2 leaders on the need for organizational transformation towards sustainability

The need for critical action to achieve climate and nature goals has elevated the role of the Chief Sustainability Officer (CSO). The private sector will play a key role in multistakeholder partnerships to actualize the impact on climate and nature.

However, this cannot be achieved without a human-centred approach, making the Chief Human Resources Officer (CHRO) role also essential for sustainability transformation.

Within the private sector, CSOs and CHROs will shape fundamental strategies for organizational change to catalyze sustainable habits in organizations and individuals.

Here, we asked two business leaders to focus on how the nexus of sustainability, human resources and organizational change can influence companies and their value chains.

Nadine Sterley, Chief Sustainability Officer, GEA Group

As the world is confronted with the consequences of the climate crisis and other environmental challenges, acting sustainably is becoming increasingly essential in companies. This is true both from a strategic point of view as well as with regard to innovations and successful recruiting. At the same time, the breadth of sustainability topics is increasing year-on-year.

The growing importance for companies to act sustainably and report on their sustainability performance has elevated the role of the Chief Sustainability Officer (CSO). Sustainability has evolved from being a niche function to a strategic one. CSOs are expected to take a key role in leading their organizations towards sustainable business practices. At GEA, the CSO role belongs to the inner circle of the company’s decision-making. It plays a crucial role in helping its executives and the entire workforce to easier understand, reasonably measure and adequately report on sustainability impacts, risks and opportunities.

As sustainability has fundamental strategic importance, GEA has put the topic at the heart of its strategic approach. In fact, sustainability is the core theme in GEA’s corporate purpose, “Engineering for a better world”, from which the company’s vision is derived: “We safeguard future generations by providing sustainable solutions for the nutrition and pharmaceutical industries.”

Moreover, sustainability has its own pillar within GEA’s Mission 26 corporate strategy and underpins the other six key levers. Taken together, they form the roadmap to ensure GEA achieves its targets. Within this framework, the CSO works strategically to ensure sustainability is integrated into all business activities and the entire company. This requires adept networking and advocacy skills and the ability to connect the dots within and outside the organization to drive sustainability transformation.

However, as important as they are, neither strategy, nor the organization or the products on their own are enough to make the key difference. What matters most to achieving real transformational change and becoming a truly sustainable company is the mindset, behaviour and commitment of a company’s employees. To help their organization succeed, employees need to be engaged, empowered, and assume a key role in the transformation. And this is where the human resources function must become part of the game. It can create a supportive environment that fosters a sustainable mindset and behaviour. It also plays a critical role in hiring and helping ensure new employees understand and embrace company values.

GEA is taking this aspect very seriously. Of GEA’s five values, the first one is: “Responsibility: We care for people and planet.” Internally and externally, our CEO, Stefan Klebert, has made it his personal mission to promote this value, thus setting the tone for all employees.

The clarity and importance placed on caring for people and planet, reinforced by GEA’s corporate purpose: “Engineering for a better world”, serve as a promise to current and future employees. This has already had a positive impact on our goal to become “Employer of Choice” in our industry. Likewise, our values and purpose set a clear expectation toward all employees and, consequently, any people-related decisions.

In addition to requesting a driving mindset towards sustainability from all employees, GEA is significantly investing in the competency development of its business leaders. Just recently, the top 160 leaders of the company, went through a comprehensive programme with a renowned business school that was strongly focused on identifying new ways of leveraging sustainability as a source for competitive advantage.

Building on that, the company’s leadership teams are now expected to develop their own strategies to create additional value for their customers by offering products and solutions that allow a reduction of energy, water, or waste. To encourage even more innovation in these areas, we set up cross-function and cross-divisional sustainability-focused hackathons to spark creativity.

As of 2023, a significant proportion of GEA’s senior leaders will participate in a variable compensation plan which is linked to GEA achieving its sustainability-related targets. For example, the reduction of CO2 emissions in GEA’s own plants and along entire supply chains will lead to higher compensation, as will the development of more efficient products that support customers in achieving their sustainability targets.

With the support of our employees, GEA is not only driving its own sustainability transformation but also the transformation of the many industries it supports through engineering excellence.

Judith Wiese, Chief People and Sustainability Officer and Member of the Managing Board, Siemens

The challenges to human (co-)existence on the planet from resource depletion, climate change, and unsustainable practices of the industrial age are undeniable. In the corporate world, the broader attention needed to handle sustainability issues is generally allocated to the role of the Chief Sustainability Officer (CSO). There are, however, no universal standards for what this function does or how much authority it has to be effective. At Siemens, the CSO role has been a board-level position since 2008, underscoring the importance of sustainability as a building block of our DNA and setting a strong foundation to build on. And that’s what we do, every day.

As Chief People and Sustainability Officer (CPSO) at Siemens, I have the unique opportunity to wear two hats: one for ensuring the well-being of our people and nurturing our company culture, and one for advancing sustainable practices in our own operations and all aspects of our business – multiplying the impact for our customers and communities. For me, this is a superpower. It joins two powerful elements that run horizontally across all our businesses: people and sustainability – both necessary if solutions are to be found for solving the most critical issues of our time. Add in the power of technology that Siemens brings as a technology company, and you have an unstoppable combination that actively supports the mindset shift needed for achieving a more sustainable world.

At Siemens, our push for sustainable business practices is encompassed in our 360-degree framework, containing six fields of action: Decarbonization, Ethics, Governance, Resource Efficiency, Equity, and Employability or DEGREE. Our DEGREE framework is, among other things, a commitment to ethical standards based on trust and respect for human rights in the supply chain.

DEGREE allows a holistic view of sustainability that puts people topics like employability and equity, as well as environmental and societal impact topics, in focus. We encourage continuous learning and are committed to re- and upskilling, especially green skills. In the last fiscal year, we invested €280 million in professional training and continued education to transform our workforce into sustainability ambassadors. Our highly popular Base Camp for Sustainability offers an introduction to DEGREE and 66,000 participants have completed the course already in FY23.

We value the E for Equity that helps us integrate and promote diversity, equity, and inclusion into the fabric of our company. It helps us create a workforce that reflects our customer landscape and brings a fresh perspective to the way we think about creating solutions. The intersection of people’s interests with our company values creates a sense of belonging and engagement that we both admire and appreciate.

Combining the responsibilities for sustainability and people operations allows social aspects to be complemented by proficiency in the environmental and corporate governance spheres. At Siemens, with sustainability at the core of our processes, we need relevant skillsets across our business units and corporate functions. This allows sustainable approaches to be developed in an ecosystem manner, observing the cross-functional and business governance standards required to comply with new EU Taxonomy regulations and develop non-financial reporting and accounting guidelines.

To effect change, a cultural and organizational transformation and mindset shift are necessary. The convergence of people and sustainability can be a useful tool to speed up the momentum of much-needed change in all aspects of our existence. Indeed, for a company like Siemens – undergoing the transformation from industry to global technology leader – sustainability is a tremendous opportunity. Crucially, this applies both to our own operations and to our portfolio. We have increased our CO2 reduction target from 50% to 90% by 2030, compared to 2019, and will invest €650 million in decarbonizing our activities by 2030. But our products and solutions can also help our customers with their sustainability challenges – ~150 Mio tons of emissions were avoided by customers in FY22 alone.

Those companies that recognize the power of this combination will be well positioned to be drivers of innovation and growth, increase employee engagement, and mitigate the challenges associated with rapid transformation.

As a company at the intersection of the real and digital worlds, we at Siemens believe that technology is a key driver of sustainability. Embracing a holistic view that goes beyond environmental topics, we anchor sustainability firmly in all our business and operations. We are confident that leveraging the superpower combination of technology, people and sustainability can make a difference and transform the lives of billions.