#United States #Chicago #Kearney #Sustainability Initiatives #CFOs

CFOs Expect Higher Returns from Sustainability

A new study titled Staying the Course: Chief Financial Officers and the Green Transition, released by global management consultancy Kearney, highlights a significant trend among Chief Financial Officers (CFOs) regarding sustainability investments. Conducted in partnership with media broadcaster We Don't Have Time, the report indicates that an impressive 69% of surveyed CFOs anticipate higher returns from sustainability initiatives than traditional investment avenues.

Key Findings of the Report

This survey involved over 500 CFOs from various sectors in major markets including the United Kingdom, United States, United Arab Emirates, and India. Even amid geopolitical uncertainties and financial pressures, CFOs exhibit robust confidence in the long-term profitability of sustainable investments. Notably, 92% of participants expressed that they expect their organizations to markedly increase net investment in sustainability within the coming year.

Business Case for Sustainability

The findings indicate that 93% of CFOs acknowledge the financial rationale behind investing in sustainability. However, the motivations driving these investments displayed notable nuances; 61% still seem to approach sustainability through a cost-centric view rather than appreciating its potential long-term value. On a more encouraging note, about 65% of CFOs are now assessing the costs associated with inaction, revealing heightened awareness of the risks posed by climate change and associated regulatory challenges.

Focus Areas for Investment

The CFOs surveyed particularly favor sustainability investments that promise immediate benefits in terms of emission reductions. The top areas of investment include:

• - Increased Use of Sustainable Materials: Initiatives aimed at sourcing environmentally friendly materials to support products and services.
• - Driving Sustainable Innovation and Partnerships: Collaborating with stakeholders to foster innovation that prioritizes sustainability.
• - Enhancing Energy Management and Waste Reduction: Implementing strategies to optimize energy consumption and minimize waste generation.

Employee Influence on Investment Decisions

In response to growing demands from employees for sustainable practices, a notable majority (71%) of CFOs are now integrating sustainability criteria when selecting employee retirement funds. This reflects a broader trend toward aligning financial strategies with sustainability objectives—a crucial concern for many modern organizations.

The data also point to an increasing recognition among CFOs of the importance of sustainable investments. Many have begun placing weight on values-driven factors that resonate with both investors and employees, with 94% now including sustainability considerations in their broader investment strategies.

The Role of CFOs in Sustainability

Beth Bovis, a Partner at Kearney and the Global Sustainability Lead, emphasized the vital role CFOs play in the corporate sustainability dialogue. "CFOs are uniquely positioned to influence long-term business strategy through their control over financial resources. Our study indicates that they are indeed taking proactive measures in this regard."

INGMAR RENTZHOG, Founder & CEO of We Don't Have Time, added that CFOs are increasingly absorbing their organizations' sustainability responsibilities. The forthcoming Sustainability Disclosure Standards, set to be released by the UK government this year, will require organizations to reevaluate how they measure and communicate their environmental impacts, making CFOs essential in these transitions.

Conclusion

The Staying the Course report serves as a strong indicator that CFOs are more than ready to lead the charge in sustainability investments. By integrating sustainable practices into their financial strategies, they not only contribute to climate action but also align themselves with the evolving expectations of stakeholders. As the world increasingly responds to climate challenges, the leadership demonstrated by CFOs is pivotal in steering the course toward a truly sustainable future.

For more insights, the full report can be accessed here.