The Organizational Structure ofSustainabilityand Highlights from GOING GREEN?Don’t Hire a Sustainability Chief Until YouRead this Study!

Roger Thorne, Managing PartnerVictoria Zelin, Senior Vice PresidentHudson Gain Corporation

For AMR Research’s Sustainability Peer Forum TeleconferenceFebruary 12, 2009

Five Penn Plaza, 23rd Floor, New York, NY 10001 Phone 212.835.1601 w w w .hudsongain.com

Agenda

Introduction to Hudson Gain Hopes for Today Context: Definitions of Sustainability Hudson Gain Study on CSO Role in Corporations Does Your Organization Need a CSO? CSO Career Tips for Hiring or Appointing a CSO

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Founded in 2002, Hudson GainCorporation believes that the work ofcorporate leadership is to ensure thattheir organizations are sustainable fromthe perspective of the triple bottom line:People, Profit, Planet.

Hudson Gain’s work is on the Peoplepart of the equation: helpingmanagement to“build or buy” their leadership talent. Asa leadership solutions firm, we serve thetalent acquisition, talent developmentand change management needs of clientcompanies of all sizes and industries.

Among Hudson Gain’s leadershipsolutions are helping companies hire orappoint Chief Sustainability Officers andbuilding employee engagement forSustainability.

Roger Thorne, ManagingPartner212.835.1601; roger.thorne@hudsongain.com

© 2008-2009 Hudson Gain Corporation

Hopes

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The Context: Definitions of Sustainability

“Meeting the needs ofthe present withoutcompromising the abilityof future generations tomeet their own needs.”

Brundtland Commission(1987)

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Planetsustainable resources

and operating environment

Profitssustainable business

increased present value

Peoplesustainable employee

and customer base

Scope and Methodology of CSO Study

“Voice” of executives leading corporatesustainability efforts, summer 2008 1241 large private companies reviewed Less than 1/2 had execs with partial responsibility 191 had sustainability/environment in job title 214 executive backgrounds reviewed

61 structured interviews in summer 2008 Some mid-sized, universities, others included Content analysis and conclusions

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Contents of the Hudson Gain CSO Study

Going Green? Don't Hire a Sustainability ChiefUntil You Read This Study!http://echem.goiwx.com/downloads/HudsonGain_ChiefSustainabilityOfficerStudy08.pdf

“Universal” Chief Sustainability Officer requirements Key CSO responsibilities and challenges Filling the role internally or externally Examples of Top People/Companies Sustainability 1.0 vs. 2.0 Quotes

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The Ideal CSO is a Senior Executive who …

Has the ability to understand complex technologiesbut keep it simple

Can move the entire organization to where it mightnot know it needs to go or be willing to go

Will identify the organization’s carbon footprint andreduce that to zero while saving money

Has passion for sustainability but not too evangelicalwhile making sure that everyone hears the message

Can make the organization profitable while doing noharm to people or planet

Basically:

What are the skills neededto be a CSO?

Where does a CSOcome from?

“Universal” CSO Skills/Knowledge/Experience

Communication Technology Financial/ROI Measurement Innovation Ethics Supply Chain Operations/Structure Culture

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Clear Vision

Passion

OrganizationalRespect

Persistence

Tenacity

EmotionalIntelligence

Leadership

Where Do Sustainability Leaders ComeFrom? Not yet from having C-level roles, in same firm High-level technical and leadership roles Almost all functions, depending on many factors Previous experience in another function (not

sustainability), typically internal, supplementedby technical consultants

Some external candidates; they have gaps, too Builders vs. Managers, creators vs. maintainers

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In Our Study We Found CSOs from ….

EHS Supply Chain Finance and Audit Human Resources Law Compliance Operations Public Relations and Communications Engineering Research and Development

Hudson Gain Take Aways from the Study

No “one size fits all” for sustainability leadership Industry, company, culture, decision-making

style, timing-impact whether/when to have CSO Good CSOs are rare, multi-talented leaders Currently, more CSOs are appointed from within The external market will get tighter for CSOs If you don’t have a CSO:

Start building C-level support and planning Identify internal CSO candidate pipeline/career track Look for confluence of strategic factors and

internal/external needs to be negotiating “at the table”13

Does Your Company Need a CSO?

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It Depends!

On your company and … Timing of a Sustainability Leader at the C-level Sustainability’s role in your strategy

External marketplace Internal drive for sustainability as central to who you are

How you are structured (functional, matrix) Philosophy and values (everyone’s job vs. function)

Other factors Company size, mission or imperative What your competition is doing What your customers are demanding

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Where Does a CSO sit?

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Typical Organization

CEO

CFO Sales/Marketing

HR R&D

EHS OperationsManufacturing

Quality

When is Sustainability at the C-Suite Level?

CEO

CFO Sales/Marketing

HR R&D

EHS OperationsManufacturing

Quality ?????

What Factors Determine Where “CSO” Sits?

At what level are sustainability decisions/trade-offs currently being made?

At what level should/could they be made givenstrategy, span of control, your values?

What is the highest level stakeholder to whomyour sustainability efforts are accountable, andwhat priority do they place on sustainability ascompared with People and Profits?

To what role should sustainability chiefs beaccountable?

Dotted lines, solid lines of reporting?19

If You Had a CSO, They Would Be/Have/Do …

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In Your Company, the CSO Would Need…

Credibility for dealing with what strategic issues? Industry/competitive expertise? Functional & Technical skill/knowledge? Company/political/decision-making knowledge? Other credentials/experience? Hierarchical/peer level, negotiating about what? Authority, staff and resources? Structure for decision-making and execution? Culture/Style? Influence/change management skills?

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The Evolution of a Sustainability Structure

Lessons from the evolution of other functions Quality HR Legal EHS IT Supply Chain

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Roles and Careers in 2009 and after

Share your journeys How did you get into sustainability? Where have you taken your role, re: sustainability? Evolution of your company/group/function? What can you learn from others’ journeys? How can you prepare yourselves for what’s next?

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Implications for Structures and Careers

Sustainability in the year 2020 What’s possible as a vision for structuring

sustainability? Mindset, leadership, execution

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Potential Future Career Paths to CSO

CSO Senior Vice President Sustainable Enterprise Vice President Sustainable Operations Director Sustainable Marketing Senior Manager Sustainable Communications Manager Sustainable Finance Sustainability Engineer Sustainability Analyst

Tips for Appointing or Hiring a CSO

Get senior management aligned Focus role, responsibilities, requirements, budget Understand what outside/consulting support needed Set objectives based on strategic priorities

Use a rigorous selection process Consider internal and/or external candidates Do it right and/or get outside help

On-board even internal appointments Align for collective success, know WIIFMs Use Stakeholders to make CSO an “insider” fast

Expect continuous learning

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More Info, Sounding Board, Keep in Touch

Roger ThorneManaging Partner212 835 1601Roger.thorne@hudsongain.com

Victoria ZelinSenior Vice President908 306 0272Victoria.zelin@hudsongain.com

Hudson Gain Corporation Five Penn Plaza, 23rd floorNew York, NY 10001www.hudsongain.com

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