Guidance for a Key Climate Leader in the C-Suite
How CCOs and CSOs can accelerate climate progress
I had a meeting during Climate Week in NYC with an accomplished Chief Climate Officer (CCO) looking for some advice. I was reminded how challenging it can be to serve in this still quite nascent role. I also recalled my personal experience serving as Goldman Sachs’s first CCO way back in 2005.
Things were different back then. In many ways, it was much easier because there was so much “low-hanging fruit.” It seemed to me that every climate strategy we devised for GS presented “win-win” opportunities: outcomes that would be good for both the bottom line and the environment. Today, most of the easier victories have been achieved. It's harder to find these “win-wins.”
But CCOs should not be discouraged. Given all of the momentum behind the race to decarbonize — just think about the huge number of participants and all of the excitement on display during Climate Week — there remain many opportunities for CCOs and CSOs (Chief Sustainability Officers) to achieve environmental gains that also strengthen the business. These opportunities just aren’t as obvious these days.
So. . . how best to proceed? I always find it productive to brainstorm with others on this topic. In that spirit, here are some of my suggestions for CCO/CSOs. I’d love it if others shared their views too.
My suggestions:
Lead with commercial angles. I use the word “commercial” on purpose, even though it is sometimes looked down upon by environmentalists. When I first began tackling environmental opportunities at GS, amidst the firm’s relentlessly (but appropriately) commercial culture, ESG did not yet even exist as a concept. My colleagues were all intensely focused on the bottom line, period. Many of them wondered why the firm even had an environmental initiative. Accordingly, I repeated over and over in all of my conversations with them that we had two threshold criteria for any environmental initiative we undertook. First, it had to have clear, measurable environmental outcomes. And second, it had to be good for the bottom line. No exceptions. A lot has changed since 2005, but still I think CCOs should always lead with a bottom line focus. Environmental strategies that deliver positive business results are the ones that will endure and scale.
I’ll admit that I was exaggerating when I said “no exceptions” to this double bottom line approach. We also pursued initiatives without an immediate payback. For example, we funded and enthusiastically participated in great collaborative projects with NGOs like the Wildlife Conservation Society (WCS), the World Resource Institute (WRI), and Resources for the Future (RFF). We also undertook a truly heroic (and expensive) conservation project to protect hundreds of thousands of acres of wild nature in Tierra Del Fuego. I just chose not to lead with this stuff in conversations with business leaders.
Treat your colleagues like customers. You need buy-in on your ideas. That means you should always be selling. Keep your colleagues’ perspectives in mind when proposing your initiatives. Don’t be like the CCO who recently proposed restrictions on flying business class to Asia as a climate initiative. The emissions savings from flying coach versus business are small in comparison to the very large backlash from the team who has to fly for 16 hours and then go straight into customer meetings. Focus on the big stuff and pick smart battles.
Be creative in how you analyze and sell opportunities. As noted, finding “win/wins” is tougher now. But remember, you can be creative in demonstrating how your environmental/climate initiatives will pay off. Climate projects can grow the top line with new products or service offerings, reduce costs, fine-tune capital expenditures (for example, avoiding stranded assets), address potential risks, prepare for coming regulatory/disclosure regimes, align with big customers’ plans to reduce scope 3 emissions (your scope 1 emissions), rally stakeholders, and more. There is a lot of room to maneuver in finding ways to demonstrate that your initiatives will deliver positive value.
Talk to all of your stakeholders. I often hear from CEOs that shareholders, in particular, don’t seem to support environmental initiatives. “Shareholders never ask about our climate actions,” CEOs tell me. But in my observation, these CEOs aren’t really bringing up the topic. When I review transcripts from their quarterly earnings calls, I see that CEOs rarely explain why their environmental activities make business sense. It's also true that the attending analysts don't ask about it, but you can change that by persuading your CEO and CFO to put the environmental program on the agenda. Some companies also hold standalone ESG calls with shareholders — a good idea in my view.
Likewise, you can also learn a lot from conversations with your customers and employees. They’ll see opportunities you miss and they’ll appreciate being consulted. (Many CEOs tell me they’ve been surprised by the great ideas that young employees serve up and are delighted to engage with them in this fashion).
Build relationships with NGOs. Environmental NGOs are imperfect (aren’t we all?) but they've been doing this work for decades. They know things you don't, no matter how good you are. You'll help them. They’ll help you. It accelerates progress.
This was another discovery at GS back in 2005 — we were amazed at how much we learned from our NGO partners. Plus, the NGOs helped us create inspiring opportunities for our senior management that added to overall momentum. We arranged for GS executives to visit our conservation project in Tierra Del Fuego along with scientists from WCS. They had a rugged adventure they will never forget. The trip made them proud of the firm’s environmental initiatives, lifetime environmental supporters, and strong champions for the firm’s related efforts. I did the same kind of thing with corporate CEOs when I ran TNC and, again, it always seemed to add momentum to their sustainability programs.
Clarify and simplify disclosures. Explain what you’re doing, how you’re doing it, and exactly why it makes business sense. Stop there. Leave out all the extra fluff — it dilutes your message and makes you vulnerable to criticisms about being too “woke” and/or guilty of greenwashing. The truth shall set you free.
Explore acquisitions. Today many of the biggest environmental opportunities require that you disrupt your company’s traditional way of doing business. This is always difficult. But good news: there are many exciting startups with disruptive technologies or strategies and strong management teams that, due to market conditions, may not be able to raise the capital they will need. You might be able to make big investments in these ventures and/or acquire them on favorable terms. Exploring such opportunities now — even if they don’t result in done deals — should also help you build close partnerships with your business leader colleagues.
Get involved in advocacy. Better public policy would make it easier for you to meet your environmental goals. Be vocal about that. Just look at how much climate (and business) action is now underway thanks to the IRA bill. Keep fighting for policy like that. Consider partnering with NGOs to make additional policy gains happen and make sure such efforts are part of your own lobbying activity.
Whenever I meet with CEOs leading big companies today, I’m reminded how grateful we should all be that they have skillful and determined CCOs and CSOs on their leadership teams. These CCO/CSOS are heroes. But we need to accelerate progress. Time is not on our side, and the next set of opportunities are challenging ones. The goal of this newsletter is to do everything possible to help. The ideas noted above are humbly offered to do that. We also welcome any additional input, challenges, and questions from readers.
Onward,
