As corporate sustainability ambitions increase and investors demand increased accountability, companies must rethink the traditional responsibilities and activities of the Chief Financial Officer and broader finance function in light of the urgency of the climate challenge. Jeff Waller, Senior Director, Head of Financing Solutions at ENGIE Impact, outlines the barriers for CFOs and finance teams to be aware of in relation to sustainability transformation and explains how they can align the finance function with the wider organisation to ensure a sustainable future.
There’s little doubt that companies are getting serious about climate change and sustainability. In the last 15 years, companies disclosing sustainability data to the Carbon Disclosure Project (CDP) have increased carbon reduction targets threefold, from an annual average reduction of 2% to 6% today. Moreover, timelines to achieve these goals have narrowed; rather than setting goals 25 years in the future, companies intend to meet their goals in an average of just eight years. Companies are also looking beyond their own operations to examine their entire supply chain, as made clear by recent announcements from companies like Apple, BMW, and Microsoft.
Despite this progress, few companies are on track to meet their climate goals. While many leaders embrace bold targets, they struggle when it comes time to implement because they haven’t established the capital allocation strategies and governance structures needed to match their strategic intent.
The finance department sits squarely at the heart of this challenge. With sustainability goals becoming ever more ambitious and investors demanding increasing accountability, there must be a reimagining of the traditional responsibilities and activities of the CFO and the broader finance function if companies are to overcome barriers to sustainability transformation and meet their targets.