Sustainability is no longer a buzzword but a core component of business strategy. Corporate India has been steadily contributing towards sustainable growth in the country. It is increasingly seen as an approach to creating long-term value in the light of a company’s ecological, social and economic environment. It is also a process that requires responding to the actions called by climate change issues.

Sustainability-related risks are today viewed as business risks. The World Economic Forum Global Risks Report 2017 lists extreme weather events, water crisis, and failure of climate change mitigation and adaptation among the top five global risks in terms of impact.

Therefore, sustainability issues are increasingly important to both policymakers and business leaders. Global organizations have learned that sustainability risks—including environmental, social, and governance (ESG) risks—are much more than just another item in the long list of concerns they have to manage. Additionally, sustainable practices have been shown to save organizations money and create long-term business value.

According to a 2015 Nielsen study, 66% of consumers are willing to pay more for sustainable brands—up from 55% in 2014 and 50% in 2013. Given the current environment, business-to-business customers look at sustainability as well when they choose partners and suppliers. There is also evidence that organizations with sustainable practices perform better financially.

Why is sustainability a mandate for CFOs too?

Deloitte conducted a global survey on CFOs and Sustainability in 2014. It showed a continuous increase over the three years in the likeliness of CFOs being involved in sustainability decision making and in CFOs seeing a strong link between sustainability and financial performance. In the latest survey, already 43 per cent of CFOs were always and 40 per cent were frequently involved in setting a sustainability strategy at their company. So, when your CFO is well-versed in sustainability, it goes a long way.

As organizations search for hands-on and innovative approaches to transit from their long-standing processes to sustainable models, CFOs and their teams are well-equipped to help them do so. According to the Deloitte report, CFOs can consider a three-step plan to embed sustainability within their organizations:

Organize internally: Lead the finance function to partner seamlessly with other business functions.
Focus on material issues: This has been seen to impact performance positively.
Tell your story: Make sure the external message is in line with a sharply defined internal strategy.
Finance executives can consider a three-step plan to embed sustainability within their organizations, oganize internally, focus on material issues, and tell their story.

CFOs can:

• Align the internal organization around ESG priorities
• Focus on impactful, industry-specific disclosures
• Develop a plan for sustainability disclosure

Managing environmental resources can help avoid business interruptions, just as managing your workforce helps to avoid turnover. Furthermore, understanding your supply chain can help reduce the risk of brand damage.

As Goldman Sachs has stated, “If you ignore sustainability, you’re going to be worthless.” If you’re beginning to see that there is a value in addressing these risks, then read on.

Sustainability and the top line

Investors care about sustainability. It now steers the decisions of many companies and the CFO is an integral part of the strategy team involved in various decisions such as investment in R&D and future sustainable technologies. Obviously, sustainability cannot be a one-size-fits-all approach. But by focusing on the “sustaining” part of sustainability, businesses can build long-term relationships, innovate and invest in long-lasting infrastructure.

They have much to gain by acting in a socially responsible manner to boost brand value and reputation, attracting millennial talent, and achieving cost reduction. Leading organizations are enhancing their governance and management of sustainability risks, while at the same time looking to connect with a new generation of consumers and shareholders. We believe companies can use risk management to not only protect value but to power performance.

Those companies who do not adapt sustainability into their businesses may be caught off-guard. Consequently, CFOs should advocate sustainable business practices and transparent reporting on how their companies’ value is sustained over time.

So, what’s holding you back?
