With Two Letters Sustainability Storms Strategic Agendas
Summary
Recent pledges by large asset managers to consider climate change risks as investing criteria mean that companies may have to do more to tie sustainability efforts to corporate strategy. For many companies, satisfying this investor mandate may require a shift in their reporting of climate change and ESG risks as well as in how they oversee their processes and explain how those efforts tie back to corporate strategy. The finance team can take a lead role in integrating sustainability into existing corporate reporting activities, including governance, risk assessment, the establishment of data management processes and controls, disclosure, and assurance. That may require extensive collaboration across the organization with sustainability managers; the chief risk officer; legal, policy, HR, operations departments; business units; and other stakeholders central to driving the long-term growth strategy. Some companies have many of the pieces already in place; it will be a matter of leadership, coordination, and alignment, starting with the CFO and the board, to help set and build a plan that strengthens the link between sustainability and risk to business value and growth.