Explore the evolving role of Finance & ESG leaders in driving strategic decisions, cost reduction, and growth opportunities. Learn how their collaboration brings financial and ESG benefits to organizations, creating a winning situation. Discover key examples and effective ways for finance and ESG teams to work together for ESG success. Stay ahead by investing in sound ESG programs, training teams, and using tools for seamless reporting and decision-making.
Finance & ESG has played an important role in ESG till now but lately ESG Leaders are taking the seat of strategic decision makers. The reason behind is, ESG drives value beyond balance sheet. But this doe not mean they are not concerned with finances of the organisations at all. Let us look at a strategic example of cost reduction by lowering some of its expenses such travel, power, water etc. These decisions have financial impact but they also impact ESG strategy. Similarly strategic decisions also have impact on finances of the organisations. Let us look at few examples – taking advantages of subsidies available for Social Environment initiatives, investment decisions related to investment and asset optimization to align with ESG funding. Thus CFO’s job has further expanded by considering all the aspects of ESG and also engaging with stakeholders. The data collected from stakeholders meet the ESG goals of the organisations.
From the above, we clearly understand the role of leaders have gone beyond finances of the organisations and the both Finance & ESG are interlinked to a greater extent. So ESG & Finance working together is winning situation for the organisations. ESG may be new to finance but ESG leaders bring their familiarity with the standard and formats prescribed to fulfil the ESG requirements of the organisations. ESG leaders can also help to identify new opportunities to grow the business. There may be some investment benefits or tax deductions allowed on investments made for ESG.
Stronger partnership between finance and ESG brings in more benefits for the organisation. Both bring in stronger strengths and skills to the organisations. Finance brings assurance while ESG brings strategic values for the organisations. So not working together early may be a mistake. It can also mitigate major risk of not being ready for ESG when it becomes applicable to more and more organisations. Therefor, aligning shared goals are critical. So, using tools that take care of both finances, assurances and ESG will be a proactive step and will enhance the value of the organisations.
Examples of how finance and ESG teams can work together to drive key business strategies
Reduce cost – savings & reduce carbon emissions
Finance team role – works on providing accurate metrics (historical & forecast), drivers needed o achieve goals.
ESG team role – evaluate opportunities for growth
Gain sustainable finance opportunities – increase passive income investment
Finance team role – facilitate relevant financial reporting, partner with ESG teams to facilitate the flow of ESG data needed.
ESG team role – identify drivers and opportunities for capital, prepare gap analyses for Reporting.
How can finance & ESG be most effective working together to make ESG a success. As institutional & individual investors are demanding organisations to pursue ESG strategies regardless of the government regulations. A sound ESG programme and tools be put into place with proper tools should be the investments by organisations. The data provided by finance team should be usable by ESG team enabling to take big and small decisions to make ESG smooth sailing for the organisations. Both finance & ESG teams should train their teams to successfully achieve the goals of ESG. Use tools and solutions available for ESG reporting, this will help in data collection, validation & disclosures.
ESG might feel complex since it is new to organisations, but a lot many reporting’s similar to ESG are being followed by Corporates as part of their reporting, such as CSR, Risk Management, Secretarial Reporting etc. Now courses and guide books are available to upgrade the skills and knowledge of teams working in both the departments of finance & ESG. These are future challenges which have to form part of business strategy. So get prepared for future and be part of ESG.
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