This report focuses on the implications of these changes for corporate finance functions. It explores the changes, capabilities, and tools needed by Chief Financial Officers (CFOs) and their teams to support their organisations in aligning with purpose and sustainability. The report also provides best-practice examples from leading companies and stresses the importance of CFOs taking prompt action to drive organisational change towards sustainability.

This shift involves moving beyond traditional accounting to balance social, environmental, and financial value, engaging a wider range of stakeholders, and developing a deeper understanding of operations and planning for complex future scenarios.

Introduction

Sustainability is a comprehensive imperative. Given the unsustainable human pressures on planetary resources and populations, individuals and organisations must adopt new operating methods that enable long-term thriving for both humanity and the planet. Within corporations, this is primarily considered in terms of environmental, social, and economic dimensions, which are elements of a broader landscape of human factors. This multifaceted landscape is leading to increased global complexity and uncertainty.

Sustainability offers a lens through which to view and respond to this complexity. It represents both the need for and the ability to adapt to a rapidly changing world in ways that safeguard our collective future. People can only consume what is available, and expectations are rising for companies to generate sustainable financial profits, contributing to the long-term well-being of people and the planet. Key drivers for change include increasing societal expectations, new regulatory and legal requirements, and the evolving sustainability priorities of banks, institutional investors, and insurance organisations.

Growing demands and responsibilities for companies

Governments, regulators, and civil society are increasingly recognising the urgency of environmental and social crises. Companies have a significant role to play in creating a sustainable future. While population growth and economic development have driven consumption, companies have both met this demand and fuelled it through innovation and marketing.

Key enablers for transformation

Key enablers are needed to help finance functions adapt to this changing environment:

• Knowledge and professional skills: The education sector, commercial and professional institutions are developing relevant training and skills development programs to support sustainability integration.
• Access to relevant data: The availability of reliable, robust, and consistent data is crucial for companies to plan, decide, act, and report on sustainability.
• Systems and software: Integrating sustainability information with financial information requires greater integration of software systems, either through modules for existing platforms or enhanced interoperability between standalone systems. A 2022 survey revealed that only a small percentage of finance leaders had incorporated sustainability information into decision-making, primarily due to a lack of reliable tools and processes.
• Conceptual/technical developments: Technical accounting areas will need research and development to define methodologies and standards for finance teams to apply. Leading organisations have started developing guidance, but more comprehensive resources for accountants are needed.
• Coherence of standards: The complexity of standards, regulations, and frameworks needs to be reduced to avoid overwhelming companies and hindering progress. Greater collaboration and coordination between international bodies, governments, institutions, and the commercial sector are required.
• Sharing and collaboration: Leading companies should share their learnings and experiences with others to foster collaboration and avoid duplication of effort. Conferences, webinars, workshops, and case studies are valuable for sharing knowledge and supporting learning.

The report concludes that the time to act is now, emphasising the need for CFOs and finance functions to adapt and develop their capabilities to drive the rapid changes required for a more sustainable future.