CFOs and their finance teams are uniquely positioned to lead the net zero transition, but this requires a fundamental shift in their roles and capabilities. To effectively embed sustainability into financial decision-making, finance professionals must navigate various perceived drivers and hurdles. Understanding these dynamics provides valuable insights into how they can catalyze concrete actions within their teams.
Understanding the Drivers of Sustainability
A recent report published by Accounting for Sustainability (A4S) reveals that while 88% of finance professionals believe transforming financial decision-making to address environmental and social risks is crucial, only 9% feel their organizations are fully equipped to integrate sustainability into decision-making. The Finance Leaders Sustainability Barometer 2024 emphasizes the need for companies to prioritize sustainability within their financial frameworks.
In this context, the focus shifts to examining the drivers, risks, and opportunities associated with adopting sustainability strategies. Organizations are increasingly aware of the gaps in sustainability skills within their finance teams. While 80% of finance professionals rated their CFOs as either fully or mostly capable of integrating social and environmental considerations, only 10% felt that their overall finance teams possessed the same level of capability. This disconnect highlights the urgency for CFOs to become advocates for sustainability, leveraging their leadership to develop the necessary skills and knowledge within their teams.
Building Capacity for Sustainability
To bridge this skills gap, three-quarters of barometer respondents plan to invest in training current staff, while others are considering creating new finance roles focused on sustainability. This proactive approach can empower finance teams to apply rigorous financial analysis to non-financial data, such as sustainability metrics, enabling more informed decision-making.
CFOs can facilitate collaboration between finance teams and sustainability professionals, fostering an environment where both parties learn from each other. This synergy not only enhances the financial team’s capabilities but also strengthens the organization’s overall approach to sustainability.
Addressing Key Barriers
Despite the recognized importance of sustainability, several barriers persist. Nearly half of barometer respondents identified the lack of reliable data as a significant challenge, emphasizing the need for robust data collection processes and universal standards. Organizations must establish clear roles, responsibilities, and procedures for data collection to ensure that sustainability metrics are as reliable as financial data.
Additionally, competing organizational priorities can dilute focus on sustainability initiatives. Finance teams must be granted the time and resources necessary to build their skills and integrate sustainability into their core functions. Creating a culture that embraces sustainable decision-making within the finance function can be instrumental in overcoming these hurdles.
The Path Forward
The urgency to address sustainability challenges requires rapid action across all sectors. Finance teams play a crucial role in this transition by integrating sustainability into financial decision-making processes. With enhanced skills and a commitment to sustainability, they can not only support their organizations in achieving net zero goals but also help navigate the complexities of a changing global landscape.
In conclusion, CFOs and finance professionals are tasked with a critical responsibility: to lead their organizations toward a sustainable future. By prioritizing sustainability in their strategies, investing in skill development, and fostering collaboration, finance teams can become vital assets in protecting the planet and ensuring long-term resilience.
References
Accounting for Sustainability (A4S). (2024). Finance Leaders’ Sustainability Barometer 2024. https://www.accountingforsustainability.org/content/dam/a4s/corporate/home/KnowledgeHub/Guide-pdf/A4S%20Finance%20Leaders%20Sustainability%20Barometer%202024.pdf.downloadasset.pdf
* This revised article integrates insights from the A4S report.
