Many experts have observed in recent months that innovating for sustainability seems to be attracting mainstream attention, particularly at Fortune 500 companies and among forward-looking social entrepreneurs. The growth of the Sustainable Brands community certainly supports that claim, with an audience of over 2,800 boasting more than $4 trillion in combined annual revenue represented at SB’13 earlier this summer. At the same time, however, in the majority of cases sustainability is still not part of firms' core strategies. And we can’t expect to be on the right long-term trajectory if all we do is encourage employees to switch to double-sided printing.
“By now most companies have sustainability programs. They’re cutting carbon emissions, reducing waste, and otherwise enhancing operational efficiency. But a mishmash of sustainability tactics does not add up to a sustainable strategy,” say Harvard Business School professors Robert G Eccles and George Serafeim, in their recent Harvard Business Review (HBR) article, “The Performance Frontier: Innovating for a Sustainable Strategy.”
Why Engage the CFO?
In order for firms to have a sustainability-based strategy, the interests of the Chief Sustainability Officer (or equivalent) need to marry those of the Chief Financial Officer. The ultimate goal is to create a sustainability program that also enhances core financial performance.
“In the words of one of our clients, Tony Malkin [owner of Empire State Building], there’s no reason why we can’t make money and make the world a better place at the same time,” Jones Lang LaSalle CFO Lauralee Martin pointed out during her talk at SB’s New Metrics of Sustainable Business Conference last fall.
Here are three tips Martin and other engaged CFOs often recommend in getting those difficult conversations started:
- Make sure you understand exactly what the CFO does“Have you stopped to think about what a CFO has to do?” said Martin. “We are responsible for the financial planning and reporting. We have to be very, very technical and very precise. The SEC ensures that and if we do it wrong, we go to jail.”
She went on to stress that CFOs have crucial roles in corporate governance by maintaining the financial integrity of the firm. Their ultimate purpose is to create value for the firm, and they are the financial advocates of the firm to investors. CFOs report to their key stakeholders, who are the shareholders, banks, lenders and the firm’s top management, including the CEO. 2. Speak in a language CFOs understand — i.e. tie environmental and social initiatives to shareholder value“The more you talk to us about carbon, the more we don’t hear it,” Martin said. “If you’re going to bother me about sustainability, you have to explain it to me in terms of impact so I can explain it to shareholders.”
So if you are trying to convince your CFO to invest in sustainability projects or integrate them into your core strategy, speak in terms he or she understands; change your pitch to reflect the concerns and interests of your audience.
“It is about proving impact,” confirms Daniel Aronson, Leader of the Sustainability Transformation & Sustainability Strategy practice at Deloitte. “You need to prove the business case. Then you can get more support internally, and do more good.” 3. Create new business models building on your organization’s current prioritiesThis piece of advice is harder to follow than the other two, yet every bit as important. Simply put, if you want to truly impress your CFO, try pitching new initiatives, products, services or entire business models that are as close to the company’s current core strategy as possible. Disruptive innovation can and does happen, but an extension to an already-profitable model is far more likely to appeal to most CFOs.
What are common pitfalls to avoid?
“The next time we hear about a bank or insurance company's "green program" — like using energy efficient light bulbs or operating out of a LEED Platinum building — we'll either scream or throw up,” Eccles & Serafeim exclaimed in their recent HBR article, “Sustainability in Financial Services Is Not About Being Green.”
The point is, while energy efficiency and waste initiatives are great, you can and need to do better than that. Paint a thoughtful, bigger picture that touches closer to current core strategy and brand values, and you might have a case.
Want to learn more on framing a strong argument for the C-Suite?
This topic has been central to the New Metrics of Sustainable Business, a set of conversations Sustainable Brands has framed and engaged with hundreds of companies on since 2011, meeting again for its 3rd annual conference this fall, September 24-25 in Philadelphia.
Joseph Wolk, Vice President of Finance at Johnson & Johnson, will dissect a fascinating new case study quantifying product-level financial benefits from sustainability-driven innovation, including many commonly ignored intangible benefits such as risk reduction or being seen as a leader by customers who are increasingly making sustainability part of their purchasing decisions. Having a major corporation’s Finance department take the intangible value of product stewardship efforts so seriously is no trivial accomplishment, and Wolk will walk attendees through respective key steps together with a project partner from Deloitte.
The event will bring together other globally recognized experts on this topic as well, such as Dave Stangis, Vice President of Public Affairs and Corporate Responsibility at Campbell Soup, who will distill decades of experience into an outline of the most strategic levers for non-CEOs. Thomas Odenwald, Senior Vice President at SAP, will share his unique Do’s and Don’ts around embedding sustainability throughout the value chain and managing the transition from metrics to tactics to strategy. And a fantastic trio — including Roberta Barbieri, Global Environmental Manager at Diageo; Saleem Van Groenou, Global Environmental Initiatives Manager at HP; and Kevin Moss, Head of the Net Good Program at BT — will share the benefits of ambitious sustainability goals and data transparency in baking sustainability deep into both strategy and brand.