As businesses continue to embrace sustainability, many find themselves wondering how best to structure their internal capabilities to deliver it. New regulations and evolving investor expectations mean the landscape is constantly changing. How do organisations cater for variations within product lines, markets, and geographies and the ESG regulations that apply to these? This complexity makes it difficult to build and sustain momentum within a business.
A key consideration for any organisation is which sustainability operating model the business should adopt. Sustainability once sat in departments like marketing, operations, or legal, but with so many moving parts to consider, these areas alone cannot shoulder the full scope of ESG strategy. Reporting directly to the C-suite may also seem like a logical move, and indeed some regulations increasingly require financial, risk, or supply chain leaders to assume ESG accountability. So, what is the model that will best support long-term success in your business?
Here, we explore four common sustainability operating models, the opportunities and risks that relate to them, and the enabling conditions that make them work effectively.
1. The centralised directive sustainability function
In this model, a central sustainability function reports directly to the CEO or management board and is responsible for setting strategy, driving implementation, and ensuring alignment and results across all parts of the organisation.
This model offers clarity, creating clear accountability at the highest level, and it allows for consistent messaging, goal-setting, and reporting across the business. It aligns sustainability closely with strategic priorities and gives it visibility at the most senior levels.
However, there is a potential disconnect between corporate-level strategies and on-the-ground realities. Regional teams may feel disengaged if they aren’t involved in shaping initiatives. There may also be limited agility, particularly in complex organisations where markets vary significantly.
Success in this model depends on strong executive sponsorship, well-communicated KPI's that resonate across departments, and mechanisms to translate central strategy into day-to-day operational action. Cross-functional engagement and clear lines of influence are essential to avoid sustainability becoming siloed or overly theoretical.
2. The hub-and-spoke model
The hub-and-spoke model offers a hybrid approach, combining a central sustainability team with embedded representatives usually within functional teams or business units, who tailor and deliver sustainability initiatives locally. The central team defines the vision and provides strategic coordination, while the embedded representatives ensure delivery on the ground.
This model strikes a balance between control and flexibility. It enables businesses to maintain a coherent sustainability direction while adapting to local market conditions by using local expertise. It also fosters greater ownership from business functions and ensures those functions act as a bridge between local priorities and the central leadership team.
Yet this model can bring coordination challenges. The central team often relies on influence rather than direct authority, which may lead to uneven execution across different functions and geographies. Strong communication and clearly defined roles will avoid fragmented efforts.
To thrive, this model requires strong central championship and leadership support and alignment between central leadership and local implementers, as well as systems that encourage internal collaboration. Success depends on clear governance structures, shared objectives, defined roles, and tools that help local teams implement the central vision.
3. The Centre of Excellence with functional ownership
Here, the sustainability function operates as a Centre of Excellence (CoE) that supports business functions by providing strategy, guidance, tools, and training. The CoE sets standards and offers advisory expertise, but it is the business functions themselves, such as procurement, HR, or product development, that are accountable for delivery.
This model encourages sustainability to be embedded within the operational DNA of each function. However, a key risk is that the CoE can become a passive advisory group without real influence. If functional teams lack influence, implementation may stall. There can also be challenges around measuring and coordinating results across functions.
For this model to succeed, it’s crucial to have a sustainability-focused culture and strong alignment on global sustainability policies with managed flexibility for local adaptation. Governance systems will help to align goals and monitor progress, and performance frameworks that include sustainability targets with established feedback loops will also assist. Functions must be equipped with the skills and incentives to integrate ESG into their planning and execution.
4. Fully embedded / local ownership with a service model
In the most decentralised model, sustainability is embedded directly within each business line or function. The central sustainability team acts as a service provider, offering expertise, resourcing support, and shared tools, while business units own the responsibility for execution and outcomes.
This model offers deep integration and high responsiveness. Because sustainability is owned locally, it becomes closely tied to day-to-day decision-making. It encourages innovation and allows for strategies that reflect local contexts and customer needs.
However, it also carries significant risks. Accountability can become diluted, efforts may be duplicated across teams, and overall alignment with enterprise-wide goals can weaken. Without strong coordination, the organisation may struggle to measure impact consistently or benchmark performance across teams, and collaboration across functions can diminish.
To make this model work, sustainability must be embedded in the culture and values of each team. Collaboration must be prioritised over competition, and incentives should reward sustainable outcomes. A strong internal service charter, aligned KPIs, and empowered local leadership can help maintain cohesion and strategic alignment.
Conclusion: Matching the model to your maturity and needs
The model your company chooses should reflect your sustainability maturity, cultural context, regulatory environment, and business structure.
Some organisations start with a centralised model to build control and credibility, then evolve into a hub-and-spoke or embedded model as capabilities grow. Others may adopt a hybrid approach from the outset, blending central strategy with local execution.
Ultimately, structure should serve strategy rather than the other way around. Whatever model you choose, success will depend on leadership support, clear accountability, and the ability to adapt over time. Sustainability is a dynamic capability that, when embedded thoughtfully, can future-proof your business for decades to come.
Find more about our thinking on how to design a sustainable operating model here, and the top 10 factors to consider here. Get in touch to discover more about how we can help you set your sustainable operating model up for success.
