The view from the President: 4 steps to engage with ESG goalsUpdated:
Editor’s note: Paul Ash, FCMA, CGMA, began his term as CIMA president on 3 June 2021, succeeding now Immediate Past President Nick Jackson.
'Over the past year, the age of the CFO as the "chief value officer" has arrived.'
When I started my year in office, we had already been living under the shadow of COVID-19 for several months. As I leave office, I'm hopeful that the shadow will lift soon.
My focus has been highlighting the opportunities offered by responsible financial leadership, and it could not have been more appropriate for our times. Financial leadership that considers all stakeholders, not just shareholders, is no longer a fringe idea. It has become mainstream over the past year, and as economies are being rebuilt, finance professionals can be the guiding lights in ensuring this is done equitably.
Over the past year, the age of the CFO as the "chief value officer" has arrived, and you should be in the vanguard of shaping what that role looks like in your own company. Responsible financial leadership is an initial conversation before implementing change, and since this is my last column as CIMA president, I want to leave you with four actions you might take to further develop your organisation's engagement with sustainable environmental, social, and governance (ESG) goals.
Building a better future
Consider how you can incorporate sustainability practices into your business model. Economist Kate Raworth's influential "Doughnut Economics" model is one way of thinking about how we can balance what we need with what our planet can sustain. It provides a framework as you take steps to reshape your business. That said, also look at your costing/pricing policies. For example, you could consider how well they reflect the full costs involved in sourcing, manufacturing, and disposing of the things you create and sell.
Measurement for a sustainable world
If you have made a commitment to pursue ESG goals, ensure you track their outcomes. It's not enough to talk about the importance of these goals; you have to action, monitor, and evidence them — be the company that lives its values. Data is king and, fortunately, is what the finance function loves. ESG is now being taken seriously by governments and regulators. For example, the EU has recently consulted on changes that would allow companies to focus on long-term value creation rather than short-term benefits.
Guiding the profession
Set an example to the profession by threading your values throughout the business. Look to align your company's strategic investments with ESG ambitions. As I write this, the EU is making it easier for investors to know what is and isn't a sustainable investment fund; and more investment firms are recognising that ethical investment doesn't necessarily equal poor returns (indeed quite the opposite in many cases). So, it's a win-win.
Digital transformation and bridging the skills gap
Even as more financial processes are automated, don't imagine that human input isn't needed. Although work can be done considerably faster, the finance function is needed more than ever to ensure it continues to align with corporate values. Tied to this is the ongoing need to keep your team's digital skills sharp to manage better the challenges ahead. All of that requires a culture change. Finance professionals need to cultivate curiosity, use evidence to back up arguments, and be more prepared to accept risk. I think we can do that.
Finally, it has been a unique challenge to have been president when we faced and conquered so much. As leaders, we can set the course for business, so let's do it responsibly. I will continue to champion responsible financial leadership and look forward to working with the new CIMA president in the coming year.
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