing with evolving regulations. In jurisdictions like Europe, authorities are now starting to implement climate-based reporting for companies. Across the pond, regions like California are expected to follow suit.
'It's quite a lengthy process,' Unilever's Marmot said. 'But to the current extent, the more you have standardized reporting the easier it is for investors because you are able to compare apples with apples.'
Despite all the challenges, most CSOs remain positive, mainly because they feel closer to company strategy. Zichal said though it 'sounds crazy, I have a lot of enthusiasm for the industry right now.'
Her sentiment was echoed by Stube. 'We are no longer sort of advisers on the side, but really integrated in the business, being part of the business' decisions.'
Write to Yusuf Khan at
