Why CFOs are sustainability’s surprising new superheroes

It's a bird … It's a plane … No, it's a CFO — the new sustainability superhero!

CFOs are emerging as the new superheroes of the sustainability world. Their unique perspectives, skills, tools and roles empower them to advance corporate sustainability in the rapidly changing marketplace. Deloitte's global research [PDF] reveals that finance's sustainability role is on the rise: In 2012, 26 percent of CFOs from large companies indicated they had sustainability authority, up from 17 percent a year earlier. Nearly two-thirds of these finance chiefs expect their involvement to increase by 2014.

CFOs as corporate value-drivers

What is driving this shift from the perception of sustainability as soft stuff to sustainability as a value driver? CFOs realize that a sustainability lens can improve enterprise risk management, including physical asset, compliance, supply chain and reputation risk. Already, they have seen improved profitability from early investments in resource efficiency. They anticipate revenue generation opportunities from new business lines, new markets and new product features. Increasingly, they respond to investors, lenders, insurers, raters and customers who seek sustainability performance data. These finance leads foresee pending government regulations and embrace innovation as a means to go beyond value protection to value creation. Sustainability gives CFOs the chance to bridge their steward and strategy roles to future-proof their companies and enhance shareholder value. 

For CFOs to realize the business benefits, however, they need to embed sustainability considerations throughout their mandates. Fully embedded, sustainability will become a factor in corporate and financial strategy, financial and operating performance management, and risk and opportunity management. Finance teams will include sustainability factors in budgeting, business casing and investment decisions. Mergers and acquisitions, divestitures and capital expenditures will be analyzed from a sustainability perspective. Tax planners will include sustainability in identifying tax liabilities, and incentives and procurement managers will anticipate sustainability constraints and opportunities in supply chains. Finance will be responsible for the management, reporting and assuring of sustainability information, which will become incorporated into corporate decision-making, incentive compensation and investor relations.

Strategies to advance the mandate

Here are some top strategies to help finance leaders initiate or advance their sustainability role and mandate:

Update your risk models to consider emerging medium to long-term sustainability risks to your business and its value chain.
• Determine your firm's material sustainability priorities and create a sustainability lens for high-threshold decisions.
• Adjust anticipated pay-back periods and hurdle rates to green-light sustainability investments.
Set up a corporate venture capital fund to scout and finance sustainability innovations.
Identify competitive opportunities in your corporate strategy that take advantage of key environmental and social issues.
Show your shareholders how your sustainability plans can unlock shareholder value.
• Develop business unit and IT systems and processes to enable consistent, reliable and assurable sustainability information management.

Finance chiefs also should ensure that their teams have the appropriate sustainability knowledge and expertise to anticipate and leverage the emerging sustainability business agenda.

To foster success, these finance superheroes need a sustainability mentor. Sustainability professionals can partner with finance peers to help them understand and communicate sustainability risks and build the sustainability decision tools to position the company for long-term shareholder and sustainability value creation.

And by the way, it's easy to spot the successful CFO — just look for the cape.

For more information on strategies and tools, watch The Sustainable CFO Webinar, hosted by the Conference Board of Canada on Feb. 25. It will review the trends, drivers and roles that underpin the emergence of the finance sustainability superhero, and will offer insights from a seasoned finance executive and an institutional investor with more than $100 billion in assets.

Telephone booth photo by Bplanet via Shutterstock