By Roy Snell
The impetus for organizations to implement ESG programs came from stakeholders, primarily investors. However, as important as investors are, they will not be deciding who your organization will choose to manage your ESG program. The decision about where to put ESG and with whom it will be put will happen naturally or organically across the world and across all industries. There will be no standard to tell an organization where to put ESG. ESG thought leaders might have an educated opinion about where ESG should reside; however, they will not make that decision. In 95% of all cases, I estimate that the CEO will be involved in the decision.
Have you ever seen compliance, ethics, or ESG professionals go too far and end up in the press? It’s not a pretty sight. Some CEOs are very concerned about filling these types of jobs. I also believe CEOs will be involved in 100% of the second ESG Officers hired in their organization. When ESG hires go wrong, they can go spectacularly wrong. ESG is highly visible, sometimes controversial, and attracts passionate and emotional people. Passion and emotion are important in organizations, but you have to control your passion and emotion.
There are only two kinds of CEOs, those who care deeply about who is hired as their organization’s ESG Officer and those who will regrettably care deeply later.
I was a CEO for 20 years and cared deeply about who I delegated work. Questions I always asked myself included: “Who has the right skillset and personality to handle this task? Who can take this task on and not create more problems? Who can do this task without being in my office every day asking for help?” Effective leaders have been subconsciously, if not secretly, assessing who on their team is most qualified to take on ESG from the moment they realized ESG was an inevitability. I will describe how I think a typical leader will decide who to select as their ESG Officer.
Imagine if you will, leadership meetings that are being conducted as we speak and someone brings up ESG. Everyone in the room will have an opinion because that’s what ESG does to people. Some will say the organization cannot do enough for ESG causes, giving leadership the impression that ESG might overpower their mission or finances. Others will say that ESG is overkill and must be dialed back. Dialing back may cause leadership to think ESG issues might go unaddressed and result in chronic underperformance on ESG topics. This may conjure up images of organizational death by social media.
Only one department head, Compliance, will have an educated opinion about identifying, addressing, and preventing ESG issues with tools and skills they have been perfecting for years. This includes education, auditing, risk assessments, policy development and more. That will catch the eye of executive leadership and impress many of them. As a result, I believe responsibility for ESG will drift toward the compliance department over the next few years, and CEO’s will have a significant impact on how the ESG profession evolves.