The rise of the chief sustainability officer

New sustainability-focused roles are a growing trend in the travel and hospitality industry, but in order for the individuals in this role to be successful, they must connect sustainable strategies with the goals of the business to create synergies and ownership across the management board. Crucially, anyone in the chief strategy officer (CSO) role or similar has to also make sure they are actively creating a more prosperous business. The path to sustainability is built by making a positive impact on the environment, people and communities, whilst simultaneously turning sustainable investments into a more prosperous business. Without that, a business will either move very slowly toward success, or never reach it at all. To date, much of the impetus for sustainability has been driven by legal compliance, mitigating reputational risk, investor sentiment and the threat to asset values and rising cost of debt. The role of CSO or people with a similar title are often subordinated to roles and functions below the management board. With the shift in consumer and buyer behaviour now making the subject of sustainability a far more crucial factor in the choices of what they buy and experience, this now needs to become more central to a business’s entire infrastructure and a key responsibility across the management board of companies. Everybody in a business has a role to play in driving sustainability forward. However, in many cases, companies embed sustainability functions as part of their corporate social responsibility (CSR), corporate communications, or human resources – depending on their bias toward the planet and people. Today however, there is a tangible opportunity for sustainable investments to not only improve the environment, people, and communities, but also recognise the upside potential and synergies of building more appealing brands, which drives growth and increases finance capacity for more sustainable investments. Sustainability should therefore have a growing impact on other functions, namely branding and marketing, commercial operations, development, technology, and finance. What this demonstrates is that for sustainability to be truly impactful, it needs to be embraced across a management board. Sustainability is the CEO’s responsibility, and strategies to capitalise on its commercial value are expected by stakeholders, investors, and customers. So, the job of the CSO is to catalyse management, not to operate in a silo and simply do the things that they can control. What’s abundantly clear when you take this perspective is that, far beyond simple risk reputation or managing the cost of financing, in order to become sustainable, a business needs to invest in a way that is going to create a more prosperous business, as well as improve the environment, people and community. Without this approach, there is far less of an incentive to invest in the business. How does a business accelerate its path and give back to the planet more than it takes out? Put simply, it has to exploit the synergies between investing to improve sustainability, recognising customer needs and prioritising investments that boost the customer appeal, and engineering efficiency and productivity gains to boost financial performance. In a recent global research study by the Expedia Group, 90% of consumers said that they look for sustainable options when travelling. In the same study, 60% said that they actively seek out and choose a more environmentally friendly method of transport or accommodation; and seven out of 10 have chosen to disregard methods of transport and destination options that they view as unsustainable. However, while the latent need from consumers to be more sustainable is clear, the gap is in what brands are offering. This is why sustainability is a hugely important factor for brands’ consideration in terms of how they compete and drive commercial performance. When you look at the management teams across the world’s top 20 hotel groups, just 5% or less have a leadership role dedicated to driving sustainability. This means that upwards of 95% of the time, the crucial matter of sustainability is subordinated within another function. Investing intelligently in sustainability has a ripple effect, as it creates a more desirable brand; a more desirable brand drives growth; and growth increases investment appeal. Subsequently, growth creates more consumer demand and more valuable assets, freeing up more resources to continue investing in sustainability. Businesses must move away from simply seeing sustainability as a compliance job, a legal requirement that incurs penalties if not adhered to. While all good reasons to invest in sustainability, it’s not going to add value to the company, and means sustainability is wrongly seen as a business threat rather than an opportunity. Opportunities are there to be had from proactively embracing sustainability as improving guest appeal, differentiating the brand and building brand premium, increasing demand and therefore creating a more prosperous business. This is the way that CSOs need to be thinking in order to ensure that ‘doing the right thing’ also makes the business more prosperous, so that they can continue to do better and build better. This is, in part, why the Sustainable Hospitality Alliance refers to the ‘Four Ps’: Planet, People, Place and Prosperity. Prosperity for all stakeholders, including the business itself. So, when we say that it is essential to think beyond environment, people and communities, we mean that we cannot forget the all-important profit that makes further investment possible.

The rise of the chief sustainability officer

By Tim Davis, a management consultant for the hospitality, travel and leisure sector

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