The first sustainability hire in a portfolio company

By Farrell Associates — B Corp-certified sustainability & ESG recruitment specialists

A growing share of the searches I run are for a portfolio company's first sustainability hire. The request usually starts at the fund. Investors are asking about emissions data and transition plans, a sale is a few years away, and the operating partner wants someone in the business who owns the subject. The company itself may have had a finance manager or an operations lead looking after it part time until now.

These hires can go very well. They can also stall within a year, and when that happens it is rarely because the wrong person was chosen from the shortlist. It is usually because a few questions were not settled before the search began.

Decide what the role is for

The title covers very different jobs. In one business, the first sustainability hire is essentially a reporting role: gathering data, answering investor and customer questionnaires, preparing for disclosure. In another, the job is to change how the company buys, makes and sells, with the reporting a by-product of that work.

Both are legitimate, and the right person for one is often the wrong person for the other. A strong reporting specialist can be frustrated in a role that expects them to lead change across the business, and a change leader can be bored by a role that is mostly spreadsheets. It is worth agreeing between the fund and management which of the two you need, or what balance of them, before anyone is approached.

Get the level right

There is a tendency to hire either too junior or too senior. A junior hire is cheaper and can handle data collection, but often lacks the standing to challenge a plant manager or a procurement director. A very senior hire may expect a team and a budget the business is not ready to give.

The question I ask is who this person will need to persuade. If the answer is the executive team and the board, they need to be credible in that room. If the answer is mainly the people who hold the data, a more hands-on hire may do the job better. Pay usually follows from that decision rather than the other way round.

Settle the reporting line

Candidates will ask where the role reports, and they read a great deal into the answer. Reporting to the CEO or CFO tells them the business is serious. Reporting into a function two levels down tells them the opposite, however the role is described.

In a portfolio company there is an extra layer, because the person will have two audiences. Management is their employer, but the fund will often be the most interested party, and may have its own ESG team asking for data in its own format. It helps to agree how that will work in practice: who sets the priorities, who the person speaks to at the fund, and how disagreements are resolved.

Make sure the fund and management agree

This is the most common reason first hires struggle. The fund wants the role, management tolerates it, and the new person spends their first six months working out whose agenda to follow.

Before a search starts, I like to brief with both. When the operating partner and the CEO describe the job in the same way, candidates hear one story, and the person who joins has the backing to get on with it. When they describe it differently, it is far better to discover that at the kickoff than after the appointment.

Think about the first year, and the exit

Strong candidates will want to know what success looks like. A short list of outcomes for the first twelve months, such as a credible emissions baseline, a supplier engagement plan or a first set of targets agreed with the board, gives them something concrete to judge the role by.

It is also worth being honest about the holding period. A good candidate will ask what happens to the role on exit, and the answer affects who will apply. Many of the best people in this field are drawn to the idea of building something that adds value at sale, and say so. That is a story worth telling well.

Interim cover can help

Sometimes the business needs data for a reporting cycle before a permanent hire can start. An interim sustainability lead can cover that gap and, just as usefully, help shape the permanent role by showing what the work involves. It is worth considering if the timetable is tight, provided the permanent search runs alongside it rather than being put off.

Where to find the right person

The people who do these roles well are often already in another portfolio company, a listed business, or a consultancy where they have worked on similar problems across several clients. Most of them are not looking. They will move for a first hire where the fund and management are clearly behind the role and the first year is well thought through, which is one more reason to settle those questions early.

If you are planning a first sustainability hire in a portfolio company, you can read more about how we approach these searches, or our guide to hiring a chief sustainability officer for more senior corporate roles. I am always happy to talk a brief through with the fund and management together, so do get in touch.

FAQ

When should a portfolio company make its first sustainability hire? Usually when investor, customer or regulatory requests for data and plans start to take more time than someone can give part time, or when the fund wants sustainability to contribute to value at exit. Making the hire a few years before a sale gives the person time to deliver results buyers can see.

What level should the first sustainability hire be? It depends on who they need to persuade. If they must influence the executive team and the board, hire someone credible at that level. If the work is mainly gathering data and coordinating across the business, a more hands-on hire may be the better choice.

Who should the first sustainability hire report to? Ideally the CEO or CFO. The reporting line tells candidates how seriously the business takes the role, and a senior line gives the person the authority they need to work across functions.

Should the private equity fund or the company lead the search? Both should be involved. The fund often starts the conversation, but the person works for management. Briefing with both, and agreeing the role's purpose and first-year priorities, avoids the most common reason these hires struggle.

Is interim cover worth considering? It can be, if a reporting deadline arrives before a permanent hire can start. An interim lead can cover the gap and help shape the permanent role, as long as the permanent search runs at the same time.