Corporate sustainability groups are reorganizing and realigning in response to the current economic and political environment. While companies remain focused on sustainability, they are adapting their structures to navigate increasing regulatory pressures, investor demands, and a sometimes-polarized political landscape. Sustainability is no longer viewed as a siloed, “nice-to-have” function, but rather it is becoming central to business strategy, risk management, and investor relations due to environmental factors. As a result of this trend as well as changes in the economic and political landscapes, sustainability roles are being integrated into various business departments, such as legal, compliance, and finance.
Legal and Compliance
The legal and compliance functions play an increasingly vital role in corporate sustainability, moving beyond simple compliance to serve as strategic drivers of long-term value. The sustainability regulatory landscape is rapidly expanding globally, with new laws and directives emerging constantly, such as the European Union’s Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD), in addition to various state climate statutes. Legal and compliance teams are essential in monitoring these changes, assessing how they apply across the supply chain, and ensuring the company remains compliant to avoid costly fines, penalties, and operational disruptions. For companies that operate globally, legal and compliance teams need to navigate conflicting regulatory frameworks across different jurisdictions, which requires a structured, proactive compliance strategy.
The integration of environmental, social, and governance (ESG) factors into corporate strategy has fueled a growing demand for legal and compliance professionals with expertise in sustainability. These roles are crucial for companies navigating an increasingly complex landscape of regulations, stakeholder expectations, and reputational risks related to their environmental footprint, social impact, and ethical governance. They include:
- ESG Counsel / Sustainability Legal Counsel: These are typically in-house legal professionals who provide specialized advice on all legal aspects of a company’s ESG initiatives. Their responsibilities include ensuring regulatory compliance by monitoring, interpreting, and advising on evolving ESG regulations such as climate disclosures, supply chain due diligence laws, and sustainable finance regulations. They also make certain that there is accurate and compliant reporting to regulators, investors, and other stakeholders on climate disclosure rules.
- Sustainability Compliance Manager/Officer: These professionals focus on ensuring the company adheres to internal and external environmental laws, regulations, and sustainability standards. They often work closely with legal teams but may be housed within a dedicated compliance or Environmental, Health, and Safety (EHS) department.
- Environmental Compliance Officer/Specialist: While sometimes overlapping with the Sustainability Compliance Manager, these roles often have a more specific focus on direct environmental regulations such as air, water, waste, and hazardous materials rather than the broader ESG spectrum.
- Supply Chain Sustainability & Compliance Manager: This role focuses on ensuring the ethical and sustainable conduct of a company’s supply chain, often involving complex legal and compliance considerations related to human rights, labor practices, and environmental impact.
- Sustainable Finance Regulatory Compliance Specialist: With the rise of sustainable finance, these professionals ensure that financial products, services, and investment strategies comply with emerging ESG-related financial regulations.
- Chief Sustainability Officer (CSO): While a CSO is a strategic leadership role, many individuals in this position have a strong legal or compliance background, or work very closely with legal and compliance teams. They lead the organization’s overall sustainability strategy.
As ESG continues to evolve and mature, the demand for specialized legal and compliance professionals in sustainability will only continue to grow across various industries.
Finance and Investor Relations
Investors are increasingly scrutinizing companies’ ESG performance to assess risk, long-term value, and investment opportunities. Regulations, such as CSRD, and disclosure standards, like ISSB, require detailed sustainability reporting, which has significant financial implications. Therefore, Chief Financial Officers and their departments are increasingly seen as key to driving the integration of sustainability across all business functions. Finance teams, with their expertise in data collection, analysis, and reporting, are uniquely positioned to provide more sophisticated and assured sustainability data to meet investor demands. Sustainability initiatives are increasingly linked to financial benefits like cost savings, such as energy efficiency, increased operational resilience, competitive advantage, and access to a lower cost of capital, such as green financing. Sustainability roles can include:
- Sustainable Finance Specialists: They analyze ESG data, assessing financial risks and opportunities related to sustainability, and advise on green bonds, sustainability-linked loans, and impact investing.
- ESG Analysts: These analysts research and evaluate the companies’ ESG performance for investment decisions.
- Investor Relations Managers (with ESG focus): They communicate the company’s sustainability strategy, performance, and impact to investors, responding to ESG-related inquiries, and managing shareholder engagements on sustainability resolutions.
- Carbon Accountants: These accountants measure, report, and verify greenhouse gas (GHG) emissions and other environmental metrics, often working closely with finance to integrate this data into financial reporting.
While some roles are being absorbed, the overall trend is often toward a more integrated and cross-functional approach. Sustainability consultants are also able to offer a wider, cross-industry perspective, leveraging diverse experiences in areas like supply chain, energy, and waste management to provide innovative, tailored solutions. This contrasts with in-house experts whose knowledge may be more limited to their specific industry or previous roles, potentially missing broader insights and cutting-edge solutions.
For companies, particularly smaller businesses or startups, sustainability consultants offer a cost-effective and flexible alternative to hiring an in-house expert. Instead of incurring significant overhead costs like salary, recruitment, training, and benefits for a full-time position, a company pays consultants only for the expertise you need, precisely when you need it. This allows for more efficient resource allocation while still advancing a company’s sustainability goals.
Conclusion
Corporate sustainability groups are not diminishing in importance, but are evolving to become more deeply embedded within the core business functions. This realignment is driven by a complex interplay of regulatory pressures, investor expectations, economic realities, and the growing recognition of sustainability as a strategic imperative for long-term value creation and risk management. If your organization would benefit from insights on how best to structure and adapt its sustainability initiatives to changing market conditions, please contact Canopy Edge for an initial consultation to discuss relevant case studies and strategies for the next stage in your corporate sustainability journey.
