The Elder Sister holds the highest position in the Order of the Red Riding Hood Sisters. The Elder Sister bears the duty of leading the rest of the group. We currently know of only three Elder Sisters: Isabella, Teresa and Ruth. As founder of the Order of the Red Riding Hood Sisters, Isabella was the first Elder Sister and kept the title until her death. After Teresa was slain by the Wolf Queen (Eldra) the position of Elder Sister was voted upon by the rest of the Order to go to Ruth, who still remains the current Elder Sister.
The details of the election rituals are currently unclear, but we do know that the first to occupy the role was Isabella after the death of her guardian. As far as the clues go in the game, there are 5 way to become Elder Sister. Some through rank, others through actions that lead to a vote like Ruth.