‘Scope 3’ push and ESG backlash: Lessons from Fortune’s First Impact Initiative

• “Scope 3” is the new “Net Zero” among chief sustainability officers.
  In the past 18-36 months, many Fortune 500 companies have made “net zero” commitments. But as the list of “net zero” pledges grows, so does the scrutiny of their scope. With the U.S. and Europe both closing in on mandatory climate disclosures, the most followed matter is so-called “Scope 3” emissions—emissions from suppliers and customers.  
• The external backlash against the terms ESG and DEI is real and palpable…
  We met one company, Deloitte, that formally dissolved its ESG practice. In the U.S., it is now called “SCE”, for Sustainability, Climate and Equity. (Elsewhere in the world, it is simply SC.) More often, the backlash against ESG meant companies put a brake on speaking out externally on social issues.
• …But internally, many companies are doubling down on their ESG and DEI commitments.
  The head of DEI at Paramount, for example, shared that the company continues to accelerate its diversity push, including behind the cameras. Her explanation? Employees demand it. For many other companies, stakeholder pressure was similarly mentioned as the main reason to double down on ESG.
• Chief Sustainability Officer roles at Fortune 500 companies are new and all over the org chart.
  Most CSOs offices were created within the past five years. We met CSOs who were also chief communications officer (Coca-Cola), CSOs who reported to chief supply chain officer (J&J), and CSOs who cracked the executive committee (Walmart). That org chart eclecticism often has structural or personal reasons, but is also a sign of the newness of the role.
• CSO offices are among the most silo-breaking corporate departments.
  The CSOs we met combine a broad remit with low formal authority. It means they are natural coalition builders and systems thinkers, collaborating with every other department, from finance to manufacturing to R&D. They work by design holistically instead of in silos, in some cases pioneering the way their companies operate.
• Finally: bringing together CSOs and heads of ESG and DEI feels a bit like “group therapy”.
  No one has a clearly defined template or roadmap yet of best practices in ESG and DEI, so the willingness to share with and learn from colleagues at other companies is high. That sense of camaraderie is especially high for a group of professionals who have as much detractors as supporters, especially from the outside. 

If you’d like to sign up for our Impact Initiative, which continues as a member-based initiative, you can do so here, or join the LinkedIn group here.

More news below.

Peter Vanham
@petervanham
peter.vanham@fortune.com 

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AROUND THE WATERCOOLER

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This edition of CEO Daily was edited by David Meyer.