What FP&A needs to know about Sustainability reporting, and how to win with it

Financial Planning and Analysis (FP&A) is changing quickly, but not all practitioners and companies are taking the steps needed to be in the best position for future success. The latest driver of change is the convergence of Financial Reporting with Sustainability Reporting. And it won’t stop there: Reporting is just a precursor to integrated Financial and Sustainability performance management.

But there aren’t enough hours …

Few FP&A professionals complain that there is too little to do! As the one team with their fingers on the pulse of every corner of the business, they are tasked with analyzing the past, interpreting the present, and anticipating for the future. Being successful in FP&A requires multi-disciplinary skills in:

• Finance and Accounting – understanding how transactions flow through the business
• Data management & modeling – collecting and transforming data using technology
• Business Operations & Strategy – leveraging data to drive operational and strategic decisions
• Change Management – adapting quickly to external pressures and internal imperatives

Meeting deadlines for financial reporting, budget, and forecast cycles is difficult enough. And yet, concerns about sustainability-related financial risk are motivating investors to push companies to disclose verifiable, comparable, investment-grade, and decision-useful information in sustainability related areas. Regulators, including the SEC and the European Union, are now involved.

Once the SEC’s new climate-disclosure rules are rolled out in 2023, CFOs will be signing off on financial reports that include emissions data as well as assessments of financial risk arising from climate disruption. Even companies that are not subject to regulatory reporting requirements need to take note because transparency on sustainability metrics now materially affects many aspects of doing business including the cost of capital, talent acquisition and retention, and customer loyalty.

Finance has no choice but to engage.

Knowledge is Power!

The good news is that once Finance engages with sustainability-related data, they find that it opens new vistas into cost-saving, innovation, risk-management, and process improvement opportunities that were not visible under a finance-only analysis. This in turn expands career possibilities for individuals who know how to bridge the gap.

Anyone who has built a career in FP&A is in a strong position to take up this challenge:

• The skills required (listed above), and even many of the technologies, are largely the same. The software platform you use to support financial planning and forecasting is very well-suited for handling quantitative sustainability data too.
• Many companies already have sustainability teams who collect and report on this data, often in manual spreadsheet-based processes. What finance adds through collaboration is experience in complying with reporting standards, verification (audit) cycles, and (typically) having/using technology to automate data acquisition and management.

All that remains is to learn the key concepts and language of Sustainability Reporting. While there is a lot of helpful information available, it can be challenging to figure out where to begin.

Getting Started

One way to get started is to join 7,000 of your finance and treasury peers at AFP 2023 in San Diego CA on October 22 – 25, and attend our educational session within the Financial Planning & Analysis Track on How Sustainability Programs Could (and Should) Transform FP&A. We’ll be covering all the basics including:

• The context for growing sustainability/ESG reporting requirements, and the vocabulary used to describe them
• What you need (and don’t need) to know about carbon accounting
• How to quick-start your data management efforts using the planning software technology you already own and know
• Concrete examples from real companies who have saved money and driven growth by embracing sustainability-driven insights!

Click here to register before September 15 and save!

Until then, follow me Ann-Grete Tan on LinkedIn to see regular posts that expand on this exciting topic, or check out our blog at TensorResearch.com!