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Professional services firm launches “virtual CSO” service

JTC Group says ESG talent competition puts sustainability officers beyond reach of some smaller firms.

Professional services firm JTC Group has launched a “virtual chief sustainability officer service” (vCSO) for financial firms and corporates.

The new service offers to support clients in reducing operational emissions, training staff members in ESG and developing an overarching sustainability strategy, as well as assisting with PRI reporting. The firm is marketing the service to corporates, as well as smaller pension funds, family offices, HNWIs and fund managers.

The model has been used successfully for other senior positions. “Virtual” CFOs and outsourced chief compliance officer services have proved popular with smaller businesses.

Victoria Gillespie, JTC’s head of ESG services, said the current demand for people with ESG skills meant that the required salaries “are just beyond what some companies can afford to pay”, and that even firms that had appointed their own CSO still found expertise in certain areas was hard to come by.

She added that JTC itself was “not immune to the fact that ESG is such a required skillset at the moment”, and that she had experienced the issues faced by firms first-hand when looking to grow her own team. The service could act as a bridge, she said, with JTC providing support until a good candidate is found or the company decides to bring operations in-house.

The service was launched in response to client demand for ESG support. Gillespie said: “What we often hear is ‘goodness, we made a commitment last year to do this and all of a sudden the deadline is looming, can you please help us?’”

Asked whether this meant that firms were making commitments they were not serious about, Gillespie said the pace of recent developments meant that until six months ago, firms were hesitant around claims of greenwashing and concerned about the lack of data points and clarity, and so decided not to take action.

She added that “the burden of ESG overwhelm” was too much for some companies and pension funds to bear, and with a number of elective and mandatory frameworks for reporting, smaller firms often do not know where to start.

UK pension funds have previously complained about the burden of mandatory and voluntary reporting placed on them. In May last year, the CEO of the BT Pension Scheme, Morten Nilsson, said the scheme’s reporting was not helpful at all for its members, and claimed that reporting requirements were “becoming an industry of themself”. The head of responsible investment at Lothian Pension Fund, David Hickey, claimed in December that having to do so much reporting “set many of the leaders in the space back a little this year”.

To outsource or not outsource?

Gillian Karran-Cumberlege, founding partner at board and executive search firm Fidelio Partners, said that while the CSO role was new to many companies, and she expected many companies to outsource some sustainability operations, she would be hesitant about a structural outsourcing of CSOs. 

“From what we’ve seen in the work that we’ve been doing, the role plays a major contribution in really embedding ESG and sustainability […] one thing the CSO does is really work on is breaking down siloes and embedding sustainability in the company –– and you have to be in the company to do that.” 

While some firms may be unable to hire a CSO immediately, Karran-Cumberlege said that hiring someone senior to head up sustainability is a trend “almost like having a chief people officer”. Even if there is no dedicated role, “the trend is very much that if you don’t have somebody with a formal title, you will certainly need somebody at a senior level who is taking accountability for that”.