Sustainability
Climate
Equity
Sustainability:
Meeting the needs of the present without compromising the ability of future generations to meet their own needs.1
Climate:
The long-term pattern of weather in a particular area.2
Equity:
The outcome of diversity, inclusion, and anti-bias actions wherein all people have fair access, opportunity, resources, and power to thrive, with consideration for, and/or elimination of, historical and systemic barriers that have existed in society.3
Finance for a sustainable future
A new dynamic opportunity
Sustainability, climate, and equity: many organizations are considering what these concepts for a better future mean for their businesses now. The steps leaders take in the near term can have an impact for years to come, but it’s hard to know where to start. But good things can happen when an organization tackles all three at once: for our planet and people, and for an organization’s future sustainability and prosperity.
To become a truly sustainable organization, it will take changes in perspective, behavior, and systems across the enterprise—and that’s just the beginning. Every unit of an organization has a role to play, from human resources to the factory floor.
So where can Finance help? Everywhere.
Trending now—
and the opportunities for Finance
Nearly every facet of an organization’s practices has a sustainability angle—a challenge, an opportunity, or both. For Finance, the considerations are as myriad as the tasks they’re charged with undertaking.
What's trending
Net Zero
Fifty-nine countries have set net zero targets with plans to reach that benchmark by 20504 and some companies are taking it one step further to become climate positive.
The opportunity for financeNet Zero
58%
58 percent of surveyed Fortune 500 CEOs said they plan to achieve net zero for their organizations by 2050.5
The opportunity for finance
Getting to net zero will require a series of decisions that Finance can support with their deep understanding of the business’s value drivers, including potential cost-savings from renewable energy sourcing to growth opportunities through new products.
Regulation
From the Paris climate target to other measures, regulatory pressures are increasing and growing more complex. Assurance and reporting frameworks are fragmented and vary by country.
The opportunity for financeRegulation
> 1,800
There are more than 1,800 climate laws and policies worldwide; the Paris Agreement has 197 signatories.6
The opportunity for finance
Finance can play a key role in helping organizations navigate the tangle, no matter the organization's geographic footprint—from avoiding potential costly compliance penalties to understanding incentives that can help fuel sustainability initiatives.
Ethical investing
Investors aren't immune to societal pressures, and they want to know: how are their investments being used in a truly sustainable way. Increasingly, many investors are allocating funds based on sustainability considerations and the evolving regulatory landscape, lending them an increasingly complex—and sophisticated—perspective on sustainability
The opportunity for financeEthical Investing
71%
71% of surveyed executives are feeling pressure to act on climate change by shareholders & investors.9
The opportunity for finance
Information—from financial statements to public disclosures—can have major impact on investors and external stakeholders. Finance plays a central role in providing the data and analysis that demonstrates that an organization is putting their capital to truly good use and build market confidence in their sustainability journey.
Demands for transparency
Pressure for and access to information is everywhere. Customers are demanding answers from corporations on net zero initiatives, equity plans, purpose perspectives, and more. What's more, social platforms make it easier to know just who isn't taking these considerations seriously.
The opportunity for financeDemands for transparency
78%
78% of surveyed consumers were more likely to remember companies that exhibit a strong purpose.8
The opportunity for finance
Finance can demonstrate the facts and the futures behind an organization's sustainability plan to avoid perception of a greenwashed narrative—arming the organization with the data and insights to engage with their current and future customers.
Employee expectations
Sustainability considerations are already driving some talent challenges, and many new entrants to the job market are highly focused on an organization's demonstrable commitment to their goals. And with sustainability plans comes another question: how sustainable are human workers in our current systems? Organizations should consider how equity concerns may affect burnout, performance management, and talent access, engagement, and retention.
The opportunity for financeEmployee expectations
50%
50% of surveyed workers right ideas, creating confidence, and 75% of surveyed millennial workers, would take a pay cut to work at an environmentally responsible company.7
The opportunity for finance
By partnering with the business to manage the performance of sustainability initiatives and investments, Finance can stay on top of results and outcomes, and help demonstrate that progress is being made and that the organization is investing in the right ideas creating confidence.
Climate disruption
Disruptive climate events are not slowing down; if anything, they're driving unprecedented amounts of disruption. Organizations should not ignore rising temperatures, drought, and threats to coastlines from rising seas, as well as the more subtle challenges of climate change. Airports are considering what to do when their runways can't handle extreme heat; grocery stores experience supply chain delays because of extreme weather.
The opportunity for financeClimate disruption
80%
80% of the world's largest companies are reporting exposure to physical or market transition risks associated with climate change.
The opportunity for finance
Finance can support complex decision-making across the organization and their suppliers, modeling financial and sustainability impacts at strategic and operational levels to demonstrate potential impacts of climate change and identify opportunities to mitigate that impact.
Innovation
Sustainability isn't a trendy drain that creates costs and operational burdens. It's a vision for the future that can open doors to new opportunities for value. Think about all the organizations meeting a sustainable need that did not exist even a few years ago—from electric vehicles and edible cutlery to new tech startups modeling climate risk to consumer product companies creating circular packaging by design.
The opportunity for financeInnovation
53%
53% of CxOs reported new revenue streams from socially conscious offerings11
The opportunity for finance
Finance understands the business and operational levers available to helpmeet business strategy - starting from growth, profitability, and now sustainability and can help the enterprise evaluate new business models, new products, and new consumers and the investment required to capture those opportunities.
If we can agree that the world as we know it currently is at risk, we should all care—and every day, another global organization makes a commitment to think and act differently. Finance has a role to play in the moves an organization makes toward a sustainable future, including holding it accountable for enterprise performance, data analysis, cost-savings, market guidance, strategic planning, talent considerations, and more.
Survive
First, Finance can assist the organization in bringing it into alignment with existing compliance and regulatory measures and provide transparency in financial and sustainability data through reliable and efficient processes and controls. A transformation mindset, with a strong, flexible foundation of technology, processes, data, and talent, means Finance can be dynamic no matter how complex the regulatory measures may be.
Strategy
An understanding, fluency, and prioritization of the regulatory landscape and business sustainability strategy to act as the organization’s sustainability steward
Process & Technology
Ability to meet internal and external reporting needs— including external disclosures— whether through automated or manual processes
Talent & Delivery Model
Alignment of leaders and activities around strategy, and communicating progress toward sustainability goals and metrics
Governance, Risk & Compliance
Compliance with reporting and disclosures across regulatory and external frameworks, including key controls over related new processes and data
Data & Analytics
Understanding, assessing, and using data and analytics to support internal and external reporting and disclosures
Drive
Finance can help drive a sustainable operating model shift and operational efficiency with Lights Out FinanceTM and a capacity to sense, weigh, and mitigate risks—and prepare the organization for what’s next. With deep insights on the value drivers to the business, Finance understands the risks and opportunity for its decisions—especially ones based on sustainability, with such deep implications. It can also partner with the business to manage the performance of sustainability initiatives and investments, demonstrating impact and results that can build confidence internally and externally that the organization is investing in the appropriate outcomes, and unlock access to investors and capital to continue to fund the sustainability journey.
Strategy
A sustainability ambition
and strategy for Finance that
are linked and deliver on the
organization’s purpose and
business strategy
A structured business case
to reflect costs and benefits
of investment that includes
sustainability factors (CO2
emissions, equitable hiring
practices, etc.)
An understanding of the
business value drivers and how
sustainability goals contribute
Process & Technology
Ability to design and
implement decisions along
finance processes to enable
sustainability outcomes
Ability to embed
sustainability in performance
management culture, linked
to accountabilities, decisions,
and business cycles, such as
target setting, annual planning,
forecasting, and performance
reviews
Talent & Delivery Model
A reimagined Finance
Operating Model with
formalized organization and
roles and responsibilities to
support the organization’s
sustainability vision
A human-centered sustainability
strategy for finance that reflects
the business’s goals
Increased understanding of
sustainability across Finance
to identify new risks and new
opportunities
Governance, Risk & Compliance
Internal audit and risk
management processes that
incorporate sustainability
considerations
An organization that proactively
identifies key sustainability risk
areas, where stakeholders have
concern, or where risk appetite
is low
Data & Analytics
Aligned KPIs, hierarchies, and
definitions with accountabilities
and defined reporting views at
each level of the organization
to tell an organization’s
sustainability story.
Data initiatives that bridge gaps
in availability and quality
Thrive
New markets, new products, new consumers, new value—all of it can be on the table when an organization successfully incorporates sustainability practices. Finance can evolve new avenues of business partnering to drive the sustainability strategy, enabled by an empowered workforce, advanced data governance, and an overall dynamic finance capability. Being able to balance revenue growth and sustainability impacts can be a common trait of leading organizations in a sustainable future.
Strategy
Translation of ambitions into targets and performance metrics, including KPIs and OKRs that correspond to value drivers
Ability to evaluate M&A strategies to capture sustainability opportunities.
Ability to access financing to fund sustainability-related action
Process & Technology
Integration of financial and
sustainability planning,
forecasting, and controlling
processes using leading
practices and automated
technologies
Identification of process
decision points and use
of dynamic policies and
procedures
Updates to process outsourcing agreements and expectations
Talent & Delivery Model
A model for finance workforce
to support sustainability
efforts, with alignment to
talent attraction and retention
strategies
Enhanced finance talent pipeline
that targets critical skill sets
and sustainability skills or
experience
High finance employee
engagement with sustainability
goals, especially around
improvements to processes or
ways of working
Governance, Risk & Compliance
Use of risk-sensing models to
assess third-party risks, engage
with supplier base, map supply
chain, and find opportunities in
a product’s life cycle
Ability to look across
sustainability issues to identify
whether they are linked to any
thematic risks and/ or trends
Data & Analytics
Aligned sustainability data
processes and pipeline with
business views, that is treated
as a strategic asset
Deep insight into profitability
versus sustainability along the
organization’s value chain
Ability to provide insights to
support engagements with
customers and suppliers
Proactive/ predictive analysis to
support business decisions at
every level
It's time to
get moving.
As a CFO or Finance executive you may be looking to build your vision and strategy to incorporate sustainability practices and to help understand the opportunity they hold for your organization—and the risks to the organization if it doesn’t take advantage of them. There is opportunity in an organization’s data, technology, reporting, operating models, and people. Over the coming months, we’ll examine how Finance can partner across all facets of an organization to help drive improved reporting and sustainability decision-making, considerations for talent and operating models, modeling and decision support for climate risk, and more. Survive, drive, and thrive: a dynamic and future-forward finance function can find the opportunity in each of these stages and help empower its organization to stay relevant, keep stakeholders and customers engaged, and do good for the planet and their community. The destination—a better world and a sustainable organization—is well worth the journey ahead. Let’s get moving.
Contacts
Sustainability & Climate Leader
Principal | Risk & Financial Advisory
Deloitte Transactions and Business Analytics LLP
+1 212 436 4626 | LinkedIn
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Check out the other articles in the Finance for a sustainable future series
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