As sustainability expectations accelerate, companies can no longer rely on scattered or informal efforts to manage their environmental and social impact. The move from ad hoc initiatives to formal ESG structures is essential. A dedicated sustainability function provides the leadership, focus, and consistency needed to meet rising demands from investors, customers, and employees, navigate complex reporting frameworks, and respond to regulatory changes. Stakeholders increasingly expect more than lofty goals—they want evidence of action and accountability. For organisations aiming to stay competitive and compliant, building an internal structure that embeds sustainability into strategic decision-making is no longer optional. It is a business necessity. This article explores why having a formal ESG team matters, how to design the right structure for your business, and how to make sustainability everyone’s responsibility.
Why a dedicated sustainability team matters?
As ESG priorities grow more complex, the need for a dedicated sustainability team becomes increasingly clear. It is no longer feasible for organisations to treat sustainability as a side function or rely on individual champions without formal authority or structure. A centralised team ensures coherence, accountability, and long-term impact. Here is why it matters:
Aligns ESG goals with business strategy
A dedicated sustainability function ensures that ESG objectives are not developed in isolation but are directly tied to the company’s core strategy. This alignment helps drive innovation, attract ESG-focused investment, and embed responsible practices into everyday business decisions—from supply chain planning to product development.
Coordinates compliance, reporting, and stakeholder engagement
The growing landscape of ESG regulation—including frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD) and the Task Force on Climate-related Financial Disclosures (TCFD)—demands structured coordination. A formal sustainability team streamlines data collection, reporting, and cross-departmental collaboration while maintaining consistent messaging across all external communications.
Drives measurable progress instead of fragmented initiatives. Without a structured team, ESG efforts often emerge piecemeal and lack accountability. A dedicated function ensures initiatives are prioritised, resourced, and tracked against clear KPIs. Whether reducing Scope 3 emissions or achieving diversity goals, the team plays a vital role in ensuring progress is quantifiable and sustained.
Builds internal expertise and credibility
Having ESG professionals within your organisation builds long-term capacity and knowledge. These individuals understand both the external landscape and internal culture, enabling them to implement tailored, practical solutions. Their presence reinforces your company’s credibility with stakeholders, investors, and regulators alike.
Strengthens communication with investors and regulators
A structured sustainability team provides a single point of contact and consistency in ESG communications. As capital markets increasingly integrate ESG factors into their risk models and due diligence processes, having in-house experts ensures your organisation is prepared to answer complex questions with clarity, transparency, and confidence.
Structures for sustainability teams – One size does not fit all
There is no single model for building an effective sustainability function. The right sustainability team structure depends on your organisation’s size, industry, and stage of ESG maturity. What matters most is ensuring sustainability is not sidelined but resourced appropriately and aligned with strategic priorities.
In startups and small businesses say up to 50 employees, a lean approach is typically most effective. This might involve appointing a part-time sustainability lead or designating an internal champion who drives initiatives alongside their primary role. To fill gaps in expertise, many smaller firms start with external consultants to help define strategy and ensure regulatory compliance. In addition, we often observe that sustainability is integrated within another department, such as HR or operations, to ensure day-to-day visibility and ownership.
Importantly, small organisations can also leverage ESG software and AI technologies to support the implementation and monitoring of sustainability strategies. These tools streamline planning, automate data collection, and simplify reporting, allowing functional teams to contribute, at the base, directly to ESG tracking even in the absence of a large sustainability department. This approach not only reduces administrative burden but ensures that ESG data is timely, auditable, and aligned with emerging regulatory frameworks.
Mid-sized companies (typically 50 to 500 employees) often need more formal structures to handle growing ESG expectations. This usually involves hiring a full-time ESG Manager or Head of Sustainability, who may report into the COO, CFO, or Head of Strategy. These roles are increasingly supported by cross-functional working groups that bring together representatives from finance, legal, operations, and communications. This hybrid model balances leadership with collaboration, helping to embed sustainability into the operational fabric of the business.
In large corporations with more than 500 employees, sustainability is often treated as a strategic function on par with finance or risk. A full ESG department is typically established, headed by a Chief Sustainability Officer who reports directly to the CEO or executive board. The team may include specialists in sustainability reporting, stakeholder engagement, climate strategy, and communications. To ensure enterprise-wide alignment, the sustainability function collaborates closely with legal, procurement, finance, HR, and risk management, ensuring that ESG is integrated into both decision-making and delivery.
Regardless of scale, what distinguishes effective sustainability structures is their ability to combine strategic oversight with operational execution. The structure must evolve with the business and reflect both the ambitions and resources of the organisation. Companies of this size, as well as mid-sized organisations, often turn to interim or fractional Chief Sustainability Officers to help define their sustainability strategy and drive transformation. Their role typically includes engaging investors, influencing leadership, and delivering operational change across the business.
Embedding ESG across the organisation
While a dedicated sustainability function provides leadership and direction, true impact requires ESG to be embedded throughout the business. Sustainability cannot sit in a silo. To drive meaningful change, every department must understand its role in supporting the company’s environmental and social goals. This cross-functional ESG strategy ensures that accountability is shared and that sustainability becomes a business-wide priority.
One of the most effective ways to embed ESG is by integrating sustainability KPIs into departmental performance reviews and planning cycles. When teams are evaluated not only on financial outcomes but also on their contribution to ESG goals, sustainability becomes part of how success is measured.
Different departments bring unique perspectives and responsibilities to ESG implementation:
| Department | ESG Role or Responsibility |
| Finance | Responsible for sustainable budgeting, ESG-linked capital allocation, and integrating ESG risks into financial reporting. The finance team plays a central role in aligning sustainability with long-term value creation. |
| Risk | Manage climate risk, physical and transitional exposures, and regulatory compliance.Risk functions increasingly incorporate climate stress testing and scenario planning |
| Procurement | Ensures ethical sourcing, supplier due diligence, and responsible procurement practices—critical for managing Scope 3 emissions and reputational risk. |
| Marketing | Communicates ESG commitments transparently and ensures compliance with green marketing guidelines to avoid greenwashing. |
| Product | Leads on sustainable design, circular economy principles, and lifecycle assessments—helping reduce environmental impact from concept to end-of-life. |
| HR | Champions diversity, equity, and inclusion, supports employee engagement in ESG efforts, and shapes corporate culture around sustainability values. |
Sustainability Committees are increasingly established within organisations to oversee and guide sustainability efforts across the business. Composed of representatives from key functions such as finance, operations, risk, procurement, human resources, and marketing, these committees are responsible for monitoring progress, making strategic decisions, and embedding sustainability into daily operations. They provide cross-functional governance, help align business activities with ESG goals, and support informed decision-making on environmental, social, and governance initiatives.
Embedding ESG in business means making sustainability part of everyone’s job. This model builds resilience, unlocks innovation, and strengthens the organisation’s ability to adapt to evolving market expectations.
Aligning structure with corporate culture and strategy
When designing a sustainability team, it is important to think beyond headcount. Success depends on cultural fit, leadership style, and how closely the structure aligns with the company’s strategy. What works for one organisation may not suit another if it does not reflect its internal dynamics, decision-making processes, and long-term ambitions.
Organisations with a culture-first approach often view sustainability as a core value rather than a compliance requirement. These companies tend to embed ESG across departments, encouraging ownership at every level. In such environments, the sustainability function acts more as a facilitator and enabler, helping teams align their work with broader ESG goals.
Conversely, compliance-first organisations typically focus on meeting regulatory expectations and investor demands. Here, a centralised model is more common, with sustainability reporting lines clearly defined and concentrated within a specific function. This structure enables rigorous control over disclosures, performance tracking, and policy adherence.
The choice between centralised and decentralised sustainability models also depends on how decision-making is distributed across the organisation. Centralised teams are well-suited to standardise ESG practices, particularly in global companies that need consistency across markets. Decentralised models, on the other hand, empower local teams to tailor initiatives to regional contexts while remaining aligned with corporate ESG objectives. Ultimately, a hybrid approach often provides a better balance between accountability and operational action, helping to strengthen integration and ownership across teams.
Budget and resourcing are also key factors. A well-designed strategy needs meaningful investment in people, tools, and time to succeed. Smaller companies may need to phase their ESG efforts or work with external partners to bridge gaps. Larger organisations must focus on internal alignment to avoid duplication, inefficiencies, and miscommunication across functions.
Finally, executive sponsorship is essential to the success of any sustainability function. Visible support from the CEO, CFO, and board members signals to employees, investors, and stakeholders that ESG is a strategic priority, not a compliance exercise. Strong leadership does more than launch initiatives; it sets the tone for the cultural and behavioural shifts needed for sustainability to be embedded across the organisation.
Key considerations for executives building and implementing a successful sustainability strategy and organisation
As ESG expectations intensify and companies grow in size, the question is no longer whether your organisation needs a sustainability function, but how you will build and scale it effectively. A dedicated sustainability team provides focus, expertise, and accountability in a complex, evolving environment. However, structure alone will not deliver results. Leadership must embed sustainability into the core business model, rather than treating it as a standalone initiative.
- Build a structure that fits your size, culture, and strategic priorities.
- Integrate sustainability into core decision-making, not as an add-on.
- Invest in people and systems, while embedding ESG ownership across all functions.
- Empower your Chief Sustainability Officer or ESG lead, but make sustainability a shared responsibility across finance, operations, procurement, and beyond.
Sustainability is not the task of one team; it is an organisation-wide commitment that must be reflected in every decision and action.
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