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Accountants sit in pole position for race to net zero

Author: ICAEW Insights

Published: 13 Jul 2021

CFOs from top UK companies define the paramount role finance professionals play in the race to net zero. With the Prince of Wales placing accountants ‘at the very heart of the transition’.

As more businesses and governments join the UN-backed Race to Zero campaign, CFOs from some of the UK’s largest organisations have shared their insights and practical advice on turning the theory into practice at an Accounting for Sustainability (A4S) virtual conference to coincide with the launch of two practical guides (Net Zero A Practical Guide for Finance Teams and Net Zero A Practical Guide for Finance Teams of Banks) to help finance teams to respond to the crisis.

At the event, HRH the Prince of Wales called on finance professionals to lend their energy, expertise and leadership to develop and implement the practical solutions needed to build an ambitious and sustainable future. He also called on finance leaders to sign the A4S CFO Net Zero Statement of Support to signal their commitment to the kind of action on the ground that is so desperately needed. 

“As CFOs, accountants, investors and pensions professionals have an essential role to play in driving the urgent and substantial change required. Your ability to raise and allocate funds for allocation and adaptation and embed greenhouse gases reductions within your organisations’ decision-making processes, to influence others and to track and report on progress against these targets places you at the very heart of the transition,” Prince Charles said.

It’s now 17 years since he set up the A4S project, working with finance leaders to inspire action and drive a shift towards resilient business models. “This is not about making money on the one hand and being sustainable on the other. It is all about recognising that business as usual is no longer an option and those organisations that invest in the future by putting people, planet and nature at the heart of global value creation will be the ones to succeed,” Prince Charles told delegates.

Gregor Alexander, CFO at SSE, which published its Just Transition Strategy in November last year, said: “Action is where the business community can really demonstrate its ability to get things done. The role of the CFO is to work behind the scenes, to support the business case and make sure risks are identified and managed and to deliver the financial investments.”

Andy Agg, CFO at National Grid, said sustainability was a natural extension to the role of the CFO, in particular making sure that the targets that the business needs to deliver are baked into our activities to make it a core part of how we manage our business, whether it’s how we budget, how we forecast, or how we report our performance. 

“As CFOs there’s a role for us to really champion sustainability at a board level and thinking about those key investment decisions we need to make. And how we engage with our investors who will ultimately lend the capital to us to allow us to make those investments. It’s critical that we share our plans and that we’re open about the journey and we’re a critical part of that conduit to the board to let people know where expectations lie,” Agg said.

Agg said the UN’s COP26 Climate Change conference due to take place from 31 October in Glasgow was a fantastic opportunity to show that business can come together with government, regulators and other stakeholders to set up a clear path to joining up policy commitments with action and investment commitments. 

Transparency is critical, Agg says. This summer National Grid produced its first Responsible Business Charter that sets targets and its first publicly-available Responsible Business Report, where it reports progress on delivering against sustainability targets alongside the annual report. “It’s critical that we hold ourselves to account.”

Simon Robson, CFO at Sky explained that at its simplest, his role was to prioritise resources. “I see my job as to get [sustainability] front and foremost of all the executive team’s minds so they understand what we’re doing, why we’re doing and how and why we’re putting resources into those places and ensuring the whole executive team know what their role is.”

Robson said the skills and attributes of accountants meant they were well-placed to tackle sustainability head-on: “This challenge is right up finance people’s streets. The natural behaviours of finance people are perfectly aligned with this. We’re naturally curious and we ask a lot of questions, we have a healthy dose of cynicism and that makes sure plans are really robust, and we track and report – transparency is absolutely critical and we hold the pen on that.” 

There was an opportunity for finance to lead on sustainability and help the business achieve ambitious plans by breaking them down into manageable chunks, Robson added. “That’s a really exciting position to be in. Set ambitious targets, get everyone involved and get started,” Robson urged. 

Katie Murray, CFO at Natwest Group PLC, urged CFOs to exert more pressure on the investor community to accelerate change: “One really tangible thing we can do as finance professionals is that we collectively own and influence huge amounts of pension funds and I would say at the moment that I think the investor community could add a bit more pressure than they are. Get started, put where you have investments under some pressure.”  

Join ICAEW’s Sustainability Community where work being undertaken by ICAEW in this area is to change behaviour to drive sustainable outcomes.

Here are the links to both practical guides A4S launched to help finance teams respond to the crisis: