When thinking about the DNA of a company, it is natural to think of its core service offerings, physical footprint, brand reputation, culture, values – this is all true and relevant for its sustainability proposition and impact. However, this misses what all companies have as a core component – financial rigour and discipline. Here are some of the reasons sustainability leaders should prioritise collaboration with finance in plans to drive the sustainability agenda.

The language of the business is finance

Cost, profit, payback, return on investment, value – sustainability, like any other business transformation, must co-exist with the same key measures and considerations applied to any other business initiative. These should not be seen as opposite forces, rather, the framework through which to articulate a case for change.

Earlier on, some sustainable choices were no brainers, being both good for the balance sheet and sustainability credentials – operational efficiencies, energy consumption, reduced waste. With this low hanging fruit picked, sustainability decisions may now have longer cycles of investment and return – for example, mass electrification, changes to transportation, supplier development, product (re-)design for sustainability and circularity, etc. These can be for value creation – new revenue streams, greater customer satisfaction – as well as for revenue protection and risk management – maintain business, protect supply or scarce materials, secure labour, etc.

Using the organisation’s accepted framework to articulate expected benefits and monitor their delivery over multiple years will help ensure these initiatives are elevated out of tactical concerns and annual results cycles.

After all, sustainability is not just about environmental issues – sustainability means the business being able to succeed and thrive into the future.

Focus on the agreed targets

Financial metrics are non-negotiable – everyone knows where to look on the balance sheet and at the end of the day, we come back to the bottom line.

In the sustainability space, businesses have defined what they want to tackle based on (double) material assessment. There are agreed sustainability priorities, which are reported on regularly and are strongly focused on positive impact and reaching compliance with new national and international legislation.

Having gone through this process, these metrics are a legitimate North Star, but they can lack urgency as they are kept removed from other business targets.

Work with finance colleagues to integrate the goals into the business’ way of thinking.  Incorporate them into every management routine alongside ‘traditional’ metrics. Only by doing this can sustainability metrics truly be rolled out company-wide.

It does not mean the same business decision in support of customer service or cost optimisation won’t be taken – but it will illuminate the trade-off that is being made. Transparent reporting, given credibility through the rigour of financial standards, will also foster legitimacy and bring clarity to emphasise the value of the sustainability agenda.

Borrow the process, structure and rigour of finance

One of the key drivers of the sustainability agenda is compliance with legislation and reporting requirements, which naturally needs structure and rigour. It also often involves finance teams to ensure a consistent and accurate picture being reported externally.

But also, borrowing some of these approaches has proved remarkably successful in getting sustainability to a wider audience and turned into action. Carbon accounting, emissions management, net zero, scope one, two and three – these terms have cut through to become everyday language beyond specialist sustainability. It puts numbers on the problem and puts systematic, repeatable approaches behind the sometimes ‘hazy’ or intangible sustainability challenge.

So, what does this mean for business and sustainability leaders responsible for delivering action? Listen to finance colleagues and co-design a process-oriented approach to bring to life the above focuses on real business value, and results.

In particular, work alongside each other to understand the (evolving) legislative requirements and their impact and operational concerns. Use the benefit of their experience to establish a data infrastructure that supports efficient data handling for strategic reporting, detailed audit and disclosures, as well as operational needs and performance management.

CFO and CSO – strategic partners for delivering impact and value

Working together like this will make it easier to make links between strategic commitments and operational activities and results, and foster transparency, which breeds confidence and builds momentum. And it will help in the long run, as you will anticipate changing requirements and be able to proactively adapt the organisation to meet them. Treating the CFO as a key stakeholder and ally is essential to achieving success in embedding sustainability in the organisation.

Author: Judith Richardson

Judith Richardson

Managing Principal

sustainability.uk@argonandco.com

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