
Subscribe
By Don Reed
Historically, sustainability has not been at the top of most CFOs’ agendas. In fact, as a CFO, you may be thinking: “We comply with all laws and have global standards that exceed local standards in many countries. Investors don’t ask me about it. Can we move on?”
Not so fast. Companies are seeing a new generation of customers, investors, employees, and governments requesting and relying on sustainability information for a range of decisions: Do I want to work for this company? Can this supplier help solve my sustainability challenges? Do I trust this management team?
As corporate claims about sustainability proliferate, CFOs are working with General Counsel to make sure they can stand by their answers – especially as claims spread from voluntary reports to SEC filings and investor surveys, social media, supplier questionnaires, government contracts and exploratory class-action lawsuits begin to emerge.
A new generation of investor focused standards are focused on this challenge:
Risk management can create value directly - recently, a Morgan Stanley raised their target price for three of the companies in the branded footwear and apparel industry by 4 to 9 percent by explicitly recognizing their efforts to manage social and environmental risks through differentiated supply-chains, according to 2015 research from Morgan Stanley. CFOs can help monetize sustainability efforts by translating them into language that the market understands.
Second, CFOs who can communicate effectively with investors about how their companies are managing environmental and social risks--as well as how sustainability is creating shareholder value --can win by demonstrating long-term quality of earnings to active investors. And that’s the kind of benefit that can help sustain an organization for years to come.
Image credit: Pexels
Don Reed is a Managing Director in PwC's US Sustainable Business Solutions practice
©2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
TriplePundit has published articles from over 1000 contributors. If you'd like to be a guest author, please get in touch!