Sustainability's New Business Frontier

Why are you stirring the pot like that ? Why did you have that to say ? I am joined , as always , by KP Reddy , like I said , our CEO and founder . We're going to get into it today . So , kp , welcome . Glad you're here today .

It's gotten a lot of reactions , it's definitely timely and it sort of sets the stage for some of the things that we're rolling out , but also , I mean , what we're seeing and what you're seeing across the AEC industry . So let me read it first and then , as usual , we'll go back and we'll unpack it and we'll see what was the inspiration behind this .

So , as we're recording this , you posted this about a week ago , about five days ago . So if you're looking for it on KP's LinkedIn feed and , by the way , if you don't follow KP , you should on LinkedIn . It's just KP ready R-E-D-D-Y . You can find them there . So you must've posted this about , say , the 17th of January 2025 .

For those that are listening , in 2030 , you can go back five years andTO CRO and so on . That's a whole lot of C's and O's .

For the chief sustainability officer , their impact on the enterprise value of a business beyond compliance manifests itself as intangible value . The chief sustainability officer of the future has to build multifaceted competencies beyond what they have to deliver shareholder value . It's interesting times . All right , let's unpack that .

So the chief sustainability officer is the only purely strategic C-suite or C-party or C-event , whatever it is we're calling it . Tell me about that .

Look into here's new businesses we can build , here's some new ideas , but there's some anchoring around . No , we're creating value by creating process improvement et cetera . Chief strategy officer , they get their like KPI driven metrics around growth metrics , around acquisitions , like MA stuff , like that corporate development et cetera .

So there is like a EBITDA impact , there's a growth impact to the business . So they all have their foot into something else . I think when you look at a chief sustainability officer , compliance isn't , you know , it's not a revenue opportunity , it's not even a process improvement opportunity .

In a lot of cases , in most cases , it's really just , it's just regulatory right , it's just a defense mechanism . So you're quickly like in the overhead space , you're the GNA of the C-suite Sure , and so that's just a tough place to be .

So when I look at great chief sustainability officers , not only do they understand some pretty deep technical aspects of sustainability .

You know , if you're the CSO at Coca-Cola , you probably have some core competencies around water and water sustainability , because 90% of a bottle of Coke is water right , so you might have some deep competencies , technical competencies and plastic . And plastic , right , right , exactly Like you're probably studying microplastics and water .

You know like that kind of thing , right , right , exactly Like you're probably studying microplastics and water . You know like that kind of thing , right . So I think you might have some deep expertise , but then you really have to build these other competencies .

You really need to understand marketing and sales and finance and all the other functional areas of your fellow people in your C-suite in your C-suite , because if you have to let them understand you and sustainability and what the impact is , they'll just never get there , right ?

The CFO if you want the CFO to self-interpret the sustainability strategies and translate that into an income statement and a balance sheet , you're just going to be overhead . They're not going to understand it , they're not going to spend the time . So it's really incumbent on a CSO , a chief sustainability officer , to really understand . Hey , here's what my CFO does .

Here's what our math is . As a business , if you're a public company , you better know the Ks and Qs better than anyone on the C-suite other than the CFO , maybe probably better than the CEO , because you're fighting for relevancy .

So if you think about that , when you look at that and then you look at marketing , are you going to expect marketing to interpret what it is you're doing to support the messaging ? Probably not . You know , if you're the chief marketing officer at IBM , do you know anything about the sustainability strategies ? Probably not . Are you focused on that ?

Are you focused on brand awareness , lead generation and all the things that the CMO of IBM should be focused on , right ? So I think what it really drives is the next , the leveling up of a chief sustainability officer to really understand the other functional aspects of the business really well and translate their work product into those areas .

If you're a public company , when you're living quarter to quarter , how are you relevant in the quarterly reports and not just the annual reports , right ? So what are the things that matter on a quarterly basis that you're reporting and communicating ? Well ?

And I think that's just where I don't think you can say you know , in my world , every business should have some sustainability function , right ?

Even if you're , you know , using the little airline feature when you book tickets to track your carbon output or whatnot , or you know , just at a minor level , it may not be someone's job , it's definitely some level of awareness around it . And then I think , as you scale up and you actually need a chief sustainability officer .

I think there has to be some strategy how it fits into the core business , and I think there's a huge gap there . I think it's a huge gap there .

In fact , I think David will probably be a guest on this podcast on a future episode here before too long . But one of the things that David talks a lot about is basically a new definition of sustainability . You know what is sustainability ? He's focused on resiliency . He's focused on the business case . What is the business case ?

You talked about it a few minutes ago the regulatory , the compliance side , as you said . That's going to be overhead and David is pushing hard on the idea of changing that . One of the things that he said actually today , as we were talking , was we usually talk about carbon first , which speaks to the regulatory , the compliance piece of it .

He says we need to talk about carbon last . Here's the business case , here's how we're going to do these things and how we're going to make our business better . And , by the way , the , the result of this is going to be the , the carbon . You know , the , the , the meeting , meeting the regulations and and complying as as we need to , as we're required to .

So it'll be interesting as David and I unpack some more more things around this idea , but I think what you're saying is exactly right . You know he's talking about hey , we need to change this . You're saying we need to change this and giving us the historical perspective on how it's going to work . He's going to answer the call perhaps .

If it's a business that's highly finance-oriented , like maybe a Bank of America , maybe the next CEO is the CFO , right ? That's where they pull the next . If it's an operational business like a UPS , the COO might actually be the next CEO . If it's a marketing-driven organization like Red Bull or something it might be the CMO right .

So you have to ask yourself like that If you have the ambition of a chief sustainability officer , your ambition is to be the CEO of your company or another company ? What is that path right and what all do you need to know and what ? How do you really communicate well and understand the math right ?

So this is where I understand when I say the chief sustainability officer of the future really needs to understand every functional group in the business and how they are relevant to it . That is the only way you go from chief sustainability officer to CEO is if you're able to really position and prioritize that . And I think you know David's a great example .

You know Rubicon was a startup and so his role at that startup was probably way more critical than maybe the chief sustainability officer at Georgia Pacific right , because his strategy understanding that's what drove their business model .

He had to translate everything he was doing into how does this affect revenue , how does this better serve our customers , which is a unique place to be , you know , is this the chief sustainability pick on Coca-Cola . Is the chief sustainability officer of Coca-Cola saying how does this drive revenue and how does this impact create value for our customers ?

I don't know . Is their CMO doing that ? Absolutely .

Um , you know to your point there . So if you , if you look into your crystal ball or your tea leaves or whatever it is that you use to predict things , I don't know I've never asked you that question on here here . Um , how long is it before the , the chief sustainability officers , the , the trend maybe in chief sustainability officers rises to ?

You know what you're saying I .

We have to be ESG because that's what people are saying , the narrative in the market and you're seeing it with DEI , right it's . I'm just reporting the news , y'all . It's not I don't have a position per se , but I think ESG is going to fall under that realm of DEI where it's like why are we doing this ?

And so I think a lot of the chief sustainability officers , I think , are really at risk of existing at their company , right ? In other words , oh , we did this because that's what we were told to do .

You know , we do a lot of work for Microsoft , and maybe you're a consulting company , do a lot of work for Microsoft , and Microsoft is kind of virtually signaling out ESG , and so for us to do great business with Microsoft , we're going to have a chief sustainability officer so we can at least tell them we have one .

We may not be able to tell them , like , what it is we're doing , but we're going to definitely tell them we have one to continue to do business with them . And then what happens ? When Microsoft says I think it goes one or two directions right , they say , hey , it's not important anymore .

I doubt Microsoft would say that my friend happens to be the chief sustainability officer of Microsoft , so I doubt Melanie would ever say that . But I do think there could be a digging into help us understand the key metrics . It's not good enough for you just to say we have a chief sustainability officer .

Help us understand how that better serves us , better serves the community . So I think there's a digging in . It's not just going to be window dressing .

So I think either some organizations will end up getting rid of these positions because their customers aren't mandating it anymore , or some of their customers are going to double down and say no , no , we need to actually understand better what you're doing . And so there's a doubling down that now you know the chief sustainability officer has to .

I said you know , knuckle up , so to speak , be ready for the fight .

Like , are we going to rebuild stuff in southern california the same way they were built in the first place ? Because this is not the last fire . Everyone , right , we know this is the ongoing continuum of what we're living with . So , to your point is well , there were businesses that were impacted 100% . Right , there were businesses . There was economies impacted .

They're talking about the unemployment going up because a lot of these businesses aren't going to come back , right , right .

So I do think that if you think about the intersection of chief sustainability , you know the chiefs , the CSO and the COO , that's resiliency , that's , that's that intersection they have have Right yeah , yeah and yes , and one inform in the other certainly .

Right , but if you don't as this chief sustainability officer , if you don't understand the operations , almost as good as the COO .

So the LinkedIn post that KP and I have been unpacking again , if you're listening to this in the year 2030 and you're looking back five years , look around January 17th or so for this post 2025 . The C-suite has expanded from CEO , cfo , coo to roles like CIO , cmo , cso , cto , cro and so on .

One of the roles that is purely strategic is chief sustainability officer . The other C-suite positions can be judged on a quarterly basis . For the chief sustainability officer , their impact on the enterprise value of a business beyond compliance manifests itself as intangible value .

The chief sustainability officer of the future has to build multifaceted competencies beyond what they have to deliver shareholder value . It's interesting times , All right . Kp and I have been unpacking this . We do this once a week . We come together . We've thrown out a few things here and there .

You are going to start to hear from some more future guests and things . I've got to get with our producer , ethan , to understand that schedule a little bit better in terms of the , the publishing , but but keep your ear to the ground .

We're going to have more topics , we're going to have more discussions , we're going to have more guests , but they're all always going to be around unpacking these posts from kp and and really I mean selfishly , this is my special time to sit down with kp and say what were you thinking ? We unpack these . So until next week . Thank you for joining us .

In the meantime , we have a few things coming up .

We have a depending on when you're listening to this , in February we have a one one day in-person mastermind event coming up where our mastermind members we have masterminds , mastermind groups for um innovation leaders , which you know some of them are on that list the chief innovation officers , director of innovation . Our uh construction technology leaders .

Also our early and mid-career AEC professionals group . They'll all be there . Some of the folks that are focusing with us on startups and investing will be there . Some of the folks that are focusing with us on sustainability will be there .

Phoenix , february 25th you can go to kpreadyco slash events to find a link to learn more about that event coming up , so keep an eye out for that , and always check the show notes for things that KP and I have talked about .

You can find links to those , and also our producer , ethan , has started to produce publications for each of these episodes , so you can find sort of a companion article . I'll call it .

I'll probably I think we're also on the youtube , right , so people can do comments we are on the youtube , so you find us over there and uh , and yeah , you can , you can comment . You can , you can agree , you can disagree , you can do whatever you want over there in the comments . It's social media . So it's still the wild , wild West 20 years later .

Yeah , find us on YouTube . You can find short versions , you can find longer versions , but that's a great way to to to find more content that we produce . And , of course , on LinkedIn , follow KP . Kp ready R-E-D-D-Y . Connect with on LinkedIn . Follow KP K-P-E-R-E-D-D-Y . Connect with him .

Connect with me and love to have you as part of the conversation and our ecosystem here focused on the future of the built environment . So , thanks for joining us today . We'll be back again next week . Who knows what we're going to unpack next week ? You're just going to have to show up and find out . Maybe it's a new party , maybe it's something different .

So , kp , thanks for joining me today . As always , it's great to have this conversation . I'll see you again next week .