In 2020, only 5% of FTSE 100 CEOs were women, at the current rate of growth, its predicted that it would take more than 80 years to just reach 50%.
But this is changing. Board composition is rebalancing in the face of pressing ESG and climate challenges that require different skills and experience in the new-age CEO. Women, who more commonly hold roles in ESG, are starting to rise up and we are seeing a new and welcome trajectory of female leaders moving from CSO to CEO, as businesses realise climate action is key for their reputation and bottom line.
Climate action is now a board-level priority
Understanding climate risks and opportunities has become vital to businesses’ future strategy and reputations, with many companies now acknowledging that their long-term survival and success relies on their action around environmental issues. Since 2015, a total of 4,328 businesses have demonstrated their intentions to move sustainability to the top of their agenda by committing to targets for emissions reduction in partnership with the Science Based Targets initiative.
In the EU, climate regulations are coming into force this year and businesses will have no choice but to comply with one of the main regulatory frameworks, including the Corporate Sustainability Reporting Directive (CSRD), the Sustainable Finance Disclosure Regulation (SFDR) and the EU taxonomy. Executive teams will need to navigate these regulations, which makes taking climate action a board-level priority.
Chief Sustainability Officer today, CEO tomorrow
With the rise of climate reporting requirements, stricter regulations, and growing pressure from customers and employees to take action on emissions, the need for Chief Sustainability Officers (CSOs) will only continue to increase. A PwC study found that the number of companies appointing a CSO tripled year-on-year in 2021, with 28% of CSOs holding an executive level position – a clear evidence of the growing importance of the role.
Climate strategy affects every sector and business function, so CSOs are granted all-area access to provide guidance on operations, strategy, culture, and leadership. Their roles include tracking industry developments and adapting ESG strategy accordingly, identifying areas for environmental improvements throughout the business, measuring carbon emissions and other metrics, and communicating with stakeholders about company priorities. This breadth of experience and understanding puts CSOs in a great position to organically transition to the role of CEO.
Sceptics might question whether CSOs have the skills necessary to take up the mantle as CEO, arguing that the traditional tactic of promoting the chief finance or operations officer is prevalent for good reason. However, experienced CSOs help to define corporate strategy and are accustomed to advocating for the business – both internally to employees and externally to stakeholders, investors, and the media – making them well placed to take on the top leadership role and continue to guide company direction.
An unique opportunity for women
Women are moving up the ladder in sustainability at a much faster rate than in other business areas. A Credit Suisse 2021 report on global gender diversity in the corporate sector found that not only did companies with more diversity showcase better performance on ESG metrics, but women were also more likely to hold lead sustainability roles than men. And, once in a role as CSO, it becomes natural for women to make the jump into a CEO position.
This trend has already started. At the beginning of 2022, H&M appointed its first female CEO – Helena Helmersson. Helmersson worked as a sustainability manager for five years before being appointed COO – a role she held for just over a year before taking the reins as CEO. She is one example of how sustainability roles are proving a legitimate and logical avenue for women to be promoted to board level. For example, look at Marissa Pagnani McGowan at L’Oreal; Rebecca Marmot at Unilever; and Lou Balmer-Millar at Caterpillar Inc.
With companies increasingly turning to female expertise for improvement in efficiency and navigation of the changing requirements around carbon emissions, water usage, and energy consumption, the trend of CSO-turned-CEO will pick up pace.
Similarly, we will begin to see more male professionals making their move into corporate sustainability or ESG roles as it becomes a tried and tested path to CEO roles.
As we approach 2030, governments will ramp up the pressure on corporations to implement rigorous changes to achieve the long-term goals of the Paris Agreement. It is therefore makes sense thatclimate leaders will be next on the CEO seat.
Just as crisis and war ushered in a wave of social change in the 20th century, changing mindsets and leading to women being granted the right to vote, the collective desire to save our planet may be the impetus needed to end decades of inaction on climate and diversity issues. And women will be in the driving seat.
About the Author
Rachel Delacour is the cofounder and CEO of Sweep, she is an award-wining repeat entrepreneur with a background in finance. In 2009, she cofounded BIME Analytics, a pioneering business intelligence SaaS which was acquired by US customer service company Zendesk six years later. Rachel worked there as General Manager until she decided to use her talent to help clean the climate mess with Sweep.
A leading female figure in European tech, Rachel was elected co-President of France Digitale in 2018 and her thought leadership has been featured in The Economist and The Wall Street Journal. An advocate for women in tech, she has backed several female-founded US and French startups.
