How CFOs further value creation by leading on sustainability
At some companies, sustainability is still managed at a functional level, often with limited resources. But finding success in evolving ecosystems and value pools will require paying more attention to how companies interact with the world and the communities around them. As a result, many companies are realizing that sustainability is an enterprise-scale issue requiring specific people, processes, and technology to gauge and report the impact of sustainability factors on a business—such as the impact of climate change on its supply chain—or even a business’s impact on employees, customers, and the environment. Often, what’s needed is a sizable, systematic organizational change, if not a wholesale sustainability transformation.
CFOs may be the natural catalysts for such efforts. As stewards of most companies’ data and analytical resources, they have a broad view of the technology, systems, infrastructure, architecture, and tools that have already been built. Often with the support of an ESG controller, they are positioned well to provide the data to support concrete goals, establish initiatives to deliver on those goals, monitor progress, ensure accountability, and reward continuous improvement—much as they do for financial performance.
As a practical first step, companies need to identify what problems they’re trying to solve—and what people, processes, and technologies they need to solve them.
Upskilling people to meet the demands of sustainability
A successful transformation requires that strategy, structure, and culture be in sync, working seamlessly together. This means that the strategy needs to be operationalized throughout the organization and that measures of sustainability performance need to be integrated into management reporting and control systems—and often into the remuneration of leadership.
Much of this depends on the knowledge and skills of a company’s staff. For example, staff members need to understand not just what to do, but also why and how. Sustainability knowledge needs to be embedded in people’s everyday activities, so it becomes “just the way you do things.” Moving the workforce from where it is today to become sustainability-conscious is not a simple endeavor. We’ve seen companies struggle with the transition internally, as employees become familiar with the level of internal controls required At the European multinational mentioned above, few of the more junior people understood the company’s sustainability strategy at even a basic level, let alone technical concepts like Scope 1, 2, and 3 emissions. In response, the Finance and Sustainability teams undertook a focused effort to manage internal stakeholders, bringing in a core group of senior people at different stages to conduct steering groups, one-on-one conversations, and training sessions. Their efforts built widespread support across the workforce, giving staff the confidence to embrace net-zero commitments and work toward them.
Existing technology can enable the process
The CFOs who are furthest along on sustainability are looking at their existing technology architecture to see where ESG data and controls can be integrated into their overall governance, risk, and compliance tools. They’re reviewing how their sign-offs and certifications can be integrated into established reporting processes. Working with the broader Finance and IT functions, they’re also reexamining enterprise technologies to see where they can use what they already have for other purposes, where there’s likely to be a gap, and where they’ll need a best-in-class solution. From there, they’ll need to start laying out a plan for where to go next.