Social responsibility, sustainable development, environmental performance, corporate governance, business accountability, shared value, citizenship, triple bottom line, ESG – whatever you call “sustainability,” it’s traditionally a squishy topic. Marketing, supply chain, manufacturing, and HR teams have long been focused on driving socially conscious practices such as packaging made from recyclable materials, less waste and use of natural resources, regulatory compliance, donations to social causes, and employee-based volunteerism.
However, this “soft” view of sustainability seems to be changing as highly sustainable businesses become highly lucrative and profitable. Gradually, businesses are beginning to recognize that sustainability initiatives are a great source of cost reduction, risk mitigation, and market-share growth – all opportunities that steal the attention of every CFO. In fact, the EY report “Six Growing Trends in Corporate Sustainability” reveals that 65% of surveyed sustainability executives involve their CFO in their portfolio of sustainability initiatives.
While such a mindset brings considerable advantages to finance, there is perhaps a more pivotal reason for CFO intervention. Investors, customers, partners, regulatory bodies, and social advocates want concrete, quantifiable proof of how the business makes money and impacts the world.
Sustainable business performance: A strategic double entendre for finance
The range of risks that businesses face has dramatically changed. In years past, executives were more concerned with shifts in market conditions, investment assessments, and regional economic and political stability. However, these factors are now expanding to cover environmental responsibility and availability of natural resources.
Enter the CFO, who may feel that these risks can no longer be ignored in amidst growing demand for transparency and action. By collecting the kind of information that connects sustainability programs to brand growth, business performance, organizational value, and social impact, finance leaders can identify opportunities for additional improvements, increased market share, and new revenue streams and create actionable strategies to seize them.
Here are three steps that can help CFOs get started:
1. Align sustainability drivers with business priorities
The beauty of sustainability initiatives is the capacity to impact how people work. However, disconnected one-off investments do not deliver this level of change. For this reason, it is vital to engage all functions in continuous cooperation and alignment when validating and communicating business performance, incoming risks, and emerging opportunities.
Integrating advanced and predictive analytics into business processes and strategic priorities helps CFOs educate all organizations on how they influence the sustainability performance of operational functions such as finance, HR, manufacturing, procurement, and supply chain. By adopting a central data repository stored in a cloud-based digital core such as a next-generation ERP suite suited for companies of any size, industry, geography and infrastructure, they can consolidate this information to deliver business-relevant, well-rounded, contextual insights.
2. Disclose reliable, repeatable outcomes on demand
The more a business embraces the value of sustainability, the higher the demand for more in-depth sustainability reporting. CFOs will inevitably require a system that handles a wide variety of reporting frameworks, schedules, and evolving metrics. At the same time, data must be collected continuously to help ensure that complete and accurate insights are delivered in every report.
With sustainability performance management software, CFOs have direct access to the tools they need to create reliable disclosures with flexibility and consistency. A central library of key performance indicators based on the Global Reporting Initiative standard supports the ability to manage and scale existing and new processes, frameworks, reporting deadlines, and requirements with ease. Plus, data collection becomes an automated process that is auditable, all-encompassing, and repeatable – eliminating the need for chasing managers for information through a long thread of emails, phone calls, and spreadsheets. This approach helps CFOs move towards a delivering an integrated report that provides additional transparency and insight to external stakeholders, and potential investors and customers
3. Get the data right (and don’t tolerate anything less)
The success of any sustainability initiative is highly dependent on data quality and the ability to analyze it when and where insights are needed. After collecting and consolidating sustainability data into one source, finance requires a mechanism for slicing and dicing data, comparing those results to past performance, and predicting future outcomes in the form of dashboards and visual reports.
Interactive data visualizations accessible on a laptop, as well as a mobile device, puts actionable information at every decision-maker’s fingertips to help them maximize the value of sustainability progress. With speed and precision, users can consume a massive volume of information quickly to understand root causes and gain a holistic view of the entire business – all without the intervention of an IT specialist and a data scientist.
The CFO view of sustainability: Better for the world, better for the business
As the model of fiscal mindfulness and expertise, CFOs have a unique opportunity to lead far-reaching sustainability efforts. Let’s face it: Companies are not going to do anything if there is not a business case to support, even if it promises a better world for all of us.
Measuring and managing sustainability-related performance is more than just a corporate mandate; it’s a stakeholder and shareholder necessity. Strict regulations, operational risk, and growing public outcries for action worldwide are putting every business under intense scrutiny. Companies that can enable and capitalize on this requirement will only operate faster, more efficiently, and more competitively as they deliver something bigger than themselves, their business, and even the entire industry.