The number of financial firms with a chief sustainability officer has tripled since 2020, with 45 percent now appointing a dedicated executive to oversee ESG initiatives, up from just 15 percent four years ago, according to a new Deloitte and Institute of International Finance report.
Despite this rapid growth, the role of the CSO is still evolving, with many firms struggling to integrate ESG into their core business strategies.
The report, which surveyed more than 80 sustainability professionals across 70 financial institutions, highlights that nearly two-thirds of CSOs see their roles as balancing all three components of ESG rather than focusing solely on sustainability.
Respondents represented asset managers, insurers and banks in Europe, North America, Asia and Emerging Markets.
Role Shift Toward Strategy and Governance
The research found that the CSO’s mandate is expanding beyond compliance and reporting, with many taking a more strategic role.
Almost 85 percent of asset managers and insurers said their CSO oversees the full ESG agenda, compared to 44 percent of banks.
Key responsibilities now include aligning business models with sustainability strategies, implementing the United Nations Sustainable Development Goals and managing environmental risks for large-scale projects.
“CSOs are increasingly seen as the ‘sense-makers in chief’ within financial institutions, helping firms navigate regulatory complexities, investor expectations, and business transformation,” the report noted.
ESG Integration Faces Challenges
While ESG is gaining traction, companies face challenges in fully embedding sustainability into their operations.
According to the report, key barriers include talent shortages, difficulty measuring ESG impact, and balancing sustainability with financial objectives.
Many firms are still in the early stages of ESG implementation, with only a minority integrating sustainability into their business models.
The study found that the CSO’s role intersects more frequently with the CFO’s, as financial reporting increasingly includes ESG-related risks and opportunities.
Some industry experts predict that the CSO role may evolve into a “chief value officer,” merging financial and sustainability metrics in the future.
Future of the CSO Role
Despite these challenges, 99 percent of the respondents expect the CSO role to gain prominence over the next two years, with 70 percent believing it will remain distinct over the next five years.
However, some foresee that as sustainability fully integrates into corporate strategies, the role may eventually be absorbed into other leadership positions, such as the CEO or CFO.
“The real success of a CSO will be when their role is no longer needed — when sustainability is fully embedded across all business functions,” the report added
