About 45% Financial Firms Now Have CSO; Triple Share From Two Years Ago: Report

About 45% of firms now have a Chief Sustainability Officer (CSO)—triple the 15% reported in the previous survey conducted two years ago, according to a report by Deloitte and the Institute of International Finance (IIF).

The report also revealed that around 70% of firms now have a CSO or an equivalent role (up from 31% two years ago). Increasingly, CSOs report directly to their CEOs. They need to be agile change agents, engaging with all parts of the business, equipping teams with new ways of thinking, and helping integrate net-zero commitments into business-as-usual (BAU) operations.

The report highlights that the role of CSOs is evolving at the same pace. While many still focus on driving change and raising awareness, an increasing number of business functions are now taking ownership of specific net-zero tasks—with CSO support as needed.

A commitment to net-zero requires financial firms to transform their operations and manage risks. In doing so, they drive real-world change by engaging with customers and markets, ultimately enabling entire economies to transition to a low-carbon future. This unique position in the global economy makes it imperative for financial firms to design credible decarbonisation strategies and implement them effectively.

The move toward sustainability leadership among financial institutions heralds a larger change in corporate governance. The CSO function is transforming from the periphery to the center of decision-making, assisting companies in aligning their business strategies with long-term sustainability objectives. However, as much as financial institutions are progressing toward sustainability governance, many are still lagging in implementation. One of the strongest challenges is being able to measure climate risk for specific customers. Just 3% of companies in the report said that they were confident in their own ability to quantify and manage financial exposures related to climate, signifying a very big gap between awareness and expertise of climate risks.

Net-zero ambitions have come as a motivation to drive finance sector innovation. Companies that have committed to achieving net-zero emissions are showing increased degrees of product innovation, higher levels of governance incorporation, and quicker advancement in getting ESG data. These commitments are now no longer seen as voluntary or aspirational but are considered necessary to business resilience and regulatory requirements. As one executive observed in the report, net-zero is no longer "nice to have" but a necessity. The pace of the climate emergency, highlighted by the necessity for global greenhouse gas (GHG) emissions to reach their peak before 2025 and drop by over 40% within the next half-decade, has put tremendous pressure on financial institutions to take bold action.

In spite of these developments, structural issues remain in integrating sustainability into underlying business functions. Although 70% of companies today have a CSO or its equivalent, many continue to struggle to embed net-zero targets within their overall corporate strategies. Governance structures must be enhanced so that sustainability is not viewed as a standalone initiative but as an inherent part of doing business. Data quality is also a significant challenge. Though 80% of companies have managed to obtain Scope 1 and 2 emissions data—emissions from owned or controlled sources—Scope 3 data, including emissions from financed activities and supply chains, is out of reach. Inability to access reliable data creates challenges for companies to effectively measure and manage their environmental footprint.

Financial institutions are, nonetheless, closing these gaps through innovation. Half of the companies have launched net-zero financial products aimed at sectors like energy, real estate, and transportation. These products will aid the shift to a low-carbon economy by providing funds for green infrastructure, clean energy projects, and sustainable business models. Also, banks are establishing ESG advisory teams to assist clients in transition finance, highlighting emerging sectors like hydrogen energy, carbon capture, and sustainable agriculture. New models are also being created to better measure climate-related financial risks. Nevertheless, as pointed out by the report, most companies are still unsure of their capacity to apply these models with accuracy.

The way forward for banks and other financial institutions is plain: shifting from commitment to delivery will be the greatest test. Progressing toward net-zero requires interdisciplinary teamwork, solid governance frameworks, and ongoing innovation in green finance. Firms no longer merely need to promise net-zero, but also demonstrate real momentum with meaningful action. The sector's reaction to this challenge will have profound implications, not just for stability in financial markets but also for the global effort as a whole to address climate change.

President and CEO of IIF Tim Adams and Global Chair of Deloitte Sharon Thorne highlighted the need for cross-industry collaboration in their closing remarks. They hoped that the observations made by financial services leaders in the report would be a useful guide for companies on their own sustainability journeys. The net-zero race is already underway, and financial institutions cannot afford to lose any time. As investors, regulators, and society continue to demand more, the capacity to embed sustainability into business models will determine the future of the financial industry.

To gather insights, Deloitte surveyed 135 executives across 40+ countries and all financial sectors. Additionally, in-depth discussions were conducted with over 30 executives leading teams in sustainability, strategy, risk, finance, and data management.