Sustainability Layoffs & Restructures: What’s Really Going On?

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Transcript

Saif Hameed [00:00:00]:

One is everyone is getting a lot more cost conscious. And this was already a trend we were seeing over the last 18 months. Higher interest rates, just more risk on the horizon. And it is even stronger of a trend now with the tariffs basically in the picture. I think everyone is tightening belts and just looking to sort of buckle down for the next couple of years. So that puts a lot of pressure just on every function. There's another piece which is, I think, this sort of aswathrabodaran effect where everyone is just like, well, actually, what do these people all do? What do these functions do? There's not a lot of clarity. I think that is starting to dawn on many companies and teams.

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Saif Hameed [00:00:36]:

And then now you have this sort of political cover where it is politically correct to sort of dismantle your sustainability setup. So I think under that cover, basically, under that political cover that the new US administration has provided, I think a lot of CFOs and CEOs are looking at these functions and saying, well, actually, should we just pare this whole thing back and reorganise and restructure it?

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Isobel Wild  [00:01:18]:

In a world where the US has withdrawn from the Paris Agreement and fossil fuel policies are gaining favour, many are questioning the future of corporate sustainability. Behind the scenes, a telling trend is emerging sustainability teams across major corporations are being restructured, downsized or even absorbed into other departments. We're going to unpack all of this and what it means for you today. Saif, how's it going?

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Saif Hameed [00:01:47]:

Yeah, it's going. Going well. It's the end of the world as we know it and I feel fine. Izzy, how about you?

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Isobel Wild  [00:01:53]:

I feel fine too, but I'm enjoying your grimace that you said that through. What are you witnessing in corporate sustainability departments at the moment?

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Saif Hameed [00:02:02]:

So, ooh, this gets funny. Funky. So I think that it's really interesting to contrast what we're seeing now with what we were seeing two years ago. Yeah, about two, three years ago, we had this boom in sustainability roles. We were in this phase where we were going from around 5% of the sort of S&P 500 having a Chief Sustainability Officer to around 95% of the S&P 500 having a chief sustainability officer or equivalent. All those CSOs needed functions, all those functions needed hierarchies. And so it was really boom time with every kind of role. And I think that you saw many signs of this sort of boom time in the fact that if you had anything from like six months to two years of sustainability experience, you were seen as an experienced professional.

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Saif Hameed [00:02:55]:

There were amazing roles out there for you with more seniority. You had a lot of people moving from one organisation to another to another to more senior and more important roles over the course of just a couple of years, and difficulty filling roles and keeping talent with technical skills because they were so highly in demand. And so there was this massive boom period. You then started to get this sense of disillusionment late last year where everyone started to look around and think through, well, what does a Chief Sustainability Officer actually do in most of these organisations? And in some organisations it was a little more clear than others. We read this article recently by Aswath Damodaran, who's a professor at NYU Stern, and I think he had a really interesting perspective around how the Chief Sustainability Officer was basically Yoda in some organisations, speaking serious truths that everyone should listen to and the role changed depending on who you were speaking with. So that was kind of where we were a few years ago. And what we're seeing now is that as the dust settles, I think one, actually two or three things have happened. One is everyone is getting a lot more cost conscious and this was already a trend we were seeing over the last 18 months.

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Saif Hameed [00:04:16]:

Higher interest rates, just more risk on the horizon. And it is even stronger of a trend now with the tariffs basically in the picture. I think everyone is tightening belts and just looking to sort of buckle down for the next couple of years. So that puts a lot of pressure just on every function. There's another piece which is, I think this sort of Aswath Dr. Bodhran effect where everyone is just like, well, actually, what do these people all do? What do these functions do? There's not a lot of clarity. I think that is starting to dawn on many companies and teams. And obviously I'm not saying this is true for every function, every sustainability function in every business, but I think there was a general trend of over functioning this in some places.

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Saif Hameed [00:05:01]:

So I think that sort of was leading to some disillusionment. And then now you have this sort of political cover where it is politically correct to sort of dismantle your sustainability setup. And there are some parts of the ESG space that have more politically correct, more political correctness around the dismantlement or it is more politically correct to dismantle some parts of that than others. Deni basically, right now you almost have to really go out to bat for it, or the default is that you're just going to stop talking about it and wind it back. And so I think under that cover, basically under that political cover, that the new US administration has provided. I think a lot of CFOs and CEOs are looking at these functions and saying, well, actually, should we just pare this whole thing back and reorganise and restructure it? Because now it's kind of okay to do that. So that's the big picture I'm seeing, Izzy.

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Isobel Wild  [00:06:05]:

And so what's happening to these teams? Are certain roles in particular more vulnerable than other roles? Are certain seniorities more vulnerable? Are certain regions or locations? Like, what's that actually look like?

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Saif Hameed [00:06:20]:

Yeah, so, like, you know, the funny thing is, if you look at. In business generally, I think this has certainly been true for the last several years. The people most at risk are usually middle management. And then actually execs often have a very short tenure as well. So I would say the people who are safest are likely the people who are at the lowest level doing all the heavy lifting, basically. And obviously there's an argument for will AI come in and change all that. But right now I think that's almost the safest place to be. I think that there are a couple of variations of role that are more at risk.

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Saif Hameed [00:07:02]:

And then let's talk about what risk looks like and what the new setups are. But I see Chief Sustainability officers as a role type really undergoing a transformation right now in how companies see them. And there's a couple of things happening to those roles. One is that they're just being removed. Like that role is being made redundant, doesn't exist anymore. There is no Chief Sustainability officer. That is a sub mandate of another role. So that's the most common one.

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Saif Hameed [00:07:31]:

I think another one is that the role is just being.

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Isobel Wild  [00:07:34]:

Sorry, Saif, can I jump in? Sub mandate of what roles? Like what roles are you generally seeing that this CSO role being absorbed into it varies?

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Saif Hameed [00:07:45]:

I'm seeing a few shifts. So when you take the role wholesale, you are most often transitioning it into some sort of comms or marketing. When you break the role up, you are most likely transitioning the reporting side to the CFO and team the supply chain side to the CPO or chief supply chain officer or something in that vein. And then there are usually some elements of, let's say again, environmental performance that you might move into operations or ops wherever the manufacturing sits. And so you kind of tend to chop it up a little as well when you're not moving it wholesale. So I think that the Chief Sustainability Officer role right now is a risky place to be. And I am speaking with Chief Sustainability Officers who are also just like Wondering, where do I go next? Like, what is the next role for me? Do I try and go into another Chief Sustainability Officer role? Do I try and go into an operational role at a sustainability led business, which I think would be an interesting transition for many of them? Is there another role I try and have my sights on in my organisation? What role is most akin to what I'm interested in and what I want to do in the world? And so I think it's just an interesting space where that progression pathway to C Suite looks a lot less clear for those who see themselves as sustainability professionals and practitioners than it did even 12 months ago. I think that middle management right now in the sustainability function is actually maybe a little safer.

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Saif Hameed [00:09:25]:

But what we're seeing is that the roles that are seen as expensive roles have some sort of restructuring going on. Even in the middle management vein, they're either being moved to a different geography or rolled into something else. And that just is based on, again, the cost drivers that we're seeing play out in a lot of businesses as well. So I think that it's a tricky time for most sustainability professionals in these teams right now. I think there's no sugarcoating that at all.

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Isobel Wild  [00:09:58]:

So when you're explaining how potentially a CSO role is being divided up and put into other functions, is that a good or a bad thing? A lot of the time on this podcast we talk about how to absorb and merge sustainability goals, actions, delivery plans with other functions that are closest to the problem.

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Saif Hameed [00:10:20]:

Yeah, we're wading into murky waters here, Izzy. If I'm totally honest, and I think we try to be totally honest always on this podcast, there's two things that I think are both true. One is it is undeniably a difficult situation for many professionals that we know well and that we work. And I think that we just need to appreciate that there's expertise that needs to be retained and developed. And expertise requires some form of progression to be available and some form of recognition of work and a place in the organisational structure and hierarchy. The other thing that is also true is that we have consistently said on this podcast that we see sustainability really as a transformation capability more than as an enduring function within an organisation. I think that the first original business function was most likely sales, and the second original business function was most likely procurement. In the dawn of time, people were selling, let's say, potatoes or onions or whatever it is that they might have been selling, most likely onions or garlic, I guess, predated potatoes.

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Saif Hameed [00:11:31]:

So they would have been selling that and then maybe next up they would have been buying that to sell it. Right. And in that way I think that you can see certain functions, sales, procurement, finance, that are enduring functions that have a place in the corporate structure. I don't think that you can really say the same thing about sustainability. For sustainability to be effective in an end state, I really do believe it needs to be embedded within every function in the organisation. Procurement needs to be able to procure sustainably. Finance needs to be able to factor sustainability, KPIs and metrics into the governing KPI structure of the organisation. Marketing and comms needs to think about segmentation based on sustainability buying preferences.

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Saif Hameed [00:12:19]:

You really need to embed this in every function. There is a strong case to be made for how sustainability needs to be a team that drives that embedding or that embedment basically, or whatever the right word is there. And so I think that sustainability as a function needs to exist in every organisation for a period of time. The length of that period of time depends on just how long it takes to transform. The best analogy that I can come up with is a digital function where at some point 10 years ago, every company, every large company thought, hey, we need to go through this digital transformation and we're going to bring Accenture in and we're going to bring in a McKinsey or a BCG or Bain to do a strategy as well and we're going to have a chief Digital officer come in and set up a function that functions going to drive this transformation. But really at some point you should digitise and be digital first as the end goal of that transformation. And you shouldn't really need that function to keep revisiting it. And now maybe it's AI or there'll always be a new transformation needed.

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Saif Hameed [00:13:25]:

Businesses need to keep reinventing themselves. But I think that there are some functions that you see as universal end state functions or capabilities and others that are transformational in nature.

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Isobel Wild  [00:13:36]:

And what are the high risk areas? So with the lack of this leadership pushing sustainability initiatives forward, I'm thinking like board meetings, what's the risk and what should teams think about with these restructures happening?

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Saif Hameed [00:13:53]:

I think everything is at risk now. It is still possible, I think, to emerge from this better, but it is also probably more likely to emerge from this worse. And so if I, let's say, reflect a little on how you can emerge better, let's take Unilever as a good example. I think they're a company that many others look to for leadership in the sustainability space. I think that some argue that that has changed recently, given the shifts in priorities for Unilever. I was at the Unilever Partner to Win event and I think I can say this because it's positive in nature, but I didn't actually see any evidence of the shift in structure of Unilever's sustainability approach leading to a downgrade in momentum. And what I mean by that is I'm aware that within the Unilever context, you now have sustained sustainability sort of moving into two places quite strongly. One is the comms side, where they've aligned a lot of their sustainability leadership with the comms and PR and external facing apparatus.

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Saif Hameed [00:15:09]:

And at the same time you have a lot of the aspects that I would see as maybe more nuts and bolts moving into the procurement side of the organisation and the supply chain side of the organisation. So, for example, the focus on how do we engage suppliers in our climate programme, how do we gather data, how do we get things moving in terms of the products they were making. A lot of the weight and burden of that has moved into the procurement side, which makes sense to me. Actually. That's a logical transition. And I think that from what I see of how Unilever frames its sustainability goals, there seems to be more clarity to me, it's like a shorter list. They're still tracking progress against the KPIs that they have, and they're probably aiming to do fewer things, but do them better. And I think there's a lot of sense in that.

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Saif Hameed [00:15:57]:

I think that you can have the structure that they are landing on in terms of how their teams are set up, being a very good, effective supporting structure for that mission. At the same time, I think that there are going to be a lot of other organisations where you basically just take a backseat on the entire function, the transformation and the targets, and you just, you have fewer people in your organisation there to talk about this stuff, fewer people to push this stuff, fewer people to bank the progress that you might make and push for progress, and then you just eventually stop talking about it externally altogether as well. That may make sense commercially for business, it doesn't make sense for the planet. And I think ultimately you come back to how sustainability is effectively a kind of tragedy of the commons, an externality. And I don't think it is reasonable to rely on business self regulation to manage that externality, otherwise it wouldn't have been there in the first place.

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Isobel Wild  [00:17:01]:

Okay, what you're saying here, it doesn't sound like completely out of the ordinary. I feel like a lot of kind of departments in the past have probably gone through similar, similar evolutions of expanding really quickly, then cutting back down, then expanding again. Is this new?

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Saif Hameed [00:17:23]:

I'm going to give a really horrible example, Izzy, that may not be fully relevant to the situation and may sound a bit offensive to some people, but I'm going to give it anyway because it came to mind and we can edit it out in the post editing if we think it's too spicy. I was a consultant working for an organisation once that had about 8,000 people in it. And I was leading a restructuring programme or I was part of a larger setup leading a restructuring programme of this 8,000 person organisation. And every sort of, every few months we'd come back and we'd be like, hey, we need to kind of take another few hundred people out. And it was like a painful process. And at some point we kind of kept coming back to this function. And I think it was called the change function. I think it was literally called the change function.

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Saif Hameed [00:18:10]:

And, and this change function had about 1,000 people. And bear in mind that this organisation was maybe about 12,000 people to start with. By the time I was there, it was like 7,000. We still have 1,000 people that are in this change function. And every time I asked, well, why do we never look at the change function? I was told the change function is super important and we can't touch the change function. And after a few weeks it became clear to me that no one knew what the change function did. And I kept digging and ultimately what I found was that there was an IT function that was separate to the change function, but no one understood what the IT function did. And so the change function was there to translate the IT function into business speak for the rest of the organisation.

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Saif Hameed [00:18:57]:

And so the roles of all those people, or most of those people in that thousand person function was basically to act as middlemen or intermediaries between the rest of the organisation and the IT function. So long way of answering your question, Izzy, that this sort of thing actually happens all the time, sadly, in corporations where you sort of grow teams and then at a particular point it seems to make sense and then actually the zeitgeist changes or something else happens. This change function made sense at one point, right? You probably had all these different transformation projects happening. You needed all these translators and project managers to manage these transformation projects. And it kind of when the organisation was 12, 13, 14,000 people then to say, well, 8% of them are involved in driving transformational change, maybe, fine. But I think sadly there is a lot of muscle memory for this in most corporations.

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Isobel Wild  [00:19:59]:

And what's the moral of the story? Is the moral of the story to be clear on what you're doing and translate that across to everybody in the company so everybody understands your role and your importance.

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Saif Hameed [00:20:12]:

I think there's like two morals here. I think one moral is for the corporation, which is I think that every organisation, I think when it comes to sustainability or to any other business capability, needs to sort of really understand what are we trying to achieve here. Like what are the business problems we're solving? Why do those problems make sense for business? What does it take to solve those problems? Well, what does the solution look like? What does the end state look like? What capabilities do we need to achieve that end state? And what types of people are going to bring those capabilities or own those capabilities? And what type of organisational wraparound do we need to house and develop and maintain those capabilities? Like, this is how I would think about the, the funnel, basically, or the series of problem solving questions that get you to building a sustainability function. And I think that if you have clarity around that, then you have a blueprint that you can revisit and kind of say, okay, fine, times have changed, we need to have some trade offs. What are the trade offs that we make against this sort of blueprint that we conceived? Whereas I think that many organisations, when they set up these functions, they did it because everyone else was doing it. And I think actually that has been the same with a lot of again, digital functions and other setups, setups as well that they tend to be because others were doing it because the consultants advised it, because the new CEO wanted to set up something of their own, that sort of thing. And I think that that makes the, then the step back much harder and more fraught and more painful for the individuals involved and also makes the whole thing much more expensive for the organisation. That, I think is the moral for the corporation.

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Saif Hameed [00:21:46]:

I think there's a moral for the sustainability professional as well, which is that I think that those who want to make a career in this space need to think about two aspects of that. One is what is the enduring skill set that they are building? Are they the Yoda actually, who is there to just preach, basically for want of a better word? Or are they building business skills that have business currency in the future? And I think the second thing is, are they joining an organisation that places value and a premium on those skills, or are they joining an organisation that has a role to fill? Because that role is a box on an organogram. And I think that those two principles are what I would advise every sustainability professional approaching their career to bear in mind.

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Isobel Wild  [00:22:38]:

And if I just touch on the job market at the moment, it looks well. From stats from last year, according to LinkedIn's Global Green Skills Report, the demand for green talent grew twice as quickly as supply between 2023 to 2024. So this year, 2024 to 2025 grew twice as quickly. What's your take on that?

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Saif Hameed [00:23:01]:

You know, it's interesting, actually. I don't have the stats ready to hand. I see a lot of really interesting sustainability roles out there. I see fewer roles that are very senior, actually. Like, I don't see. I know some Chief Sustainability officers looking for their next gig. I know some people looking to leave consulting and become Chief Sustainability officers. And I don't have a lot of places to point them, actually.

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Saif Hameed [00:23:34]:

I don't think that there are as many of those roles going around as there were maybe a year ago. But that's very anecdotal. I think that at more junior levels, I think that there are a lot of interesting roles out there. I think those roles are now starting to look much more technical. I actually think that's a really good thing. They're starting to look more technical in terms of the expectations for the individual on expertise. If you're going to be driving, let's say, a supply chain programme in a food business, you have to really understand the agronomy, you have to understand what farm ecosystems look like. You have to maybe have a track record of driving change in specific types of crops or materials or geographies.

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Saif Hameed [00:24:15]:

I'm seeing higher expectations of what you should be able to do with data and software and systems. I'm seeing like a lot of clarity and robustness. Now, maybe these have all been written by Claude or ChatGPT, all these JDs, but there's certainly more specificity in what business is looking for. And I think that is a tightening that comes from the same drivers that we touched on a little earlier. Like, businesses are thinking, well, okay, if we're going to hire this role, let's be very clear on what we need and let's try and get as much as we can get from this individual.

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Isobel Wild  [00:24:48]:

Yeah, actually there was a report from PwC that said over 59% of CSO appointments were actually internal hires. And I think that also comes down to the fact of what we're talking about change in, like, understanding the business, understanding the different departments, to be able to kind of translate that change across the whole company, I guess. Saif, the final question is, like, what advice would you give to sustainability professionals? Kind of either looking for new jobs, going through a restructuring process, and trying to see the light at the end of the tunnel.

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Saif Hameed [00:25:23]:

Yeah, I think that sometimes basic principles are the best. And I think that in addition to what we already covered, I would say look to your network and develop a peer group that's one of your best resources for any. Any young professional, I think, and frankly, any professional of any tenure is their peer group and others and their network who will help them land on their feet in new places. There are some companies that we work with, for example, where individuals were made redundant and their teams and in some cases, team leaders reached out to me and said, hey, can you help this person find a new role? And then we kind of go and say, okay, well, actually, who else are we working with that might actually have a similar role? And I think that that is the power of a network. It comes from good sponsorship and the backing of your manager or those who worked with you and value your work and their readiness to reach out on your behalf, or reaching out to friends and colleagues and people you've met and their readiness to open doors for you. So I think that's probably the best resource. I think that being really good at something is an important skill. And I think that two years ago, sustainability as a space valued talkers more than walkers, to put it crudely, valued people who had a big LinkedIn profile, talked a lot about the right things, re shared a lot of the news and stuff that was happening.

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Saif Hameed [00:27:04]:

And we're good at doing the conference circuit and sitting on panels and sort of talking about what the business did. I think that that is starting to look much less valuable now. And there's much less readiness for most large companies to go and send people to all these conferences to talk about stuff, which means that actually the ability to get stuff done is something that has a really high premium. There's this little clip going around on social media of Obama at an interview, and someone says, what do you think is the best advice that someone could give to a young professional today? And Obama's answer is, get shit done. Learn how to get shit done. And the ability for me to hand a piece of work to someone and say, could you have a look at this and be able to rely on the fact that they will go and take it away and get it done and come back with results is just a super high value? I think that's. That is so simple. But it's not to be found everywhere.

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Saif Hameed [00:28:07]:

It's not ubiquitous. And so I think that this combination of rely on your network, build a network and then be known as someone who gets stuff done, who can deliver, and who can be really good at something that is not just talking about sustainability. I think those are the two best pieces of advice I could give.

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Isobel Wild  [00:28:25]:

Great parting words. Saif. Thank you so much for this conversation. It was really interesting and I think actually very timely. We're having a month long break where we're doing a bit of a reshuffle and we're going to come out with a new season, the start of June. So look forward to tuning back in with you all then. Thank you Saif. Goodbye.

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Saif Hameed [00:28:45]:

Thanks Izzy.

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