Chief Financial Officers 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, EHS, legal, procurement/supply chain, IT, facilities/real estate, and HR.
Moreover, the corporate finance team often leads key business processes, such as budgeting, capital appropriations, internal and external financial reporting, executive compensation, and energy management that directly affect the achievement of sustainability goals.
1. Sustainability Reporting is Mainstream
Despite the recession, Climategate, and the lack of cap-and-trade legislation, sustainability reporting has become mainstream in business. The number of companies responding to the Carbon Disclosure Project has grown from 235 to 3,050 in just eight years, and this number will grow dramatically as Walmart and other large companies encourage their suppliers to also report to the CDP. The number of companies using the GRI framework has increased as well, from 100 in 2000 to 1,800 today.
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.
Sustainability reporting is weaving its way into RFPs and customer evaluation programs. In some industries, companies have seen a marked increase in requests for environmental data in RFPs. Bank of America , General Mills, IBM, Procter & Gamble, Walmart, and others are now asking their suppliers for details about carbon emissions and energy use.
CFOs need to ensure that good quality sustainability data is reported publicly to prospects and customers.
2. Green Ratings Matter
Green ratings such as the Dow Jones Sustainability Index, Greenpeace's Supermarket Seafood Sustainability Scorecard, and countless others continue to be more influential for a company's brand image. Product-level rating initiatives, like Good Guide and the Sustainability Consortium, are also maturing their approaches. Companies ignore these trends at their peril.
3. Investors Care
Investor interest in sustainability continues to grow. According to Ceres' Investor Network on Climate Risk, shareholder resolutions were up 40 percent last year. The reputation of companies like Apple and Berkshire Hathaway is at risk because of their continued refusal to publish carbon emission details. Voluntarily reported emission data sent to the CDP now appears on Bloomberg terminals and Google Finance alongside audited financial information for detailed peer company comparison and trend analysis. Last year for the first time the SEC issued guidelines on reporting climate risk.