Sustainability has never been more crucial for businesses than now, looking at the increasing carbon footprint and clarion calls to set up efficient systems to mitigate climate change.
Environmental, social, and governance (ESG) opportunities and risks are increasingly being discussed in executive team discussions and corporate boardrooms globally. As a result, corporate officers have to shift from being passively ‘kept informed’ to taking a more proactive role in ESG conversations and implementation.
The role of the chief financial officers (CFOs) within a business has inherently progressed and evolved with time. As organizations keep on realizing the ROI of sustainable business practices and ESG-mentality, they’ll indeed create and fine-tune the analytical tools required to examine and gauge their sustainability endeavors.
The finance function will thus become more closely associated with decisions around ESG efforts as CFOs are uniquely placed to shape companies and make the business model for action.
Leveraging the CFO’s role for sustainability can help enhance the finance operation’s contributions to the entire business value through four intertwined roles - strategist, catalyst, operator, and steward. Let’s discuss them in detail.
The Catalyst
CFOs can promote a timely shift to sustainability within the finance operation and across the entire business. By incorporating all levels and divisions, CFOs can ensure the budget and the will needed to carry out the essential plans and practices. This role of catalyst is eventually molding a business’s future by shepherding sustainable financial success.
The Steward
The CFO needs to safeguard the critical resources of their businesses, ensuring adherence within any norms and conveying value efficiently to the shareholders, investors, and board. Nobody else is in a better position regarding adopting sustainability efforts and measuring their effects on long-term performance.
The Strategist
CFOs have to leverage their key competencies in asset allocation to financial analysis and reporting systems for facilitating the shift to a sustainable business. They are already aware of gauging the financial value created and leveling off the integration of new schemes into the entire business strategy. They are poised to get everybody aboard - and on the same line.
The Operator
At last, CFOs need to make sure their divisions work effectively and efficiently, above everything else, offering credible insights on sustainability and ensuring reporting improves fast. This implies incorporating new data flows, data sources, and, perhaps, entire new frameworks. They must plant all things to allow rapid access and interpretation of all that’s occurring.
Wrapping Things Up
Sustainability draws attention toward the opportunities for cost-cutting, innovation, enhancing differentiation, and the ability to compete, while helping tackle risks from – costs, supply chain, legal, tax, and resource.
Furthermore, CFOs and their accounting teams are responsible for providing the relevant insights and systems, keeping the long-term in mind. The point indeed is to serve the best interests of the societies and ecosystem can also be perceived as the proper financial method.
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