CFOs Go Green: Investing in Sustainability for Future Profit Growth

The latest report from Kearney, titled “Staying the Course: Chief Financial Officers and the Green Transition,” reveals a transformative shift in how Chief Financial Officers (CFOs) approach investment strategies, particularly emphasizing sustainability. This significant trend highlights the increasing commitment of CFOs to prioritize sustainable investments, even amidst economic uncertainties.

Key Insights from the Kearney Report

Surveying 500 CFOs across the UK, US, UAE, and India, the report showcases a strong inclination towards sustainability. Here are some essential findings:

• 69% of CFOs expect higher returns from sustainability initiatives compared to traditional investments.
• 92% plan to increase their net sustainability investments in 2024.
• A remarkable 93% recognize the business case for sustainable investments.
• However, 61% still evaluate sustainability through a cost-centric lens instead of focusing on long-term value.

The Cost of Inaction

A notable trend among CFOs is the growing recognition of the costs associated with inaction, especially regarding climate risks and regulatory penalties. According to the report:

• 65% of CFOs are actively measuring these costs.
• Immediate investment areas identified include:
• Utilization of sustainable materials
• Promotion of sustainable innovation and partnerships
• Enhancement of energy management and waste reduction

Integrating Sustainability into Investment Strategies

The report further reveals that:

• 71% of CFOs are considering sustainability in employee retirement fund selections.
• 94% are weaving sustainability principles into broader investment strategies.

Voices from the Industry

Beth Bovis, Partner at Kearney and Global Sustainability Lead, emphasizes the pivotal role of CFOs in the sustainability conversation, stating, “The perspective of CFOs is often overlooked in the corporate sustainability debate, yet their role is crucial.” Additionally, Ingmar Rentzhog, Founder & CEO of We Don’t Have Time, highlighted the increasing responsibilities of finance leaders in their organizations’ sustainability efforts.

Looking Ahead: The Role of CFOs in ESG Strategies

As the UK government prepares to introduce new Sustainability Disclosure Standards this year, CFOs are expected to take a central role in shaping corporate ESG strategies. Bovis notes, “ESG reporting is increasingly falling under the CFO’s responsibilities. Beyond compliance, CFOs can drive investments that cut emissions and boost commercial value.”

This report underscores a critical consensus among CFOs: sustainability is not merely a regulatory requirement but a vital aspect of financial strategy that presents considerable opportunities for growth and value creation.

For more insights on corporate sustainability, visit Kearney and explore their extensive resources. You can also check out We Don’t Have Time for additional information on environmental advocacy.