Is the COO the unsung sustainability superhero?

In brief:

• COOs are emerging as a key leader in driving sustainability, transitioning from a more behind-the-scenes role to a strategic enabler of business resilience.
• Their unique position allows them to operationalize sustainability goals, ensuring they’re embedded across all business functions.
• Operations leaders are essential in managing environmental risks focusing on improved responses to disruptions and proactive planning.
• While initially, COOs may view sustainability as another cost, investments in sustainability are preventative measures to future-proof the business

Of all the executives in the C-suite, Chief Operating Officers (COOs) seem to get the least attention. In fact, a few years ago it was a role that many businesses were happy to do without. Just 32% of Fortune 500 and S&P 500 companies in 2018 had a COO as more hands-on CEOs were overseeing operations.

But things have changed and COOs are making a comeback, with many operations leaders now expected to take on a more strategic role within their organizations. Of course, the COO’s roles and responsibilities vary from company to company. But they’re becoming an increasingly strategic element in the C-suite, charged with providing internal leadership and direction, boosting organizational resilience and value creation, and setting overall business strategy.

This evolution is a game-changer when it comes to sustainability, too. By giving COOs more space at the table, sustainability can expand outward across the business — from a workstream between sustainability departments and their CEO to a central consideration of daily operations. In other words, when COOs are valued as business leaders, companies can move beyond sustainability ambitions and take concrete action.

With sustainability acting as a strategic web across the organization, COOs step into the spotlight. Here’s how they can become the sustainability superhero every business needs.

Operationalizing the sustainability transformation

As organizations increasingly recognize the need to integrate sustainability into their core operations, COOs emerge at the forefront of this transformation. Their unique position at the helm of business operations enables them to translate sustainability from a high-level vision into actionable, operational practices that impact every facet of the business. Investors, consumers and regulators now expect measurable progress on sustainability goals rather than abstract plans or commitments. While CEOs are responsible for setting the overall vision of the company in both the short- and long-term, the COO’s role is to execute that vision appropriately and in the context of their business to directly address these expectations. This holds true for sustainability target-setting and action – these need to get translated into realistic KPIs. By embedding sustainability into everyday operations and across all departments, COOs ensure that goals are being actively pursued and teams meeting expectations.

Bringing environmentally driven risk into focus

Our rapidly changing climate and loss of nature are accelerating corporate exposures to risk like never before — and the COO is well-positioned to address them. In 2023 alone, extreme weather events caused economic losses of around $380 billion. The environmental breakdown is no longer an abstract threat; it presents real operational challenges. COOs must manage immediate crises while implementing long-term strategies to build resilience against climate and nature-related operational challenges.

COOs should reassess emergency response protocols and contingency planning through an environmental risk lens. Imagine, for instance, a scenario in which a company’s primary distribution centers are concentrated in one region and become damaged by flood waters, rendering them inaccessible. If the COO has made effective contingency plans, they can quickly establish an alternative supply network to reduce disruption as much as possible. But operational leaders must go beyond reactive planning. A proactive sustainability strategy involves, for example, investing in resilient infrastructure that can withstand climate-related disruptions and preparing the company for various environmental scenarios.

Transition risks, such as increased business costs due to things like incoming climate regulations, are also significant, along with the liabilities from failing to mitigate or adapt to climate change effectively. Between 2017 and 2022, climate-related court cases more than doubled, reflecting shifting public sentiment and evolving legal challenges. Enhanced disclosure requirements, like the US Securities and Exchange Commission (SEC) ruling to mandate climate-related risk reporting and Europe’s Corporate Sustainability Reporting Directive (CSRD), have intensified focus on ESG beyond traditional sustainability functions. COOs must navigate these regulatory demands by integrating compliance into operational strategies, ensuring adherence and avoiding penalties.

By tackling these impacts and dependencies head-on, COOs play an instrumental role in safeguarding the company’s operational stability and long-term viability.

Considering the cost of sustainability inaction 

At face value, achieving sustainability goals may appear as just another cost to the COO. But by approaching it as a preventative mitigation investment, operational leaders can build a more holistic picture, comparing the cost of taking action to the potential cost of doing nothing. By working more closely with the finance department, COOs can better understand the risks associated with business-as-usual operations and the consequences of insufficiently investing in the action needed to effectively address climate and nature issues related to the business.

If they haven’t done so already, COOs should stay connected with other leaders across the company who are actively working on climate and nature risk and reporting. It’s crucial to understand data challenges, the importance of transparency and sustainability limitations. Reporting, while not the be-all and end-all, can serve as a strategic foundation for decision-making. If you know your carbon hotspots, for example, you can start to prioritize investment in the right things at the right time. Similarly, it’s important to understand where pressures on water supplies exist in the supply chain, whether heating and cooling loads may be exacerbated by climate change or how extreme heat may impact your workforce.

The COO’s missions as sustainability superhero

To effectively operationalize sustainability, COOs should focus on several strategic actions that align with their expanded role. These actions are designed to integrate sustainability into every aspect of the business, from risk management to operational efficiency. If done well, they’ll serve as “wins” that position the COO as the sustainability superhero.

• Mission #1: Keep the light on during the figurative — and literal — storms

With a solid overview of the company’s climate- and nature-related vulnerabilities, COOs can be the sustainability superhero by preparing, planning and investing in resilient infrastructure. They should make direct capital investments to both fund the adaptation of operations (if necessary) and build resilience. One of their core responsibilities should include preparing, planning and investing in infrastructure that enhances resilience to environmental impacts. This includes evaluating current infrastructure vulnerabilities, investing in upgrades and developing contingency plans for potential disruptions.

• Mission #2: Save the day by retrofitting, transitioning and driving operational cost reductions

COOs should prioritize retrofitting facilities to improve efficiency and environmental resilience. Transitioning to renewable energy can help meet Scope 1 and Scope 2 targets. Operational savings from these improvements can be reinvested into challenging areas such as supply chain sustainability and advanced technologies. Operations leaders can also be proactive by investing in new equipment and processes that can contribute to net zero goals, boost energy efficiency and reduce exposure to energy price volatility.

• Mission #3: Unleash the power of predictive analytics and AI

Predictive analytics and responsible AI tools offer insights to identify potential exposures and pose mitigation and adaptation solutions. COOs should use these technologies to make informed decisions, enhance traceability, avoid disruptions and drive effective sustainability strategies to enhance overall performance.

• Mission #4: Let your environmental leadership shine

Meaningful sustainability practices can enhance brand reputation and support revenue growth. COOs should lead by example, showcasing the company’s commitment to sustainability to align with consumer preferences and market trends, thus reinforcing its leadership position.

Fostering collaboration for sustainable transformation

Achieving meaningful and lasting sustainability requires a unified approach where executives contribute their unique expertise towards a common goal. For COOs, this means working closely with colleagues in the C-suite to integrate sustainability into every facet of the business. Effective collaboration ensures that sustainability initiatives are aligned with overall strategic and operational practices.

• The CEO and CSO are pivotal in setting the strategic vision for sustainability. COOs must partner with them to align high-level goals with day-to-day operations. This ensures that sustainability priorities are not only visionary but also practical and actionable for each department.
• COOs should collaborate with the CFO to understand the financial implications of sustainability compliance and investments, such as securing the necessary resources and aligning financial planning with sustainability objectives.
• Bridges to product and procurement leaders are also critical to ensure sustainability factors into what the company sells and how its produced. Embedding sustainability into the “bread and butter” of the business will make it easier to steer the company onto a successful long-term growth track.
• When it comes to communicating a company’s sustainability efforts and enhancing brand reputation, COOs should establish an effective partnership with the CMO. Climate activism and increased regulations around greenwashing and sustainability claims has added another layer of work for both COOs and CMOs everywhere. COOs can help align sustainability messaging with operational achievements, strengthening the company’s market position and supporting growth.

Sustainability is evolving across business functions, from existing solely as a satellite function to being engrained across all departments. By working together, these key executives can maximize the impact of sustainability efforts, ensure effective implementation and drive long-term success. The role of the COO in this collaborative effort is to coordinate and align these diverse perspectives, making sustainability a central and actionable part of the company’s operations and mitigating climate and nature risks for a more resilient business model.

Seizing the opportunities that await the COO 

COOs can occupy a bold leadership position within their company by merging visionary sustainability ideas with the reality of business operations and goals. Virtually every investor call in major companies now includes ESG issues and progress against sustainability targets – and how they impact the overall business strategy. This is the time for COOs to shine, report climate and nature-related risk confidently and convey how operational actions build resilience and insulate the company from the impacts of emerging climate regulations and environmental threats – giving a whole new dimension to the role.

COOs have the power to be the sustainability superheroes who save the day by turning goals into reality. They need to create the conditions for the successful execution of high-level strategies and make sustainability a core part of everyone’s job. After all, if there’s one leader who can make sustainability work across the business – it’s the COO.