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How CFOs can manage sustainability risks and create long-term value
See what role environmental, social, and governance (ESG) risks and sustainability reporting play in building value and brand protection.
Environmental, social, and governance (ESG) risks increasingly demand the attention of chief financial officers (CFOs). Companies that aren’t addressing these issues may be caught off-guard as these pre-financial risks become central to business strategy. Consider the following situations:
- A beverage company loses access to water due to local water scarcity or loss of social license to operate in surrounding communities.
- A technology company fails to listen to its highly skilled labor force. Employee turnover increases and the company loses its competitive advantage.
- A consumer products company faces brand and reputational damage and consumer backlash for instances of human rights violations in its supply chain.
After reading these examples, you might be thinking, "I’ve never considered these risk areas as sustainability risks; they’re just business risks." Yes, they certainly are business risks, and that’s key to understanding their impact on your long-term financial performance and unlocking potential "hidden value" in your business. They should grab your attention. Consequently, CFOs should advocate sustainable business practices and transparent ESG reporting on how their companies’ value is sustained over time. If you’re beginning to see that there is value from addressing these risks, then download the report.