CSO to CSO: 6 steps to enterprise sustainability transformation

By:  Faith Taylor

Only 16% of companies successfully incorporate sustainability into their corporate strategies.¹ In my discussions with peers across industries, I’ve found that for many, the struggle is integrating sustainability on top of decades of established and often conflicting policies. That’s why it was such an exciting opportunity for me to lead the development of Kyndryl’s sustainability strategy from the ground up when we emerged as a standalone company in 2021.

While my opportunity is a rare one, I believe there are valuable lessons from Kyndryl’s sustainability story that any Chief Sustainability Officer (CSO) would benefit from hearing as they navigate their own journey.

Read the 2024 Global Sustainability Barometer study →

1. Align sustainability progress to business objectives

The first step towards sustainability success is creating a strategy that aligns with your business model’s goals and values. Establish benchmarks and incorporate original research to ensure informed execution. The strategy should also clearly outline benefits to the business, which may include:

• Financial benefits through cost reduction or revenue opportunities
• Regulatory compliance benefits
• Reputational benefits
• Employee benefits such as retaining, attracting and motivating your workforce

Once you have a solid strategic plan, get buy-in for the necessary resources. Begin by explaining how the sustainability program will benefit the goals of your C-suite and board of directors, which may include managing compliance, reputation and profits. Building a strong rapport with your C-suite and board of directors is crucial for gaining their support and obtaining the necessary resources to implement your strategy effectively.

The Kyndryl experience

Kyndryl prioritized sustainability from the beginning, embedding it into the company's foundation with early buy-in from our C-suite and global teams. Our sustainability team worked with leaders across the organization to understand their objectives and translate how our sustainability progress will have meaningful impact on their own goals.

Our upfront engagement with these stakeholders influenced our strategic priorities and continues to garner support as we work towards achieving net-zero emissions by 2040.

We developed an environmental sustainability program that revolves around four strategic priorities carefully designed to harmonize with our business objectives, the United Nations Sustainable Development Goals (SDGs), Kyndryl’s business imperatives and the aspirations of our stakeholders:

1.  Manage climate risks and environmental operational efficiency.
2.  Manage system performance and regulatory compliance.
3.  Establish ourselves as a preferred service provider.
4.  Drive market differentiation through strategic partnerships.

2. Build a cross-functional internal and external team

To help activate your sustainability strategy, start building relationships with members of the teams that control the data you need to track, measure and report on. This process often includes departments that oversee your company’s assets, for example, facilities, enterprise risk management (ERM) and finance. Partner with these teams to establish quantifiable goals related to environmental sustainability.

Working with external experts also can help keep everyone informed about emerging best practices. The sustainability space is changing rapidly, and keeping your teams educated and engaged is critical to developing effective collaboration and driving progress.

The Kyndryl experience

Kyndryl’s cross-functional sustainability team includes our real estate and data center team, procurement, logistics, HR, legal, finance and others. Each member has contributed their expertise throughout our sustainability journey. We continue to provide access to resources and people across the organization. A key moment was when the sustainability team met with our CEO, reinforcing their work’s critical importance to Kyndryl’s evolution as a company.

We have also built on our internal capabilities with several external partners who have helped guide us and provide expertise in this space. Various members of our cross-functional teams meet as regularly as weekly, if not more often, to ensure continued alignment, make sure progress is being made to meet targets and address any existing blockers.

3. Determine your material topics

The prominent European ESG regulation, the Corporate Sustainability Reporting Directive (CSRD), now requires a double materiality assessment to identify the sustainability factors that are most important to the organization and its stakeholders.

To determine your material topics, you likely will need to educate individuals who may not be familiar with the CSRD or double materiality. Additionally, you will want to consider other applicable regulations, your company’s operations and internal focuses, and industry standards and guidelines.

Make sure to take into account what is most important to your customers in this area, as well. Consider the sustainability-related questions you receive from them and understand what your investors prioritize. This clarity will help you identify the material topics that are significant to your industry and company.

The Kyndryl experience

Kyndryl completed our single materiality assessment in 2022, shortly after becoming an independent company. We are currently undergoing our own double materiality assessment, identifying the top sustainability material topics to Kyndryl. This process has involved getting input from customers, employees, investors, suppliers and others to ensure our material topics adequately encompass what is most important to them.

4. Develop your data baselines

Collect qualitative and quantitative data based on your business’s needs. Your double materiality assessment, regulations, frameworks of interest, ESG raters and rankers of interest, and other relevant needs will likely influence your decisions about what data to collect. The data will likely come from many internal business functions, which is why your cross-functional team is so important.

Develop your data collection process and baseline methodology with the end in mind. This process may include a technology component to streamline, develop controls and improve the auditability of data collection.

Get your data third-party assured. This assurance will help you identify gaps and improvement opportunities for future regulatory or other desired data needs as well as provide confidence to both your team and senior leadership around the numbers and information your team has gathered and calculated.

The Kyndryl experience

Kyndryl established our greenhouse gas emissions (GHG) baseline within our first full fiscal year as an independent company. This process meant creating a global assessment and comprehensive site typology to outline the emissions of our locations using an inventory management plan. Our inventory includes scope 1, 2 and 3 GHG emissions and requires working with different teams — both internal and external — to gather the data, calculate our emissions and ultimately get it third-party assured.

This step was vital to progressing in our sustainability journey and defining our goals. It enabled us to set science-based emission reduction goals and a 2040 net-zero target and gave us confidence that we’d achieve them. Having that baseline allows us to track, measure and report on our progress towards our goals.

5. Define goals and targets

The CSRD requires public targets and metrics for all material topics. Establish these targets based on the company's baselines to ensure they are relevant and to create a timeline for achieving them. Your timeline should be driven by regulatory and customer-driven frameworks, such as Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB) and Task Force on Climate-Related Financial Disclosures (TCFD). It's also important to consider the reporting requirements and then develop back-off schedules to meet these dates.

The Kyndryl experience

At Kyndryl, we focused on developing our net-zero and emission reduction targets following the guidelines of the Science Based Targets initiative (SBTi), the leading organization for developing and verifying emissions reductions and net-zero goals. SBTi has recently validated our targets. We also developed a carbon abatement financial model, which helped us determine what goals made the most sense for Kyndryl and allowed us to understand the tradeoffs and strategies we need to meet our targets and goals.

6. Track and report

Reporting allows you to see the progress your company is making and identify opportunities for improvement. It also validates ongoing alignment to strategy and helps you chart an informed path forward. Like data collection, reporting can be hard. Find ways to automate and simplify the reporting process through software solutions and tools. These solutions can help fulfill your regulatory and reporting obligations while giving you the necessary time and resources to maximize your business impact.

The Kyndryl experience

At Kyndryl, we have implemented tools that enable us to track our environmental metrics, engage with our supply chain and report across sustainability topics. Software solutions that allow you to capture data and then report on it has evolved and many companies customize these platforms to meet their data needs to align with their business models. As this is an evolving space, there are many options out there and you will likely have to evolve your approach over time.

After Kyndryl’s first full fiscal year, we reported our progress in our 2023 Corporate Citizenship Report. Now, one year later, we are excited to share our progress from fiscal year 2024 in our latest Corporate Citizenship Report.

Progress for sustainability is progress for the future

At Kyndryl, we’re proud of the progress we’ve made in a few short years. We have already been recognized for our sustainability achievements, including an EcoVadis Silver rating, placing us in our industry’s top 15% of companies. Sustainability Magazine also named Kyndryl to its list of the top 250 companies in sustainability.

However, this is just the beginning of our journey. Now that we’ve established a baseline, we are eager to keep showcasing our progress as we work towards reducing our GHG emissions by 50% by 2030 and reaching net-zero emissions by 2040 in line with our SBTi-validated targets.

I’m grateful for the unique opportunity I’ve had to build Kyndryl’s sustainability strategies into our foundation. I believe any CSO can bring value to their organization by following a similar approach — helping their business succeed while also reducing negative environmental impacts. 

Read the 2024 Global Sustainability Barometer study

Go deeper on Kyndryl’s commitment to sustainability

^{1 Microsoft/Kyndryl: Why Firms have Climate Intent, not Action, Sustainability Magazine, April 2024}