Why sustainability programs should be top-of-mind for finance leaders

For leading organisations worldwide, sustainability is far from an afterthought and has become an operational imperative. The rise of complex environmental, social, and economic concerns threatens to upend the business status quo and requires companies of all sizes to refocus on sustainability programs.

Finance leaders have a unique role in driving sustainability initiatives, in large part due to their financial expertise that can be used to integrate relevant objectives into financial strategies. Their skills can also enable the prioritisation of responsible investments, in a bid to lower risks often associated with environmental and social factors.

By adopting sustainable initiatives, financial leaders can attain advantages that extend beyond mere financial measurements, thereby bolstering the organisation’s long-term reputation.

Challenges faced by finance leaders in sustainability programs

While all stakeholders agree sustainability is vital to the success of both businesses and the planet’s future, current programs will fail to be effective if they are not implemented correctly.

“The most pressing challenge is to leverage data analytics and digital insights to guide strategic decision making. Just as company leaders would consult financial and performance dashboards, they need that same worldview to chart their sustainability progress throughout the year,” explains Marine Rivoire, senior manager, Global Product & Solution Marketing at SAP Concur.

By identifying and integrating sustainability data into financial reporting, finance leaders will be well placed to overcome short-term profit pressures for long-term sustainability.

Building a sustainable finance strategy

Many of the top-line benefits of sustainability strategies to organisations, such as cost reduction and efficiency improvements, are clear. But as a sustainable finance strategy is built, firms can achieve several other powerful advantages.

From the incorporation of Environmental, Social, and Governance (ESG) factors into risk management, which can help mitigate risks, to the enhanced brand reputation and customer loyalty that communicating sustainability wins can bring; the benefits can be substantial.

In practice, ensuring strong collaboration between sustainability teams and other departments and embedding sustainability criteria in investment decision-making, alongside establishing key performance indicators (KPIs), are effective building blocks of sustainability strategies.

Leveraging technology for effective sustainability management

Few areas of business have been left untouched by innovative digital technologies, with sustainability being no exception. Financial technology (FinTech) solutions, such as tools that can use data analytics for sustainability insights and reporting, are growing increasingly essential.

“Technology’s ability to quickly and effectively measure and value green and social dimensions will definitely help accelerate the shift towards an inclusive, low carbon and circular economy. A roadmap that enables sustainability efforts will become fundamental to every business strategy,” explains Rivoire.

With a recent study conducted by SAP Concur finding that 88% of companies would switch to technologies that offer more sustainability support, implementing the right solutions that support green finance and sustainable investments can be aided by next-generation technology.

Engaging stakeholders and communicating sustainability successes

Embedding these programs across an organisation is one element of the approach successful finance leaders would benefit from focusing on. Yet, once these successes have been achieved, it’s essential that performance against sustainability related goals is widely shared with investors, customers and employees.

“Communication plays a key role in the strategy’s success. People need clear expectations, an opportunity to make suggestions and a chance to give feedback. The CFOs job is about selling a company story in a fact-based way,” says Rivoire.

By prioritising transparency and accountability in reporting progress, not only can sustainability be accurately linked to long-term financial performance, but it can also show the alignment between sustainability goals and financial objectives.

Addressing regulatory and compliance issues

Sustainability policies are rapidly evolving across the world, with the Sustainable Financial Disclosure Regulation (SFDR) being one of the many requirements facing businesses today. In many of these regulatory areas, finance leaders have a vital role to play on the journey to ensure compliance.

“Having visibility into relevant metrics across every line of business can equip CFOs with insights required to comply with new regulations. They can also help meet increasing stakeholder expectations to cut costs and to recognise opportunities for innovation and business transformation,” she adds.

A range of digital technologies can also enable leaders to effectively leverage sustainability reporting standards, such as GRI, SASB, and TCFD.

Overcoming challenges and future outlook

There is no question that sustainability challenges are going to become more complex in the future, with addressing these issues also requiring more comprehensive business approaches. By starting now to create programs, leaders can better anticipate and address future sustainability challenges they encounter.

Despite this uncertainty, financial decision makers are perfectly placed to be able to bring all financial information together to provide a holistic view of their organisations and ensure continuous improvement remains a central aim.

Further reading – Addressing Business Travel is Becoming the New Norm: Is Your Company Getting on Board?

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