Ernst & Young- How Sustainability has Expanded the CFO's Role
AICPA Sustainability Initiative Resource Review
How sustainability has expanded the CFOs role captures the essentials of how sustainability issues and financial performance have begun to intertwine and how this has expanded the role of CFOs as they are increasingly getting involved in the management, measurement and reporting of their companies’ sustainability issues.
As institutional investors increasingly focus on the potential impact of sustainability issues companies’ risk profiles, reputation and financial performance, the paper outlines how the role of the CFO and other market-facing executives is changing in the following three critical areas.
- Investor relations. Citing shifts in shareholder voting patterns, the proliferation of sustainability ratings and indexes, and incorporation of sustainability information into analyst ratings and valuations, the paper encourages the CFO to work cross-functionally in the organization to hone the sustainability story and take a pro-active approach to sustainability-related governance issues.
- External reporting and assurance. An increasing majority of large companies publish sustainability reports. Business customers are requesting sustainability related information from their suppliers. Integrated reporting is gaining attention worldwide. Regulatory filings require companies to report on certain sustainability issues and risks. The quality and consistency of sustainability reporting within and across all reporting mediums is a significant area of concern for the CFO.
- Operational controllership and financial risk management. This section of the report focuses on the need for accounting systems to track sustainability-related events that are significant from a financial reporting perspective and the role of the CFO function in providing analysis, taking a risk perspective, and ensuring the quality of data.
Each section of the report concludes with a succinct set of bullet pointed Actions to consider for the CFO.