Tuesday, February 23, 2010

Where Should the Sustainability Team Live in the Organization?

Coordinating and providing leadership for sustainability across a global enterprise is extremely challenging, especially when involving all functions (e.g., sales, product, supply chain, facilities, marketing, and HR). Here are 5 options we've seen for the organizational structure with respect to the sustainability team:
1. Separate sustainability team. Often lead by a VP, reporting to CFO, General Counsel, COO or CEO, this team is separate from EHS, facilities, and environmental affairs. We see this in less than 10% of firms have this.
2. Part of EHS. We are finding more "EHS&S" titles at companies and noticed that NAEM is now using this abbreviation.
3. Part of Facilities. A common place for firms which have mostly Scope 2 emissions with little manufacturing and no EHS department.
4. Part of Environmental Affairs. Tends to focus on regulatory matters.
5. None. Sustainability efforts are coordinated with a cross-functional team, ideally with strong executive sponsorship and leadership.

Which structure is best? Our experience is that while selecting the most appropriate organizational structure is important, it is not the most crucial success factor. For any of the above options to be effective, the following elements must also be in place:
- CEO and Senior Management commitment
- The correct leadership skills of the sustainability leader
- Assurance that sustainability is the #1 job priority for at one empowered VP or Director
- Clear and well understood business case for investment and action

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