The Sustainability Imperative: What Every CFO Needs to Know to Lead the Change
Authored by Paula Kensington FCCA - FutureValue Director, Group Finance & Beyond SustainabilityI am a financial professional, a leader in the field of finance within business with over 35 years of experience in the commercial roles of finance across International and National organisations. I have authored a series of articles, which I am calling ‘The Sustainability Imperative’ aimed at helping others in financial leadership to work through the changes required in our business to reach compliance with international standards. Simultaneously to give you some tools, share tips and frameworks to allow moving beyond compliance, tapping into the advantage and opportunities that lay ahead of simply reaching net zero.
Throughout my three+ decades of working in business I methodically progressed through the ranks and roles of finance and during that time I have seen the good, the bad and the ugly of financial leadership, business strategy and personal egotistical behaviour. I have been in the trenches of managing the finance workload, wrangling executive leaders with personal conflicting strategies and attempting to deliver to multiple stakeholder expectations.
Today with mandated sustainability & climate reporting now impacting all businesses around the globe I am curious to ask what position is the CFO being asked to fulfill?
Should it be the CFO leading the executive team when it comes to building resilience and sustainability into the everyday language, operations and success measures of their business and organisations?
Perhaps a fundamental question we need to ask ourselves as financial leaders is where is the mandate for change sitting within the executive teams of business? If the answer is with the CFO then my next question is - Is the CFO ready to enact that change?
In order to respond to that question, of being ready, I have been reflecting on the work of 1950’s by social psychologists French & Raven and also referring to the extended work of our advisors here at Future Value, Julien and Micheala (read more here) which dives into the Leadership Power Dynamic at play. I believe that the CFO uses the ‘legitimacy’ power dynamic in their leadership. The CFO is focused on holding the whole system together and could be likened to the position of Judge, Policeman or that in the animal kingdom of Wolf. The leader using this dynamic can often be referred to as having a conservative nature and very much central to the stability of the system/organisation in which they serve. Makes sense right? The challenge is that leaders with the legitimacy power dynamic can be weak at introducing whole system, transformative change.
The good news here is that the CFO is not a lone wolf when it comes to leading change in the sustainability space as mandated reporting could be seen to be our best friend whilst building the business case for change. However, I am sure that we have all experienced the funding allocation dilemma where key resources are directed to front line projects driving revenue or profit growth.
For much of my career—first as a Finance Manager, then Financial Controller, and finally landing the corner office as CFO of many service led business — I’ve often encountered resistance and tension from Board members and Executive teams when it came to allocating funds for improving internal systems, implementing change and creating the business case which focuses on longer term returns rather than short term profit stashing.
Far too often, resources had priority towards the customer-facing side of the business, with capital invested in revenue-generating activities that were perceived as more immediately critical.
And now I reflect on why the CFO is challenged when it comes to driving systemic change within an organisation in this series of articles. Each article being inspired to answer each of these three questions
Are we facing an internal system collapse & how did we get here?
How to elegantly reveal the true business nature and decisions making process?
When will the business case for sustainability stack up?
Tune in next week to hear my thoughts on why our internal system debt is potentially holding us back from being able to invest in climate reporting as I share some tips and frameworks to tackle the challenge. Turning to international accounting standards as a friend and tool for change within our organisations.