Report: Finance reps focusing on sustainability

Could it be that finance folks at big corporations are waking up to the fact that sustainability can be a business driver? An article in the Journal of Accountancy – a publication for accounting and finance professionals from corporations, public accounting firms, governmentagenciesand nonprofits – indicates that the topic of sustainability is rising to the surface as something to take note of.

 

The article, CFOsand Sustainability – A Growing Relationship, informs corporate finance teams that they should be “key participants in their company’s sustainability journeys, reports Environmental Leader.

 

“First, sustainability-related risks are today viewed as business risks,” according to the article.

 

In fact, the risk factors facing a company are facing a significant shift. While market conditions and investment assessments are still important, these factors are expanding to include risks related to climate change and resource availability.

 

“These are landing at the CFO’stable,because they are a part of the risk to the business,” said Terry F. Yosie,presidentand CEO of the World Environment Center.

 

Beyond risk, companies should begin to acknowledge that sustainable practices have proven to save organizations money and create long-term business value. For example, the article points out, Unilever has seen that its sustainable living brands have grown 50 percent faster than the rest of the business.

 

And investors are showing increased interest in how companies are handling sustainability.

 

“If an organization wants to stay competitive and continue to engage stakeholders, all business functions need to participate in its sustainability efforts, and finance is no exception,” according to the article.

 

So what does that mean to sustainability managers?

 

First, when thinking about sustainability initiatives, always include a financial point of view.

 

“If organizations are going to commit to (aggressive reductions…) you better think about how you’re going to get there. If you can do it in a way so that your CFO is happy, it’s a win-win,” Eric Dominguez, vice president of facilities,engineeringand sustainability for Caesars Entertainment, told Environmental Leader in April.

 

Second, learn to speak the CFO language.

 

“In the sustainability space, we tend to invent a lot of new words, rather than speaking the language of the CEO, the CFO, the business manager or the operations manager. We need to be able to speak in business value terms,” said Tom Carpenter, director of sustainability services for Waste Management.

 

Finally, consider coordinated reporting between the two groups.

 

“Many companies have implemented integrated reporting which combines financial and non-financial performance, much of which was formerly included in separate sustainability reports,” said Peter Bussey, a research analyst with LNS Research. “CFOs can take this concept further by integrating sustainability managers into the business planning process. They already understand the material issues, and how sustainability initiatives can support strategic objectives.”

 


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