A new survey undertaken by Kearney and We Don’t Have Time has revealed that CFOs (Chief Financial Officers) see a clear business case for investing in sustainability.
The research, which gathered the thoughts of more than 500 CFOs across the UK, US, UAE, and India, assessed how they are embedding sustainability into their strategies. It found that despite current geopolitical and economic uncertainties, sustainability remains a priority for the business community with almost all (93%) CFOs saying that they see a clear business case for investing in the segment[i].
Further, 92% of respondents said that they will increase the proportion of revenue spent on sustainability this year, with almost two-thirds (60.8%) claiming that they would allocate 2.1% or more of their revenue to the sector for 2025. The researchers argue that rather than the green economy seeing a slowdown in 2025 as many have feared, the opposite looks set to occur[ii].
The survey did reveal differing motivations behind these investments, however. The majority (61%) of CFOs still view sustainable investments through a cost-focused lens, rather than considering the long-term value they may generate. Yet, on a more positive note, 65% of CFOs said they are now measuring the cost of inaction, signalling an increasing awareness of the long-term risks posted by climate change and regulatory penalties.
Source: Kearney & We Don’t Have Time
When asked where they will invest in sustainability for 2025, the majority of CFO’s are targeting activities that deliver near-term reductions in emissions, such as using sustainable materials and managing energy use. The top five were as follows:
1. Increase the use of sustainable materials.
2. Drive sustainable innovation and partnerships.
3. Manage energy.
4. Reduce waste.
5. Focus on ESG regulations and ratings.
Amongst the other activites listed, most were initiatives that increase business savings- such as reducing unnecessary travel, and those which add value or reduce risk- such as decarbonising supply chains, educating the workforce, and offsetting emissions. Kearney note that these priorities align with the global trend towards reducing GHG emissions by 2030, as well as reflecting areas where financial and emissions targets align, for example reduced waste and reduced energy consumption both deliver financial and environmental savings.
Kearney argue that CFOs are critically placed, acting as a catalyst for change, whereby they can create value, foster collaboration, enhance transparency, and future-proof their business: “The perspective of CFOs is often overlooked in the corporate sustainability debate, yet their role is crucial,” argues Beth Bovis, global sustainability lead and partner at Kearney, “As those in control of financial levers, CFOs are uniquely positioned to have a long-term impact on business strategy”[iii].
She adds: “Our study highlights that they’re already taking steps in this direction. ESG reporting is increasingly falling under the CFO’s responsibilities. But beyond simply ensuring regulatory compliance, CFOs can lead the charge in driving investments that not only reduce emissions but also deliver tangible commercial value for the business.”[iv]
The report goes on to outline five ways in which CFOs can improve their approach going forward. These are:
[i] Staying the course: chief financial officers and the green transition
[ii] Ibid
[iv] Ibid
[v] Ibid
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”
