What role does finance play in executing an organization’s sustainability strategy? Easy. A lead role.
What a sustainability command
center does—and the benefits
Standards
Working with cross-functional leaders to identify metrics based on external mandates and internal business needs to track performance; align on approach to calculate metrics; and define what, where, and how data will be collected to calculate metrics.
Net 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.
Collection
Coordinating collection of data from across the organization across functions, business units, third parties, etc., and coordinating approaches to simplify and automate collection overtime.
Reporting
> 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.
Reporting
Designing and building internal and external reports to meet defined requirements with flexibility to evolve as needs shift over time.
Ethical 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.
Performance
Management
Providing insight and business collaboration to track performance, identify improvement opportunities, and drive accountability against sustainability commitments.
Demands 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.
Collaboration
Engaging with internal and external stakeholders to understand their reporting and performance management requirements and continuously improve processes.
Employee 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.
Why should finance lead a sustainability command center?
It’s simple: finance has done this before and has the skills. When you build a command center, you want a steady hand at the helm. That’s finance:
They have the responsibility to meet external reporting requirements and (typically) have the responsibility to track/report on organizational performance against sustainability strategy (so tighter alignment between strategy and reporting/tracking)
They are already trusted business partners and work across the organization
They have skills and experience in data management, analysis, and performance management (may require upskilling/working with functions to understand non-financial metrics)
But just as with any new initiative, you’ll need guardrails for development.
Some to keep in mind include:
The need to have a broad focus on both financial and non-financial metrics.
The command center should not be a traditional COE that sits in a single function and builds skills and experience within that function; building a true command center connects across functions with heavy stakeholder engagement and collaboration across functions.
The sustainability command center should not be too focused on compliance (as finance does have the external reporting responsibility) but should have a clear mandate to drive ESG performance management enabled by the cross-functional collaboration.
Survive
Strategy
Drive cross-functional connectivity and consistency with a focus on internal and external sustainability reporting.
Process & Technology
Establish a clear understanding of what the work is, where it is performed, and by whom to enable a coordinated sustainability reporting approach.
Talent & Delivery Model
Identify cross-functional command center members and establish roles and responsibilities to maintain alignment and execute against sustainability goals.
Governance, Risk & Compliance
Establish governance model and corresponding decision-making processes to enable cross-functional collaboration.
Data & Analytics
Establish cross-functional data standards and collection approach; define data sovereignty over essential ESG data.
Drive
Strategy
Track performance toward goals and coordinate operational improvements to execute sustainability strategy.
Process & Technology
Identify improvement opportunities across operational processes and technology enablement to help achieve sustainability targets.
Talent & Delivery Model
Coordinate sustainability service delivery across the value chain; identify opportunities to simplify and centralize delivery.
Governance, Risk & Compliance
Embed risk management and controls that incorporate sustainability considerations to proactively identify key sustainability risk areas across functions.
Data & Analytics
Organize automation of data collection, cleansing, and attribution; sustainability data mapped with other strategic data.
Thrive
Strategy
Establish a feedback loop to demonstrate impact of sustainability strategy execution to help set and shape future sustainability strategy and commitments.
Process & Technology
Embed sustainability considerations in enterprise business planning across finance, supply chain, commercial, human resources, etc.
Talent & Delivery Model
Enhance business collaboration across functions to proactive identify strategic and operational initiatives that drive enterprise value.
Governance, Risk & Compliance
Provide mechanism to look across sustainability issues to identify whether they are linked to any thematic risks and/or trends.
Data & Analytics
Enable cross-functional insights based on integrated sustainability data and take action to influence sustainability strategy.
But what about the data?
Organizations love their data but organizing and managing it can be difficult. When it comes to sustainability reporting and metrics, data quality is key to a successful mission. Enter the sustainability command center, which can play a pivotal role in driving data quality and governance and coordinating the activities needed to mature data quality.
Consider these goals:
Align KPIs, hierarchies, and definitions with accountabilities and defined reporting views to tell an organization’s sustainability story.
Build data initiatives that bridge gaps in availability, quantity, and quality.
Build ambition for your data: what do you need it to do when it comes to telling your organization’s sustainability story?
Build a blueprint: Where does your data come from, where is it housed, and how can it be augmented to support internal reporting requirements? Can automated technologies give you better, faster visibility into that data?
Build defined data governance and collection frameworks to identify potential flaws and improvement opportunities.
All systems go.
Organizations shouldn’t incorporate sustainability just to meet reporting requirements or public expectations, although those are important., Driving sustainability is the right thing to do, both for business and the world. And if sustainability measures can be a catalyst for better, more efficient, more profitable, and more equitable organization, then that can be good for everyone. A sustainability command center can offer a real opportunity for finance to lead the way in sustainability; by building sustainable, cross-functional practices on the inside, finance may be able to help achieve more than what they ever thought possible. Think about that space launch: when systems work toward a common goal, the end result can give us a new perspective on the future—and it can also change the world.
Subscribe for more insightsContacts
Senior Manager, Consulting
Deloitte Consulting LLP
+1 212 436 2286
Managing Director, Consulting
Deloitte Consulting LLP
+1 212 313 5005
Senior Manager, Risk & Financial Advisory
Deloitte & Touche LLP
+1 214 796 7468
Managing Director, Risk & Financial Advisory
Deloitte & Touche LLP
+1 617 437 2147 | LinkedIn
Check out the other articles in the Finance for a sustainable future series