Finance professionals can help solve the climate crisis
13 October 2020: Sally Orton is the newly appointed Group CFO of Zedra, which supports high-net-worth individuals, families, larger companies and asset managers with their investment structuring. She calls for alignment between sustainable profitability and the impact companies have on the environment.
“I truly hope that the climate crisis is seen as a business issue,” says Orton. “As finance professionals, we should be able to help solve this crisis.”
The last couple of decades has seen plenty of activity to try to support finance professionals who operate at the interface with climate issues, including efforts from accounting bodies. These efforts have had mixed success, but we may finally be arriving at the point where it is clear that business, accounting for business, climate and human capital are inextricably linked.
There are clear ways financial professionals can influence how companies respond to the financial crisis, says Orton. Firstly, they can share the role of corporate leadership and can influence the responsibility to support solid decision-making around sustainability. This, she says, should include not only climate issues but also wider ESG considerations on how people should be treated, how businesses are built and how offices are run, for example.
Then, there is the role of the finance technician, where finance professionals can develop a system of reporting globally so that business can measure its impacts on the environment, and these measures can be compared within and across sectors. “Also, it is very difficult for individuals as consumers to understand the impact on the environment of the products and services they are choosing without measures,” she says. “Standards, trusted measurement and frameworks can really help.”
All of this, says Orton, will help investors and consumers be better informed about the consequences of their buying decisions.
“If there is an evolution towards sustainability reporting, it has to be done in the same way by all companies,” says Orton. She rejects the notion that reporting something on climate or ESG is better than nothing at all, and she does so for a very good reason: we have already seen how corporate and social responsibility reporting has been used as a selective marketing tool. We cannot allow the same to happen around sustainability.
“Company reports are not marketing documents,” she says emphatically. “Companies and businesses are starting to embrace actions on sustainability and climate, but any reporting on this today should show real-time progress, complete with the successes and bumps, work in progress and areas that need fixing.” She points out that transparency of actions and work to be done is vital and will enable consumers and investors to actively choose to support companies make the transition to a higher level of climate-positive activity and ESG standards. If negative information is omitted, investors are potentially being misled.
She continues: “We need to get to a point where there is an alignment between seeking profitability and impact. If companies ignore the impact of the climate crisis on their business, and the rising consumer and investor sentiment seeking sustainable alternatives, profitability and valuation will suffer and ultimately their long-term survival will be in question. Accountants can help with this. In the end, the shareholder will suffer if the company in which it has invested is not disclosing in a transparent way.”
Orton herself is a member of ICAEW through reciprocity with the Australian Institute. She is also a livery member of the Worshipful Company of Chartered Accountants in England and Wales and is a trustee of its charity. She has already had a long career as a finance professional, starting out at KPMG in Australia, followed by spells at PwC and EY in London before joining Man Group plc, LCH Limited and Hyperion Insurance Group.
She joined Zedra as it grows its existing business as well as undertakes a phase of strategic growth through acquisition. She brings to the table international experience as well as expertise in accessing new markets.
Recent Zedra acquisitions include Fitzgerald & Law, a London-based provider of global expansion and corporate services; corporate trust services provider Interben in Guernsey; BNP Trust in Singapore; and accounting and outsourced services specialist Awans in Poland. Securing fresh investment in January has helped Zedra pursue its ambitions to grow by jurisdiction, by sector and by fit with existing business lines.
Zedra itself, a specialist in active wealth, and corporate and fund administration. Companies like it, Orton points out, are in a pivotal position when it comes to the direction in which funds are built. This is what can bring about change, she says. Happily, Zedra reports that it has seen recent interest in funds with strong environmental, social and governance imperatives alongside more traditional financial measures, and these investment funds are now accessible to both private and institutional investors.
Guernsey is leading the way in green funds, she says, referring to the Guernsey Green Fund as the holder of a “kitemark” for its environmental credentials. The objective of the Guernsey Green Fund is to provide a platform upon which investments into various green initiatives can be made. It says that it enhances investor access to green investment by providing a trusted product that mitigates environmental damage and climate change.
Alongside this, Guernsey has also recently launched the Green Private Equity Principles. In this regard, Zedra is happy to assist any manager or fund sponsor in adopting the Guernsey Green Fund “kite-mark” or voluntarily adopting the Green Private Equity principles. Zedra can also work with managers and their advisors to certify “green” criteria and tailor any investor reporting to meet their needs.
To date, Zedra has grown rapidly to a team of 500 across 14 countries spanning Asia, Oceania the Americas and Europe. However, Orton was recruited in an environment in which she could not meet any of the team in person. “It has been a complex six months for us all,” she says. Let’s hope it has also been a period of reflection.