An article in Green Biz on 7 June 2011 by Paul Baier highlights that Chief Financial Officers (CFOs) can play a major role in an organisations sustainability journey. CFOs are already involved in many aspects of sustainability. Numerous functional teams that work on parts of sustainability report to the CFO. These groups include investor relations, risk management, legal, procurement/supply chain, IT, facilities/real estate, and HR. Moreover, the corporate finance team often leads key business processes, such as budgeting, capital allocations, internal and external financial reporting, and energy management that directly affect the achievement of sustainability goals.
The main issues for CFOs in embracing sustainability are:
1. Sustainability Reporting is Mainstream
Most large companies now publish CSR reports that include carbon emission data. Companies that don't publicly report sustainability data are increasingly viewed as laggards by investors, customers, employees, and other stakeholders. The number of companies using the GRI framework has increased as well, from 100 in 2000 to 1,800 today. CFOs need to ensure that good quality sustainability data is reported publicly to prospects and customers.
2. Sustainably Impacts Key Business Processes
In many companies, sustainability is treated as a marketing effort. "Ensure we get the good green ratings, but don't touch operations," is a common approach -- but short sighted. Think of sustainability like quality, and infuse it in all relevant business processes throughout the company. Capital appropriation requests need to include energy cost estimates when comparing alternatives. Profit and loss owners need bonus incentives and tools to reduce energy, water, and waste use. Supplier evaluations need to also account for sustainability attributes of suppliers.
3. Corporate Energy Management Emerges
More companies are adding corporate energy managers to increase visibility in energy use across all locations and to expand corporate energy management beyond simply energy procurement. Companies are learning to view energy as a cost that can be managed and not simply a "fixed expense" that cannot be controlled.
4. Spread sheets Are Not Sufficient to Support Emerging Processes
Spread sheets are wonderful and flexible tools for tracking energy and sustainability data, but they are insufficient as these processes mature and as public transparency of corporate sustainability data increases. Similar to financial processes, sustainability and energy management processes require database-driven software with standard features such as user management, audit trails, and easy ad hoc reporting to reduce risk to a company's brand image with top customers and stakeholders.
5. CFOs can play a leadership role in driving sustainability
Because of the large number of functional areas that report to the CFO, sustainability offers the CFO an opportunity to drive sustainability into the organization for cost savings and competitive differentiation. Your organization needs your leadership in this area.
Adapted from an article by Paul Baier in Green Biz, published on 7 June 2011. The original article can be found here.