In recent years, the world’s interest in sustainability has skyrocketed. Not surprisingly, the issue of sustainability has moved from the periphery to the very heart of business.
A wide range of factors—including responses to global climate change and environmental degradation, the depletion of natural resources and the increasing recognition of the corporation’s role as an agent of economic and social change—stimulate managers’ interest in sustainability performance management (SPM). Furthermore, corporate SPM also contributes directly to business value, e.g., revenue generation, cost control, risk management and long-term value creation.
Realising the importance of corporate SPM, companies are starting to incorporate sustainability into their businesses as part of a long-term strategic development. However, many companies are having trouble finding a starting point and devising a clear framework.
Here are five key steps to help users set sustainability goals, measure progress against those goals and ensure those metrics are integrated into business planning and reporting:
- Make sustainability performance management (SPM) strategic, not just tactical. Finance has the skills and ability to support the business in ensuring that sustainability initiatives are strategic rather than tactical in nature.
- Apply a financial mind-set—link sustainability to business performance. CFOs and the finance function have unique skills and knowledge, which can help define the business case for sustainability strategies and initiatives.
- Use the right metrics, consistently. Finance professionals can identify value drivers within a business and ensure focus on the right set of metrics is maintained.
- Develop robust systems and processes for SPM. Finance professionals bring the rigour and discipline used in accounting to the collection, analysis and reporting of sustainability data. They must, however, work closely with sustainability professionals to understand what information needs to be captured and how it is to be used.
- Integrate SPM with business planning and reporting. CFOs and the finance function are best place to incorporate meaningful sustainability metrics into business planning and reporting processes.