Sustainability is a Key Driver of Financial Performance

Posted on: November 7th, 2013
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One major function of chief financial officers (CFOs) is forecasting a company’s performance. And a performance indicator that’s rapidly growing in importance is sustainability. In fact, according to a survey conducted on behalf of Deloitte, 49 percent of CFOs surveyed said there is a significant link between sustainability and financial performance. And 36 percent are now being held responsible for their company’s sustainability practices. That’s important, because most academic and business studies agree that improved sustainability practices lead to better financial results, according to 159 studies analyzed by the Network for Business Sustainability. Sustainability has moved beyond a public relations initiative to a driver for innovation and growth.

Sustainability saves money

The simple reason for involving CFOs in sustainability practices is money. CFOs typically have operating and budget authority to invest in technology and practices that reduce a company’s environmental footprint. For example, the biggest sustainability investments CFOs plan to make include video conferencing, data center efficiency equipment, and electric vehicles. Smaller companies may not invest in data centers or even vehicles, but video conferencing can benefit companies of any size, reducing travel expenses and boosting the bottom line. Energy management policies can cut rising power bills, generate tax benefits, and further reduce expenses.

Sustainability creates opportunities

In addition to cost savings, commitments to sustainability can help companies get more business. Walmart’s Sustainability Index is well-known now, and other industries are also creating procurement rules that address sustainability and social responsibility. If your company wants to get on or stay on a suppliers list, sustainability practices may give you an edge. Sustainability is becoming an issue for companies who want to attract and retain talent, with two-thirds of workers born after 1989 saying they would like their employers to be environmentally friendly.

So how can an outsourced CFO help your company with sustainability? In addition to the specific examples already given, a CFO can help your company:

  • Define sustainability targets, key performance indicators (KPIs), and metrics

  • Create auditable sustainability processes

  • Balance the financial and nonfinancial sustainability agendas

And, of course, outsourcing itself counts as a sustainability process, so a part-time CFO becomes part of your sustainability program, in addition to helping you create, track, and report your sustainability results. If you need to explore the benefits of implementing a sustainability strategy, CFO Strategic Partners can help. Call us at 407-426-8288 for a free analysis of your business and its sustainability practices.

 

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