There’s a growing number of companies that have taken environmental sustainability and circularity into the core of their strategy. Equally many companies have started small projects and experiments around developing circular operations and business models. Unfortunately, these small, experimentative initiatives do not often scale and/or turn into economic success stories. Does this mean a sustainable circular company cannot be a successful business?
It’s the Digital storyline, again.
Here we see parallels to the development in the digital space. Some years back, the CIO was responsible for IT, which was seen mainly as a back-office function and cost centre. Slowly, digital was identified as an important, often critical capability by the business, and small, experimental digital initiatives were kicked off in different departments and geographies. The marketing, finance, R&D, and supply chain departments would all start their own projects looking at ways in which digital technology could be considered.
Today, we see different departments and geographies start their own little sustainability and circular economy initiatives from reporting to product design and finally to production. Often these initiatives are disconnected and not coordinated. Worst case, parties starting these initiatives don’t know about other, related initiatives that are ongoing. The Chief Sustainability Officer is in this context often focused on compliance and reporting and not involved or responsible for business-centric sustainability/circularity initiatives.
We all know what happened around digital … [Entry CDO from left] … the Chief Digital Officer joined the company’s C-suite with a wide-ranging set of responsibilities and a mandate to drive digital initiatives across the organisation with a clear focus on business value. Equally, we see the emergence of a new role in the C-suite with a focus on environmental sustainability and circularity.
But why do we need another Chief?
The reasons for considering a new role in the C-suit are easy:
- Multiple parallels, small-scale initiatives don’t drive the required impact, are often not economically feasible, and can hardly be scaled to the right level due to resistance in the organisation and the market.
- True circularity requires coordinated cooperation across the company and even more across the end-to-end value chain. Without a mandate to drive end-to-end initiatives, transformation projects are doomed to fail or fall short of their set targets.
- The operating environment is increasingly putting a premium on topics such as environmental sustainability and circularity, making it critical to put the right C-level focus on the topic.
- Finally, the regulatory environment is changing fast, putting companies at risk to lose their “right to play” in highly regulated markets, such as the EU. This might in the long-term lead to a situation where specific products cannot be sold or produced without considering sustainability and/or circularity.
As we see the climate crisis intensifying and getting closer to the experience space of individual consumers, voters, and employees, we see the pressure to act increasing. As a result, regulators, investors, consumers, and employees are demanding a changed approach from companies and organisations. Proof of the relevance of the topic is for example the EU Taxonomy, and the Corporate Sustainability Reporting Directive (CSRD). In 2025 every organisation with more than 250 employees and/or a net turnover of €40 million and/or more or at least €20 million in assets (two out of 3 criteria need to apply), be affected by the CSRD and must report on their sustainability criteria. Each year more companies are included. Circular Economy is also one of the mandatory reporting topics.
The change necessary to address the changing operating environment and market demands requires a fundamental shift in the way companies operate and do business. Furthermore, it requires systematic change that goes beyond company boundaries expanding to the broader supply chain and beyond. Companies that want to stay relevant and seize the opportunities this paradigm shift provides need to spearhead the new business and operating models that fundamentally change old assumptions and working principles.
As a result, companies will need to take the topics of environmental sustainability and circularity to the Board room and provide the required mandate and financial frame to drive real, fundamental change. This is only possible with a seat at the table for someone who is enabled to make the change happen however inconvenient it might be and however it might challenge the current status quo.