CFOs and Sustainability: Leaders in Corporate Social Responsibility

As sustainability surges to the forefront of everyone’s minds, nearly every segment of society is experiencing a shift towards going green – whatever that might mean for any given industry, organization, or person. In the private sector, most business leaders have already pivoted dramatically across nearly every conceivable in to embrace sustainability as a driver for innovation. The ability to extend profit-creating activity into the future in a way that will not contribute to diminishing the viability of wildlife, exhausting natural resource, and/or causing irreparable harm to the environment is a non-negotiable economic and strategic priority that not only mitigates risk but also births new opportunity. In the management structure of any given company, roles might vary slightly, but Chief Financial Officers are uniquely situated inspire meaningful progress. The best CFOs understand that you can create significant shareholder value by improving your firm’s environmental, social, and governance profile. Rigorously building and engaging with a company culture that champions corporate social responsibility has a number of tangible benefits. It betters the company’s client or customer-facing reputation by establishing you as a positive pillar of your community. It also improves the work environment internally, which has been shown to attract and retain better employees with the joy of working on products and services of which they can be proud. There are several obstacles with which CFO’s must contend. Adjusting a supply chain and other such structures or practices effectively and efficiently is no small task. Some of the most sizeable challenges include improving technology, establishing effective governance, rising public expectations (and increasingly demanding legislation), maintaining ethics and integrity standards, and shifting environmental conditions. Therefore, CFOs typically partner with production managers to evaluate and adapt appropriately at each step of the supply chain process, whether it be planning, design, logistics, marketing, or something else entirely. A CFO’s primary responsibility is to ensure and nurture the financial health of his or her company. As such, fully understanding the return-on-investment of sustainability initiatives is critical to successfully marry a long-term approach to sustainability to current financial conditions. More and more investors factor in non-financial sustainability performance to inform decisions, so the traditional managerial mindset (which overemphasizes short payback periods over more valuable environmental, social, and governance investments) should evolve accordingly. Non-shareholding stakeholders (like customers, employees, and suppliers) are also benefitting from this progress. Maximizing firm value with business sustainability protects everyone and helps better balance a company’s robust health in both the short and long-terms.