CFOs have a lot or responsibilities on their shoulders. Traditionally their only concerns revolve around ensuring the financial health of their respective corporation. Corporate responsibility usually isn’t on their radar, but there are some who believe that CFOs should be taking the time to focus more on corporate social responsibility, like John Elkington at the CSR Wire.
John writes that “CFOs as a species are notable for their conservatism, particularly in their resistance to key aspects of the environment, society and governance (ESG) agenda.” To him this is unfortunate for a variety of reasons. A major problem is that the ideas and beliefs behind implementing ESG are frequently assigned to sustainability and social responsibility teams, and that the push for positive ESG changes “fails to penetrate to the Board level.”
This is unfortunate because many CFOs and board level members do not realize the costs associated with failing to have an acceptable ESG policy. There are a variety of costs associated with ignoring ESG concerns; brand and public perception of the company are just two important results of a poor ESG policy.
John writes that CFOs tend to be nervous about bringing ESG issues to the Board because they think that the data isn’t strong or sufficient enough. On the other hand, “some CFOs were acutely aware that the volatility of markets and the growing importance of resource security challenges” are incredibly vital and relevant to the markets that some corporations operate in. Being responsible or turning a blind eye to “ethical breaches” can sink a company’s prospects in a local region and even globally.
Fortunately, according to surveys by consultants at Deloitte, “49 percent of CFOs saw a significant link between ESG or sustainability performance and financial performance.” This is an important note for John and for any CFOs working to include more ESG and/or sustainability efforts in their firm.
John believes that more needs to be done to get more ESG and sustainability issues to the boards of any corporation. He believes that the moral arguments, while good, will not impress or convince the board, who are naturally concerned with the economic health of the firm. Instead they need to “demonstrate, develop and create” the arguments, information and data to show that complying or working towards ESG and sustainability efforts align with “business incentives.”
Be sure to check out the link posted above, as John puts forward an interesting case study on the article’s website. It’s worth the read.
What do you think about including ESG and/or sustainability issues into business practices at the board level?