When it comes to capturing opportunities from Environmental, Social and Governance (ESG) adoption, businesses fully expect the CFO to be the champion for change, according to new research by Accounting for Sustainability (A4S).
Over three quarters (77%) of global finance leaders surveyed for A4S’s Finance Leaders’ Sustainability Barometer said the CFO is mostly or completely responsible for realising the opportunity of developing new technologies and innovations to share sustainable outcomes.
However, less than half of respondents believed their finance team has the skills and competencies needed to support their ESG efforts (48%) even though 82% either don’t assess ESG competence during recruitment or promotions or only do so when recruiting for specialist roles.
The report also found that 81% said ESG information is considered important in their organisations’ decision making, but two thirds believe their organisation lacks the full suite of reliable tools and techniques to make this happen.
Commenting on the survey findings, Jessica Fries, Executive Chair of A4S, said: “Looking at the results of our survey the good news is that we are seeing a robust consensus within the finance community on the importance of sustainability.
“However, it is clear that significant work is still needed to translate ambition into action. The CFO has a clear role to play, championing change, incentivising action and ensuring information and investment flows to support sustainable business goals.”
Focus less on planning, more on action
According to the barometer there is a gap between sustainability ambitions and actions to make them a reality. Agreement on the necessary direction is there, but when it comes to ‘walking the walk’, a sizable ambition gap remains.
The vast majority of respondents – 93% – agree it’s very important for their business to transform financial decision-making to reflect ESG issues, but almost one in five (19%) reported that they do not consider ESG information when making decisions. Instead, companies rely almost exclusively on traditional financial considerations.
ICAEW Climate Change Executive Sarah Reay said the survey results show the awareness is there but now this needs to be translated into action: “A great place to start would be to identify key sustainability metrics that align with your strategy and ensure these metrics are used not only in the finance function but across the organisation, fostering a culture that puts sustainability at the heart of decision-making.”
“CFOs are in the prime position to be embedding sustainability across decision-making. Not only is there a need to consider the wider ESG implications of decisions, but failure to act will have financial implications for businesses,” she added.
Communicating ESG goals must improve
Despite overwhelming support for ESG initiatives among senior respondents to the survey, this did not seem to be fully communicated to the rest of the staff. With staff retention being such a key driver for change, A4S said that CFOs should look to improve internal communication and the culture of the finance team.
Just over three quarters (76%) of group CFOs said they personally backed this ambition, however just one third (33%) of their more junior counterparts perceived such commitment from their own group CFO.
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