The way that a company performs on ESG issues has become critical as more investors demand ESG reports. CFOs are not just financial leaders, but when it comes to translation of financial results of metrics and KPIs, they have the best perspective for reporting to investors.
Of course, keeping up with the changing regulatory landscape is not an easy task, however, when it comes to numbers, CFOs and the finance team are the “reporting gatekeepers”. This provides them a huge opportunity to become ESG leaders. No wonder why 68% of CFOs globally take responsibility for their organisation’s ESG performance.
To have a better understanding on CFO’s role on ESG, take a look on four reasons.
ESG and finance are interconnected
CFOs with in-depth knowledge of sustainability strategies can be critical to retain the balance between financial and sustainability measurements. They have the skills needed to track an organisation’s non-financial metrics and link them to financial information.
Sustainability metrics impact finance KPIs
Every CFO should be able to understand how to measure and report on ESG, because such metrics can provide business opportunities, attract investors and offer a competitive advantage. They can also drive better capital allocation by bringing ESG into decision making process.
Risk management falls under finance’s oversight
Risk management and cost optimisation are skillsets found in finance team and CFOs have the ability to incorporate sustainability into enterprise risk assessments. ESG should be a part of an organization’s overall enterprise risk management strategy, by being monitored, mitigated and addressed.
CFOs have a key role in managing reporting frameworks
A variety of different reporting frameworks exist, ranging from basic mandatory reporting to wide-ranging frameworks such the Sustainability Accounting Standards Board (SASB), which maps 77 industry-specific metrics. CFOs are in the best position to determine which measurements are the most useful for evaluating and reporting their company’s ESG performance.
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