transparency, talent and purpose

Value-chain transparency and access to skills would help businesses pursue sustainability opportunities. To compete for talent, they must consider their purpose. To seize the opportunities in sustainability, companies need to rethink their business models, rewire their relationships with suppliers and partners, and transform how they operate.

For executives, the biggest enabler for their sustainability initiatives would be ‘greater transparency throughout the value chain’, with 58% ranking this in their top five (Fig. 9).

“Businesses are increasingly held to account for the environmental and social impact occurring outside their organisational boundaries” says David Schreuders, partner in our disputes and investigations practice. The EU’s Corporate Sustainability Reporting Directive (CSRD), for example, requires businesses to declare their Scope 3 emissions. Added to that is the Corporate Sustainability Due Diligence Directive (CSDDD) which means they need to identify and address environmental and human rights risks in their supply chains.

“This calls for greater visibility over suppliers and partners than many companies have today,” says Julien Moiroux, partner in our healthcare and life sciences sector. “This visibility can also reveal opportunities to reduce costs and mitigate risk in the procurement process and gain competitive advantage.” For example, France has updated its public procurement rules to prioritise sustainable companies. Those that fail to assess their greenhouse gas emissions may be excluded from bidding on government contracts. In the near future, this may be extended to those that fail to disclose sustainability information.

Executives from the technology, media and telecommunication (TMT) sector are especially keen on greater value chain transparency, with 60% ranking it in their top five enablers. According to Frances Gourdie, managing associate in our disputes and investigations practice, TMT companies are getting to grips with the data they need to do this.

“We’ve been working with clients on things like supplier codes of conduct,” she explains. “The next thing they’ll do is look at what data they’re going to collect from their value chain, and how they’ll do that.” Some more advanced companies have hired ESG data specialists, Gourdie adds.

Emily Jones, partner in our TMT sector and head of our US representative office based in San Francisco adds that, "although ESG reporting has not been mandated in the US, many companies in Silicon Valley have made some level of disclosure in response to growing investor demands. A few years ago, they were ahead of others in using their ESG credentials to compete for the best talent. Fast forward to today, the growing emphasis on collection and use of data puts them in a good position to focus more fully on environmental issues, supply chains and their product portfolio."

Many businesses want greater influence over sustainability standards and regulations. Half place ‘closer and earlier engagement with standards setting and framework development initiatives’ in their top enablers, and nearly as many (48%) cite ‘closer dialogue with governments and regulators’ on sustainability-related rules.

Trade associations can help companies maximise their influence. For example, being members of the Alternative Investment Management Association (AIMA) or the Association for Financial Markets in Europe (AFME) is the most effective way to engage with policymakers, says Nicholas Colston, partner in our financial services regulatory practice.

“The trade bodies get time in front of regulators, meetings and roundtables in a way that individual organisations don’t,” he explains. “They have more success with lobbying.”

Sustainability expertise: high demand, short supply

Businesses would also benefit from ‘funding for sustainability skills development’, they say: 57% of executives rank this as a top five enabler, as do 59% of investors. Clearly, sustainability expertise is in high demand.

As the field of sustainable finance develops, diversified skillsets are paramount for businesses to effectively meet the demands of investors and to release capital. Upskilling and collaboration is key, requiring legal, compliance and ESG professionals to work in unison, says France Vassaux, partner in our financial markets practice. Adding that ESG data analysts with data scientist or engineering backgrounds will be increasingly sought after as ESG reporting requirements mature.

This upskilling stretches all the way to the top. Boards increasingly seek advice on ESG-related matters, and the number of chief sustainability officers sitting on their organisations’ board tripled year on year in 2021.16

“It is considered good governance to have ESG expertise at a board level and it’s important that the skillset evolves at pace alongside the market,” says Sonali Siriwardena, partner and global head of ESG. “We work with boards to provide training on ESG developments and market insights to ensure they are armed with the most up-to-date information.”

Investors, too, are driving demand for sustainability talent. They want their portfolio companies to prioritise talent when investing in sustainability, and they are keen to invest in businesses with rare sustainability expertise. For example, biodiversity and sustainability-related technology are the least abundant areas of expertise among businesses, but they are the most sought after by investors (Fig.10).

Nature-related expertise is an area of growing demand, says Robert Turner, partner and head of our asset management and investment funds sector. He points to Lombard Odier Investment Managers, which became the first asset manager to appoint a chief nature officer in June 2023. “Given the release of Taskforce on Nature-related Financial Disclosures (TNFD) recommendations and a growing number of nature-related investments, we anticipate the demand for nature-related skills to grow,” he says.

How to win the talent war

The two dominant strategies for attracting and retaining talent, the survey shows, are ‘ensuring salaries for sustainability roles are competitive’, which is a priority for 61% of employers, and ‘ensuring that sustainability commitments are being put into practice’ (58%) (Fig. 11).

Given the sensitivities of sustainability professionals, the latter is more important, says Sophia Adams-Bhatti, our head of purpose and impact. “Paying enough and having a [sustainability] strap line aren’t going to work unless you’re able to put those values in motion,” she says.

Adams-Bhatti believes that to develop sustainability goals that attract and engage staff, employers must first define their purpose. Executives must ask themselves what impact they want their organisation to have (alongside profit-making), what their responsibility to society is, and how they will achieve it.

The answers should be baked into the organisation’s commercial strategy. “Goals will be far more meaningful if they’re rooted in actual business design, business models, profit-making approaches and long-term strategy,” she says. “Purpose shouldn’t be separate to those things.”