A Crash Course in Sustainability for CFOs
Who better to offer some sustainability advice to CFOs than the former EVP and Global Head of an international ratings service, who delivered double-digit growth for nine years running?
As she leaves The McGraw-Hill Companies, Vickie Tillman, who for two years has headed the company's sustainability initiatives for its Global Strategy Group as Senior VP of Global Sustainability Business Development and previously ran its subsidiary, Standard & Poor's (S&P), has some financial tips for sustainability executives (and sustainability tips for finance professionals).
In her most recent job, Tillman's primary role has been to figure out how to develop a platform of sustainability products and services, such as analytics and other information, "to create clarity for decision makers in this new megatrend" of sustainability, which is often financially murky, she says.
Four Financial Questions
Based on her observations of many companies over the years, Tillman argues: "All the touch points in a company, including sustainability, belong in the CFO's office."
Four of the key financial questions facing decision makers, including business and public leaders, include:
1. Should they invest in a particular project?
2. What are the risks of investing in projects like clean technology, project finance, desalination?
3. How is everything related?
4. And how can they create an approach to a low carbon society?
What could be more fun -- or important -- than imagining the next generation of sustainability products for companies, municipalities and others who need to make decisions, especially the financial decisions that come with sustainability territory?
Noting that most of what she's learned is relevant to many companies, Tillman says: "My job [in the past couple of years] has really been to be a subject matter expert and work with the individual businesses [within the company] to innovate around their core capabilities -- analytics, benchmarks, information, transparency. This can touch individual corporations, communities, countries, states, towns or other organizations and entities."
The essence of what she's been doing is "looking at all the aspects of what can create a low carbon society," Tillman says. "Among other things, that takes into consideration individual behavior, and people need to be educated. I've looked at the portfolio of companies the company owns and tried to figure out how to create platforms and products that could help professionals" do their jobs better.
When it comes to sustainability products that could help make financial decisions, Tillman notes that already "over 500 CEOs believe exposure to environmental liability is already taken into consideration in the value of the company by the market."
That would suggest that when making sustainability decisions about their companies, risk with respect to the bottom line should be first and foremost on executives' minds. And that suggests the work of CFOs and CSOs should be mutually reinforcing.
7 Rules of Thumb for Corporate Sustainability
Again, it all comes down to the CFO, Tillman believes: "Understanding -- or not--how the supply chain can really impact earnings, knowing how much to spend, how much to save by efficiency or innovation, influencing vendors -- all this can cost, or grow, the company.
"That kind of cost reduction measure should move into the integrated strategy of the company."
Tillman recommends CFOs keep in mind 7 pointers when looking at sustainability:
1. It should be integrated into the larger strategy
2. It can help reach more customers
3. It can influence vendors
4. It's an investment risk
5. It's an investor, asset manager attractor
6. It's a money saver (lowering carbon generally lowers costs)
7. It's a morale and innovation booster
And what does she see as the biggest sustainability challenges CFOs are up against?
Says Tillman without hesitation: "Silos in large companies, and lack of knowledge on the topic."
Accounting photo via Shutterstock.