The new heads of ESG look nothing like the old, and that’s a good thing, said Russell Reynolds Associates managing director Meredith Coburn at yesterday’s PE Innovators in ESG Speak. Firms with a genuine commitment to environmental, social and governance issues are turning to professionals with relevant experience. Environmental engineering and sustainability business backgrounds are among those now in demand.
“In the past three to four years, there’s been a tremendous change in how ESG is implemented and frankly how it’s framed,” Coburn said on the Implementing ESG Into Corporate Strategies panel.
Private equity and the broader financial services sector now sees a head of ESG as important to have, and the role itself has changed. Candidates need to meet the organization where it is on its journey, drive deliverables through firm-wide influence and be the external point of contact to communicate progress.
“Two to three years ago, many firms were thinking, CEOs were getting lots of questions around ESG that frankly they couldn’t answer well,” Coburn explains. “So they ended up repurposing someone internally, a member of their legal team, a member of their compliance team and asking them to wear the ESG hat and respond to those questions.”
“Where we are today, the last 18 months to 2 years,” says Coburn, “That’s no longer good enough.”
It’s a new signal of the topic’s newfound seriousness in board rooms and investment committees. The old-school appointment of a marketing or press team member to head ESG now carries the risk of being perceived as greenwashing—hiring a professional to sell a firm’s image rather than driving change. Likewise, handing the mantle to corporate counsels is scarcely a better move unless the goal is governance focused. Investors are increasingly looking at reporting structures and where ESG heads sit to evaluate the level of internal commitment.
–Brandon Zero
