SoS #6: How to Build an Effective Sustainability Team

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Isobel: Hey everyone. Welcome to State of Sustainability where we deliver key insights and unbundle, and unwrap the top sustainability issues. I am standing in today as a friend for Saif.

Saif: I needed a friend. Anyone who's been following our content for a while knows that we do a lot of experimentation.

Saif: Sometimes they may look like technical glitches, but they're actually experimentation. And so as part of that, we're also playing around with different formats. Izzy has been cameoing in on different sorts of things that we're doing, and I think that's worked really well.

Stay tuned and DM us to tell us which one it was in this occasion. Exactly.

Isobel: so today we're going to talk about how to build a sustainability team. We're going to focus on roles, vision, how to budget for a team, how to resource a team. And so:
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What is the vision and how do you kind of first go about making a sustainability team?
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Saif: I actually think there's almost even just a bit of context before we go into that, which is what type of person are we speaking from the perspective of? So I think of a Head of Sustainability, and that person is the first person in that team, in that function, in that role.

And they're now trying to design what other bits and pieces they need around them. And I think that the first piece is what type of organisation are they in. And so from our experience and the types of companies that I've worked with range from, let's say, smaller companies, maybe doing a hundred, two hundred million dollars revenue. Up to the very large, doing tens of billions of dollars of revenue. It's very different patterns for what you'd need within the team in that context. And so I think of two varieties. And it'll play differently for which of those two varieties you sit in.
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One is where you're the Head of Sustainability:

In a more, in a company that's earlier in its innovation journey and is still at the point where they're actually just doing rapid experimentation on its core product then you need a different type of person in that role, but also that person will need a slightly different type of team. Doing slightly different sorts of things versus a more mature organisation with established products, established fit in their market. Think of an established FMCG or consumer goods company. And there again, it's a slightly different profile of skills that you'll need as well. So that's just a little bit of context, but then to go to your question, Izzy, around Where do you start?

I think the first piece is just if you're in the former where you're in a company that's earlier in its innovation journey, I think you need to start looking for a team that can actually ideate, move quickly, be really good at execution, and be people who are just really good at getting stuff done.

And it doesn't necessarily need to be the case that they have lots of deep expertise or experience. They'll learn fast. And so actually you have a lot of leeway to bring in people who are relatively early in their careers, relatively new. They can just get going and actually ramp up. And so a number of the companies that we see that are, let's say, Series B, Series C, Series D startups, doing maybe three, four, five hundred million dollars of revenue, fit into that camp, where they've taken people who are earlier in their career journeys, but just really good at getting stuff done.

They've moved them into these roles, and that's perfectly fine. And now those people in those sustainability teams are actually great recruits for more established organisations.

In the second type of company, which is let's say a more established entity, more mature in its product, more mature in its market, it's a little different because there you need people who are going to be really good at navigating the internal politics, let's say the internal bureaucracy, and really good at speaking the language.

There is a team that I know where there is a Head of Sustainability reporting to an operational leader, and in that case, one of the things that the operational leader really appreciates is that the head of sustainability knows how to get things done in the context of their organisation, because that person has been there for 15 years.

And just knows how to navigate all the routes. And I think that's a very uniquely different sort of thing. Again, you need good performance management or process management or PMO sort of skills. But also the ability to navigate is more important, the ability to command respect and credibility from the rest of the organization is more important. So you're often looking for more expertise and more depth and more industry credibility from having done similar roles in other organisations. But that's kind of a little of what I would start with maybe.

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Isobel: When you're at the start of this journey, and you have the luxury of seeing how you're going to set up the sustainability-like department, will it be one vertical function or will it be set up within different functions? So within R&D, within the finance team? How does that work across both types of companies?

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Saif: Yeah, actually, that's that's a really interesting question. And I'm just thinking of how best to answer this. That piece really doesn't depend so much on the size of the organisation because what I see is that you have these two models.

• One is centralised
• The other is distributed

So in the centralised model, you have a sustainability function and it's a vertical function supporting the other functions of the business. In the other model, you might have sustainability playing a coordination role, but there are sustainability people embedded in other parts of the business, and other business functions.

I think actually both of those models can exist in smaller organisations and also in larger organisations. It does, however, shape what type of team you'll be looking for. It will shape, for instance, whether you need to bring those other functional expertise areas into your function because you need to understand them and be able to communicate really well with them.

So, for instance, if you are not going to be embedded in procurement, if sustainability doesn't have a person embedded in procurement, and instead has someone on the sustainability function column. You need someone who understands procurement best practice, someone who understands how to navigate supply chain conversations, someone who can run those sorts of workshops, and take what is traditionally a zero sum adversarial kind of relationship often between suppliers and customers, and actually turn that into a collaborative discussion.

Whereas if you're distributed and you're embedded, then what you can do is you can actually find someone who is in the procurement or supply chain team and actually does have that expertise already and upskill them onto the sustainability side. I think that initial sort of design choice does affect what you're looking for in the team.

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Isobel: And upskill how?

Let me maybe actually take a step back and just for a moment reflect on what it takes to drive sustainability change in an organisation and then come back to that question. I think at some point at McKinsey, I saw this framework called the influence model, and it basically has a few different aspects to it, and this holds true generally in a generic way for all types of change that you're trying to achieve in organisational setups.

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1. Role modelling: So you need to kind of have leadership and management and people in positions of authority. Very visibly role model what the change is that they want you to deliver. And I can give some examples of that as well.
2. You want to have incentives aligned with what change you're trying to achieve as well: So is there is, let's say, an impact element embedded into the KPIs of the team of the organisation? Are there ESG-aligned bonuses?
3. Which is do you have tools and processes to really help enable and support this?

Think about software, it could even be consultants. It could be just ways of working and interfaces as well between different types of teams.

1. Some form of coaching or upskilling in the direction of the change that you want to achieve. And there are a few examples of organisations doing this really well, actually.  I think it was Chanel, where actually they've been putting large sections of the team through different sorts of training programs on sustainability to really help upskill and I was speaking with the CEO of the UK business for a large food, food service business, a food retailer, like a restaurant chain, just a couple of days ago and he actually went through this Cambridge sustainability course as well for sustainability leaders and coincidentally was alongside one of our product managers in that course. And that's just amazing, right? You're taking someone who's clearly a senior leader in their business and is on track for more seniority and they're not in a sustainability role and they're doing this course to upskill on sustainability and make it relevant for their day job. That I think is actually best practice. And that's just one example, right? But that's how I would look at upskilling.

Isobel: And meeting peers along the way.

Saif: And meeting peers along the way, right? I mean, if you kind of take the cohorts that you have in these programs e.g.,

• Cambridge program is a really good one and very well respected now.
• Terra. do also has a great program and we have friends there as well. And I think what they do very nicely is they bring together cohorts of people from very different disciplines.

So, again, to go to the example of our product manager, you know, Greg, sort of shoulder to shoulder with people from industry, people from software. Uh, it's, it's a really nice combination, I think. And it means that you're able to have this osmosis of different ways of thinking united by the subject matter context of sustain of sustainability.

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Isobel: I would love to just touch on budgets as well. We had an event the other day and a lot of people were asking about how to increase their but not knowing how to actually make the internal business case for the budget to get behind it. Would you have any recommendations on how to go about that?

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Saif: Yeah, I think again, maybe just to set the overall scene. Budgets are really difficult for every business right now, and for every function within every business. Within sustainability, In some ways it's better and in some ways it's worse than it was last year.It's worse because general state of the economy and, you know, budgeting processes catching up with that.

It's also in some ways a little better because organisations have struggled with their sustainability teams being under budgeted last year. And a lot of organisations are now changing that and revisiting that for a few reasons:

• We're seeing a lot of budgets now being expanded for sustainability purely because they were so constrained last year.
• A lot of commitments made last year, you now need to start moving into delivery mode. Everyone is aware that for a 2030 target, you have basically five operational years actually now, if you start accounting for the time it takes to get things done, and the time it takes to actually brag about what you did get done.

Uh, and so, given that context, I think there's a lot of movement back and forth on budgets in this space. But... In terms of how I would think about budgets for the sustainability team, I would apply two learnings that I've absorbed:

1. I would actually start small and put gas on the stuff that works.

Explanation:

And so I think that some sustainability teams try and build out a big setup from scratch. They define early all the roles that they might need and then they put up a big set of JDs or open roles online and they start actually recruiting for all these roles and they're basically trying to build really too fast for them to be able to have room to experiment because if you have this big team, everything actually now needs to work really smoothly, both because those teams are looking for achievement.

To give them validation that they're doing the right thing and a lot of sustainability professionals are motivated to do the right thing. And secondly, because now that you have that budget and you're spending it, you're going to get a lot of scrutiny on how you're spending it.

The way to do it: Bring in one or two people to cover a range of bases. I think that's, that's a better way to start and then you can even very quickly start ramping up.Example: One of the examples I like is the Head of Sustainability at Calzedonia, who is taking a really thoughtful approach to building out his team. He started with a few people covering multiple bases and their sort of owning problem areas. Now he's defining problems to be solved and categories of problems to be solved. And then thinking about how he should architect a team around those problems to be solved. And I think that allows him to be quite flexible to gradually expand while developing a better understanding of how those problems are going to be solved, which may change role number seven versus what you would have had if you'd gone out with all of them together.

1. The second one, is a general rule that I often talk about, which is I think everything should have a proper business case, and every business case should have a return on investment.

Explanation:

And so, and we practice this in our business, Izzy, as, as you know as well, which is literally for everything we do, everything we budget for, we wanna see what is the actual return.

And the business payback could be five months, it could be two years, it could be three years. There may be a lot of reasons to do stuff that has a very long payback period, but you should still, there's no excuse for not having those numbers done.

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Isobel: What roles should we be prioritising?

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Saif: Yeah, I think that there are a few bundles:

Bundle One: Data and analytics

I think that that works really nicely together rather than compartmentalised too much. What you want is you want to have a unified person, and maybe in large organisations a unified team, that is thinking about the types of data outputs that you need, and that's the analytics side, like what do you need to be able to get to interesting answers for the questions you need to ask.

And then what does that mean you need in terms of data inputs and they can kind of design that system.

We had a great question come in on a comment on some post recently, which is: “isn't data architecture something that data engineers should be thinking of rather than people in the business trying to lead sustainability?”

And actually, you know, the lines are quite blurry now. The data architecture of this is basically just, what do you need as outputs, what do you need as inputs, and how should those things link up conceptually. And you don't need to be a data engineer to form a high level impression of that. So this sort of data and analytics piece, I think, works nicely together.

Company that does this well:  Mars

Mars is known for the Mars bar, but the pet food division is probably bigger than confectionary right now.

I think they have a really good approach to this, where they have data and analytics roles and a global data and analytics lead, a team that really thinks very thoughtfully about that.

I think that team is a big part of why they're able to put forward, again, very, very deep and thoughtful insights and, and narrative on that, both in terms of what they've achieved and what they have tried to and struggled to achieve.

Second bundle:  ESG reporting and external stakeholder piece.

Anyone who's followed my stuff knows I don't like the term ESG. But at the same time from an output perspective or a reporting perspective, there is genuinely a role for ESG. From a business change perspective and an operational change perspective, I think ESG needs to be unbundled into the diffrent pieces and managed separately.

But like it or leave it, from a reporting perspective, and a stakeholder and a regulatory perspective, they're still bundled. Having someone who can manage the ESG reporting and stakeholder management side is another bundle to have.

Company that does this well: Diageo

Diageo has actually a long history of generating, again, very robust, very comprehensive ESG reports. At a time when not everyone was doing that and they were really forward leaning. Their team is very experienced on this as well. And there you want people who have the right combination of being able to tell a story and a narrative and go quite big picture in that while being supported by the right facts and at the same time matching it against the lens of frameworks and regulations and so on.

And so I think that bundle of ESG and reporting is another important one.

Third bundle: Operational change

Skills to navigate, coordinate and align operational change across the business.

You need someone or a team that is really good at kind of aligning R&D, manufacturing, engineering and innovation and making all of this work quite smoothly.

Company that does this well: Nestlé

Sustainability and particularly environmental sustainability is very heavily an operational topic at Nestlé. There's obviously also a supply chain piece, but the operational team is one of the ones really in the lead. And I think there they've then thought very carefully about how do they really dovetail objectives and outputs and aims with manufacturing and redesign and again, rejigging really how they do business.

Fourth bundle: Supply chain

Supply chain engagement, let's say that's becoming bigger and bigger and most companies now have dedicated sustainability people on that side of the topic. And so that's another problem bundle to solve for.

And you could say it's about, it's about data gathering, but it's increasingly about collaboration and it will become about deploying solutions and climate risk insurance. And Nestlé is now piloting that, for instance, in different parts of the world. That solution, you know, bringing those solutions into the supply chain, that's part of this problem bundle, which I'm seeing as the supply chain piece.

What you want is people who can lead and facilitate collaborative dialogues in areas which have traditionally been dominated by zero sum games. Where, again, traditionally customers try to extract every last bit of value from suppliers and suppliers likewise try to take all the money that's on the table.

And obviously that's not true for every business and that is changing. And you need people on the customer side, if I'm speaking from that perspective, who can navigate those challenges and those sensitivities and do it in a way where they're also able to coach and upskill. And introduce new knowledge and new capabilities into their suppliers who will often be less advanced or less mature on this journey than they are.

Company that does this well: Unilever

Unilever does, does some things really well in this space, I think. And the way in which their supply chain teams are engaging with their suppliers. I think it's a slow moving beast. But it's very constructive, very informed way that balances sort of the ideological end state perspective with the practicalities of what needs to happen.

Fifth bundle: Project management skills

PM skills will always be needed and maybe that's to manage all these other bundles or in its own right, because this is a change program.

Company that does this well: Kraft Heinz

Where in terms of just managing to execute from the starting point to where they want to be going, I think they're, they're managing to close that gap relatively quickly through a good project management oriented approach with timelines and, and, and, and, and an end destination and involving all the right people at the right times.

And I think that's the skill set that is always going to be useful as well.

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Isobel: touching on this resourcing point, do you have any rules of thumb on when you internally resource or externally resource, and also when you automate versus deploy manpower?

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Saif: Yeah, yeah, good, good question. Here are a few thoughts on this:

1. Not everything needs to be done. Not every job actually needs to be done. The best way to reduce the scope of the team you need is to remove jobs to be done.
2. The second is not every job that needs to be done needs to be done by a human. And so the next piece is just to think about how you automate whatever it is that needs to be done and is there room to do this. In previous episodes, we've talked about scraping PDFs as an example. Every, almost every company that I'm speaking with these days that is trying to get, let's say, energy data into a system is doing it manually, they're typing in stuff into spreadsheets. Tools to scrape PDFs, particularly tabular PDFs that are quite often the same, have existed for quite a while. So you know, the ability to just remove a lot of that and automate a lot of those jobs is the second filter I would take.
3. If it's a job that needs to be done, and it has to be done by a human, it doesn't necessarily have to be done by a human that you hire. It can often be outsourced. That may mean that you have the flexibility for this not to be a full time person, and it can be a ramp up, ramp down sort of resource.
4. If it has to be done, it has to be done by a human, it has to be done by a human working for the company, in the company, I would always first look to whether you can upskill someone who's already there and wants to move into this space.I think there are a lot of instances where people in the company want to work on sustainability.

That can go well and that can go badly. I was speaking with a leader in a fashion retail business. This individual has a lot of deep sustainability expertise. It's often very frustrating that any random person in the business can put up their hand and say, I'd like to work in sustainability too.

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There's a bit of this attitude of, “oh well, okay, I guess, fine. Bring him in.” which I think is not always constructive. At the same time, you know, there are some great assets in the business as well. One of the examples I often talk about is, you know, people who work in, who, who are coming from an IT background, and there's one person that I, I always have in mind when I say this, she was a leader in the, in the IT team and she's moved into sustainability, and that means that she comes with a great mindset and logic on how to think in terms of the system design for data and data inputs and data outputs, and is then able to rapidly ramp up on the sustainability context and layer that in, and I think that's a fantastic lateral move.And there are a lot of those to be found in organisations.

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Isobel: And so when we do have to look for manpower, what are we looking for? Are there any key skills and on the flip side, any watch-outs to look for?

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Saif: Yeah, I mean, I think that we've, we've talked a little bit about sort of skill bundles. The watch outs:

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1. Don’t value experience over intrinsics:I've found that there's a balance where you want a bit of experience, but actually, in a really innovative, fast-moving space, too much experience can be a liability.

This is true in sustainability. In sustainability, depending on what the role is, I would look for people who have, who have some experience, but I would prioritise bt intrinsics. It depends a little on the type of organisation and the bundle that you're looking for, the problem bundle that you're looking to solve.

It could be that you really want to innovate on new products. Part of your sustainability challenge is how you develop a new business.

I was advising a big fossil fuel-based company in the coal mining industry, when I was a consultant, and they wanted to move towards SBTI aligned targets. If you're in coal mining and you want to move towards an SBTi-aligned target, that basically means you need to ramp down the old business and ramp up a new business. So it's not that you need operational efficiency people, there's only so much you can do with coal mining to make it environmentally efficient through operational efficiency. You need business builders. You need people who can say, I'm going to spin up a new mobility business. Or I'm going to take us in the direction of chemicals and ultimately we're going to slide out the coal piece altogether. And then that's a very different skill set. And you need people who can be innovative and entrepreneurial. And that often doesn't necessarily correlate to lots of experience.

So that first piece of just valuing intrinsics, often a little more than expertise, I think is, is important.

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1. Don’t look for an organisational match over problem solving similarity

problem-solvingThe second thing I would look at is, when you are valuing expertise, or when you are looking at expertise and credentials, it's often more important to see if the person has solved a similar problem bundle in a different organisation rather than whether they've solved other types of problems in a similar organisation.

Let me say that in a slightly different way, if you're trying to manage a big sustainability shift, then a parallel shift might actually be managing digital. Managing a shift towards digital ways of working will require you to have good stakeholder management, good program management, managed good budgeting, figured out where to automate versus where to do something manually or manage to do something on time in terms of delivering a program. Interfacing with all the different functions and sub-compartmentalising work bundles into each function. All of this might actually be much more relevant for you than whether they've been working on sustainability because that bundle looks very similar to the bundle that you're trying to solve for.

By contrast, let's say that you're actually bringing someone in who has spent many years in sustainability, but they've never actually had to manage that transition. You're bringing someone in from a very forward-leaning business that has always been sustainable at its core, and you're now bringing them into a very traditional business that has never thought about sustainability.

This person is going to feel like they're shouting into the void, and that's going to be frustrating for them, and it's going to be pointless for the organisation. You need someone who has actually a track record of managing Any type of change. It doesn't need to be a sustainability change. They just have a track record of in that kind of organisation, in your kind of organisation, they have shifted the organisation on some aspect, in some way, on time, at cost, and in a way that worked.

So I would sort of think a little from that sort of lens.

Isobel: I love it. It's like dating.

Saif: Yeah, exactly. A lot of life.

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Isobel: where do I find these people? Obviously, that sounds amazing, but are there any kind of avenues that I should go down to look for them?

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Saif: There's a bit of, let's say, textbook advice and a bit of what we've learned.

Textbook advice: this still works for our business at Altruistiq, but also I think works for our customers, we always look to specialist recruiters, for instance, and specialist feeder programs for the right type of talent.

For instance, we like the On Purpose Program, because the On Purpose Program has a history of taking, you know, great people, high performing people from generalist industries. Maybe it's investment banking, consulting, maybe it's something else.

So you get these people coming out of it who have a breadth of skills which might be relevant for you and those might be the functional skills that you need, but they've got this layer on top now which is what it means to take a mission and translate it into an organisation.

As part of their work in the program, a very common task that they're given is to help with B Corp processes because a lot of the organisations that they're seconded to during the program are trying to get B Corp certified. We were actually very similar. They come out understanding what's important and how you think about streamlining all the different pieces of what's important in an organisation.

We like Terra.do as another similar sort of program with a cohort-based approach, bringing in talent from many different feeders, whether it's mainstream businesses or otherwise, bringing them out as graduates of the program who are now mission-oriented. I think those are great programs.

That's a little of the textbook advice, and you can find specialist recruiters and sources for all the different types of talent you might need as well, whether it's data engineering, for instance, or otherwise.

The more learned piece: I'm finding increasingly that sustainability professionals are looking to their peers for advice and guidance.

They're looking to understand where is there a good sustainability team that feels empowered and that is really running ahead and actually, they'd love to be part of that versus which one is frustrating. We host a lot of events. And I know that in our team, we have a really good idea of which organisations have a happy, well-functioning sustainability team and which ones don't, regardless of whether we work with them as customers or not.

Similarly, I think that we see glimpses of this community and obviously we're like a software partner and so in some ways we're close but we're never, never embedded. But I think that you kind of see that actually there's a lot of movement within these communities from people moving from one team to another because they recognise the commonalities and they're able to get to know people and know the problems that are being solved and see whether these problems are exciting.

So I really think that sustainability leaders should invest time in understanding which community they want to invest in being a part of. That's a little different to just showing up at events all the time. Events can be very formulaic. And can also be very formal and at arm's length. Whereas actually, you know, there are groups on WhatsApp, there are groups on Slack, coffee meet ups. There, there are a lot of these sorts of under-the-radar communities.

Just to give an example, at the event we hosted yesterday, we had very senior sustainability leaders where they're chief sustainability officers at Fortune 500 companies. We also had people in their early twenties just starting their career as a sustainability analyst in let's say, you know, a 300 million dollar revenue business and you have this ability to bring these groups of people together And it's a great way to find talent as well.

Isobel: I think with the evolution of sustainability we've seen so much more visibility around biodiversity and all these other problem sets that are developing which means that sustainability professionals are moving towards those problems that align most of their passion, interests and skill set, and there's a lot of movement across that going on.

Saif: Oh, for sure. Right. I mean, I think that the problem I have with ESG, just to come up, come back to that, is that it's a, it's a basket of very different problems. And the interesting thing is we're now seeing even sustainability in some ways for some people seem like a basket of very different problems.

And at our event yesterday, we had people who cared very deeply about ecology, actually and that's the most important thing to them. It's actually not climate change. And from their perspective, actually, one of the best solutions is probably just fewer people. Because fewer people means more room for a stable ecology.

At the same time, a lot of people coming to the climate change problem are coming at it because they want a safe and healthy life for human beings. And they believe this is an existential risk to humanity, which actually for the pro-ecology gap doesn't sound that bad. So I think that what you find is this unique situation, which I think has actually never happened to business before, which is where for a particular part of their business team. They need to think about mission and ideology not just as something to avoid in an interview conversation but to try and actually lean into and understand because it will have an important impact on retention.

That I think, is just strange for business. I actually think it's something that will take time for businesses to understand and appreciate.

Isobel: On that strange note, we should probably start wrapping up because we are definitely over the optimal podcast time. Good reminder. Thank you so much for tuning in and listening to the podcast.

Saif runs LinkedIn Lives every month where he fields any sustainability related questions. So please jump onto his LinkedIn and pop in any questions because the responses are usually pretty good. Thanks for joining.

Saif: Thank you Izzy, and let us know how you thought this episode was, and we'll continue in the same format if you liked it.

Perfect. Bye! Bye.