The impacts of climate change have inspired business professionals to pay attention to their corporation's carbon footprint. As such, many individuals in upper management positions are taking sustainability initiatives seriously. They seek to adopt practices their businesses can make to reduce environmental harm.
Becoming a sustainable corporation is far from a simple endeavor. There are many variables to consider for change to happen company-wide. However, with exemplary leadership, you can integrate sustainable business practices into your everyday company processes.
CFOs are in a unique position to lead these progressive efforts. A CFO's experience can help them create more extensive sustainable finance plans. CFOs can also oversee company-wide adoptions of new protocols.
How CFOs can lead sustainability initiatives
Adopting sustainable business practices takes time, financial investments, and leadership. An array of challenges exist along the path toward corporate sustainability, including the following:
• Developing circular economic practices.
• Making an argument for sustainability despite government inaction.
• Addressing and mitigating climate change.
• Implementing the interconnectivity of business practices.
• Creating company-wide influential policies.
• Planning a sustainability budget.
• Investing time in new practices.
• Addressing internal adversity.
• Prioritizing actions.
Designing and implementing a plan for sustainable business practices takes many steps and phases. ESG (environmental, social, and governance) concerns are numerous. It is essential to spearhead sustainability initiatives on a reasonable timeline, which means you need an expert-level understanding of financial and non-financial business processes.
Daily work performance that CFOs tackle equips them with this level of understanding, which makes them one of the most significant corporate officers to get involved with leading sustainability plans.
Why CFOs should lead sustainability initiatives
CFOs are skilled in analyzing and monitoring sustainability metrics. They also ensure that points and figures are correct and compliant with the laws and regulations to which the company is bound. These skills and experiences make CFOs trusted leaders of sustainability initiatives and can ensure goals are reached with little to no interruptions. CFOs have an in-depth understanding of these metrics and can help oversee the implementation of new strategies.
A CFO can also determine financial values and plan for sustainability-related budget changes. They can track and assess the financial aspects of adopting new sustainability measures. This aspect ensures greater compliance and enhances the value of investments in sustainable practices.
In standard practice, CFOs are adept at analyzing performance reports, defining new criteria, and presenting tools and solutions that help further sustainability initiatives. Their broad, big-picture approach is vital when designing a plan of action that includes the business's financial and non-financial elements.
Creating and overseeing the organizational changes required to implement sustainable practices puts CFOs at the helm of pursuing goals of this magnitude.
Companies and smaller businesses face myriad challenges when trying to implement sustainable practices. Yet, the interest and increase in progressive ideas show that leaders in different industries see purpose and value in sustainable actions.
However, interest and ideas are not the only efforts needed to become a more sustainable corporation. Financial investment is a crucial part of seeing these ideas become a reality. The financial team and CFO play a pivotal role in proceeding with sustainable plans and ensuring their full integration into company policy.
Fortunately, the implementation of new policies does not happen overnight. Corporations that have achieved sustainability goals in the recent past outline three distinct phases CFOs can follow to initiate progress.
Implementing sustainability practices
During the initial stage of sustainable development, leadership teams often fail to address the full scope of the plan. Instead, they pursue sustainable projects individually when said projects fall within the financial threshold outlined by the financial team.
This early mistake can lead to sustainable practices falling through and the corporation only achieving minimal sustainable progress.
Instead of adopting this approach, CFOs must lead sustainable projects in a way that creates a roadmap of projects, where each success powers the next project.
01. / Stage One
01. / Stage One
02. / Stage Two
02. / Stage Two
03. / Stage Three
03. / Stage Three
Stage Two >
In the second stage, the CFO and corporate finance team analyze the company-wide projects designed in Stage 1 and determine which of these ideas most appropriately supports the overall sustainability goals. The team then schedules a timeline for reaching the targets within the project. They then track the progress of the new practices by declaring objectives and designing methodologies that entire teams will use to pursue sustainable goals.
For example, the goal of a project might include reducing energy costs over a determined period and using the projected savings to invest in more efficient endeavors. Each of these goals is measurable and achievable with proper leadership and participation.
This stage allows CFOs to research sustainable banking and investing options. The knowledge gained during this research lays the groundwork for the financial plans needed to expand to larger sustainable practices.
Stage Three >
Finally, developing a holistic approach to sustainable development is of utmost importance. After all, the successful implementation of each project in the roadmap toward sustainable business practices requires the collaborative efforts of everyone involved with the company. Everyone must know their role in implementing new procedures, from entry-level employees to stakeholders and upper management.
CFOs and the finance team lead the company in evolving the company as a whole regarding achieving sustainability initiatives that generate notable financial returns, improve brand image, reduce risks, and improve the company's position in the industry.
Analyzing each stage of sustainable change and weaving these goals into the company's finances enables CFOs to monitor progress and perform checks to ensure that a given project is proceeding as intended.
The increased climate awareness puts CFOs and finance teams in a unique position that enables them to ensure progress. These professionals can lead their businesses into a sustainable future by designing and overseeing transformation projects.
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