New York – While a majority of CFOs are aware that sustainability will profoundly affect their “mainstream” duties, almost one third of them – 31 percent – say they are either rarely involved or not involved in sustainability strategy and governance at their companies.
This is among the key findings of “Sustainable Finance: The Risks and Opportunities that (Some) CFOs are Overlooking”, a global survey launched by Deloitte Touche Tohmatsu Limited (DTTL) on October 5. The survey was conducted among 208 CFOs of large companies in 10 countries during the first half of calendar 2011.
“The findings of the survey suggest that CFOs can and should take a more energetic role in embedding sustainability into business strategy if they want to gain a competitive edge,” says Nick Main, Global Leader, Sustainability & Climate Change Services, DTTL. “It is clear that volatility in commodity prices, new environmental regulations, calls for greater transparency about non-financial performance, and a range of other drivers are compelling management teams to deal with the sustainability imperative in a manner that supports their business goals.”
At the tactical level, many CFOs are meaningfully engaged with sustainability right now. More than 70 percent of those surveyed expect sustainability to have an impact on compliance and risk management, and more than 60 percent foresee changes to functions like financial auditing and reporting.
Yet when it comes to sustainability as part of the overall business strategy, there are certainly blind spots. For instance, according to the survey, only 29 percent of CFOs believe that M&A activities would be affected by sustainability.
“M&A transactions often present immediate sustainability risks,” comments Main. “These risks can range from asset impairment, remediation and indemnification expenses to environmental liabilities and regulatory sanctions. It is critical that CFOs build sustainability analysis into deal structures, post-transaction integration, and long-term planning for disposition.”
The survey findings also show that nearly half of the CFOs surveyed are planning investments in equipment for increasing energy efficiency, generating on-site renewable energy, or reducing industrial emissions.
“These findings suggest that over the next two years, capital investment in sustainability programs will reach a scale requiring CFO involvement,” says David Metcalfe, CEO, Verdantix. “This is not surprising given the fact that these investments are critical to driving down operating and compliance costs.”
Sanford A. Cockrell III, Leader, DTTL Global CFO Program, adds, “The vantage point that CFOs enjoy within organizations – given their responsibility for transparency in financial reporting and knowledge of overall strategy – means that they are well positioned to shape decision making while carrying out core finance functions. The findings of the survey demonstrate that CFOs will need to increase their recognition of the relevance of sustainability initiatives to their portfolio of responsibilities and seek a greater role in driving those initiatives.”
About the Survey
The independent, global survey of 208 CFOs was undertaken by Verdantix on behalf of Deloitte Touche Tohmatsu Limited. All the companies represented by the interviewees report annual revenue of more than $ 2 billion, and their average annual revenue is $ 17 billion. Interviewees were based in 10 countries (Australia, Brazil, Canada, China, France, Germany, India, South Africa, UK, and US), with a minimum of 10 interviews per country, and represented companies in 15 industries, with a minimum of 10 interviews per industry.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK-based private company, and its network of member firms, each of which is a legally separate and independent entity. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Deloitte has a globally connected network of member firms in more than 150 countries and hires approximately 182,000 professionals. For more information, visit www.deloitte.com.
Source: Deloitte.
