Five ESG questions your company needs to address now
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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Sustainability is the only game in town today. As we endure and brace for a new wave of overlapping crises, finance professionals must do all we can to ensure our businesses are not only fit for the future but also reflective of the priorities and obligations we have to our communities, our people, and our stakeholders.
ESG, CSR, and associated sustainability fields are the current frontlines of this battle. But, as we've seen throughout this series, these fields are still in their infancy. To ensure that we are generating the best possible outcomes, we need to ask some basic initial questions about our organizations. Here are five conversation starters.
1. Is our business model unsustainable by definition?
This is the big question, and also the one that is going to cause most problems for many businesses: is it actually possible for us to operate our organizations in a sustainable way, or are the models and imperatives on which they are founded simply incompatible with the principles of sustainability and fairness? This is, clearly, a question entirely beyond the scope of this article - but it is absolutely crucial that we all approach it with clear eyes and courage.
2. What can we learn from others?
Many organizations are already making significant strides towards sustainability. We've already looked at the challenges facing ESG and CSR practitioners, but we should also acknowledge the work that's already been done to transform Finance and industry at large. Identify the sustainability leaders in your sector. What are they doing that's particularly efficient or impressive? Who are the thought leaders, and how can you ingest their expertise most effectively?
3. What are our obligations?
This ties in closely with the first question and is as much one of philosophy as of business practice. What, as finance professionals, do we consider our responsibilities to be? Do they extend beyond the boundaries of our organizations? To what degree should we give privilege to sustainability and equity over shareholder return? How do we justify measures that might involve short-term costs? How do we engender more understanding within our organizations about the depth of these crises? I believe this is strongly connected with the transformation of the finance professionals' role towards the new paradigm of business partnering; by positioning ourselves as a nexus of collaboration and cooperation, we can educate and inform on these topics across every level of the business.
4. How do we measure progress?
While it is impossible to assign a dollar value to sustainability efforts, there is a necessity for us to measure and benchmark performance. We'll look in detail at the problems associated with this elsewhere in the series, but we can begin by thinking about our individual organizations. What are the key areas in which we impact our communities and environment, and how would we determine whether or not that impact is being mitigated?
5. What more can we do?
Finally, we should all recognize that this is just the beginning of a huge, generation-defining shift in business, away from the purity of the profit motive and towards a hybrid model in which the bottom line must be balanced against social responsibility. This is a mindset shift as much as anything else, and it requires us to educate ourselves and our peers about the changing realities of business.
What ESG questions are your organization asking itself right now and how do you see Finance's role in answering them?
This was the fourth article in my latest series about how finance professionals should approach ESG in a proactive way that creates value for the company. You can read the previous articles below.
While you await future articles why not read my latest series about coding for finance professionals? You can read all the articles below.
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Anders Liu-Lindberg ?is the co-founder and a partner at the?Business Partnering Institute ?and the owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with more than 10,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk . I am the co-author of the book “Create Value as a Finance Business Partner ” and a?long-time Finance Blogger ?on LinkedIn with 90,000+ followers and 150,000+ subscribers to my blog. I am also an advisory board member at?Born Capital ?where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at?PACE - Profitability Analytics Center of Excellence ?where I support the development of new analytics frameworks that can improve profitability in companies around the world.
Co-Founder and Director at The Realization Group
2 年A Top Ten article from Anders Liu-Lindberg !!
Clear financial guidance for Attorneys & Small Business Owners ??
2 年Important topic, Anders.
| Humanist | Managing Director | FINRA Licensed | Registered Rep. MSC-BD LLC | Investment Banking | Alpha Generation | Capital Markets | Strat Advisory | ESG | SDGs | M&A | DCF | CAPM | Finance | Economics | Business |
2 年Very lucid review of ESG. To overcome the hurdles that could be associated with using more sustainable inputs, sometimes it is a good thought exercise to see what you are already doing as a corporation that is sustainable and can be tied to one of the 17 United Nations Sustainable Development Goals. Does your board have women or minority representation? Are you already using some products/inputs that have less environmental externalities? ESG will be the modus operandi for businesses not as a nice to have but as a central part of their strategy going forward. A good way to really learn about sustainability is really from the consumer perspective as well- are you actively looking for products or services that have a net positive Environmental, Social, and Governance aspect to them?
I teach Storytelling to Finance Teams | Course Facilitator | Keynote Speaker
2 年Measuring is key for ESG to be taken seriously In a world where greenwashing and socialwashing are a real thing, it is important to implement common drivers to help the different stakeholders assess the efforts of a company in that area And these should be accepted by the society