This post is the first in a six-part series based on Where Sustainability Lives, a new study which indicates that organizational structure matters to sustainability performance. Please check back in the coming weeks for further insight and analysis from the Framework:CR team and various corporate practitioners.

…

With respect to vertical structure, Where Sustainability Lives concludes that a company is more likely to receive external recognition if the sustainability function lives higher within said company’s organizational structure. The data, upon which the study is based, offers compelling evidence in support of this conclusion. For example, companies in which the sustainability function is just one level removed from the CEO are recognized nearly twice as often as companies in which the sustainability function is four levels removed from the CEO.

So here’s a question to ponder. Why? Why does vertical structure matter? In my opinion, it boils down to two simple—perhaps obvious—factors: power and money.

Power:  Like it or not, our titles and the perception of our influence—or lack thereof—can precede us in the workplace. Hence, the extent to which a company’s sustainability function can influence stakeholders and secure buy-in depends largely on their position within the corporate hierarchy. Think about employee engagement, for example. Employees are likely to respond differently to a request (read: polite appeal) from a junior executive than they would to the same request (read: direct order) from a senior executive. Thus, a senior executive in charge of sustainability can exert more leverage, gain more traction, and, therefore, build a more successful program than his/her junior counterpart who manages a similar program at a competing company.

In turn, senior executives are better positioned to engage with their CEOs on sustainability-related topics, because senior executives have direct access to the CEO and other C-suite executives, whereas junior executives may not. I would be remiss to not point out how advantageous this is for the senior executives in terms of raising awareness, gaining cross-functional support, and ultimately building momentum behind sustainability. Clients tell us time and again how critical CEO support is to the success of their respective programs and initiatives.

Finally, we have to consider scope. Senior executives are often responsible for a range of business units or geographic regions, whereas junior executives have narrower responsibilities. In reviewing the responses to our survey, it seems that— in addition to sustainability— most senior executives also oversee the likes of communications; public relations; environment, health, and safety; and/or other functional areas. These structures allow those senior executive to drive sustainability down into the other business units for which they have control.  Junior executives, by comparison, may have to work up through senior executives and then back down into other business units to achieve the same results.

Money: Money, of course, goes hand in hand with power, so I won’t belabor this point. However, we must recognize the important role that money and budgets play in determining a successful sustainability effort. Junior executives must often request and apply for budget dollars, whereas senior executives allocate them. From this premise, one would expect the senior executive, who is allocating budget dollars, to protect his/her budget first. The junior executive overseeing a similar responsibility is unlikely to take any precedent. He/she may have limited budget or no budget, especially in a downturn economy like this one.