Top finance leaders find out there’s no wrong way to approach sustainability, as long as your intentions are right.
There’s no question that the planet and its people are under enormous strain, and that it’s up to business to do the right thing, right. On 31 August, CFO South Africa brought together a selection of the country’s top finance professionals and industry experts, all at different stages of their ESG journey, to share the challenges they’ve faced and the successes they’ve achieved when it comes to sustainability.
“ESG has evolved from being known as CSI and the triple bottom line, and from being a nice-to-have to a must-have,” explained CFO South Africa executive community manager Georgina Guedes against the glittering backdrop of city lights, visible through the atrium-style window of 39 Melrose Boulevard.
“While ESG focuses on business practices and outcomes, sustainability is about delivering a viable business that creates positive social and environmental impacts for a just, equal and prosperous society,” said Nedbank CFO Mike Davis during his keynote address.
This is especially important at a time when we’re seeing more and more natural disasters, record temperatures, extinction of various species and the breakdown of trusting relationships as evidenced by both the government and scandals making headlines.
“Leaders need to increase their focus on conservation of the natural world and give more consideration to the wellbeing of people and relationships,” Mike emphasised.
Finding the right approach
However, not every organisation’s ESG policy and activities have reached full maturity yet, and many CFOs still struggle with adapting their business strategy to incorporate these practices. For many, despite the promised benefits, it remains a financial cost.
“We didn’t know where to start, because there’s no standardised ESG or sustainability policy available online,” explained FEM CFO Yusuf Bodiat during a panel discussion, adding that this has required many organisations to create their own.
Standard Bank of South Africa CFO Preshanta Govender said that they divided their ESG strategy into two pillars; positive social, environmental and economic development, and managing risk.
Both Mike and Preshanta shared with the audience how they use sustainable development goals (SDG) to implement and measure their ESG commitments.
Another attendee explained that they use the opposite approach. “We looked at what we’re currently doing and linked it back to an SDG in some way.”
During another panel discussion, Kumba Iron Ore CFO Bothwell Mazarura emphasised that these goals should be embedded across the business, and that sustainability should be driven throughout the organisation.
Bothwell, Bidvest Financial Services CFO Tendani Sikhwivhilu and South African Rewards Association executive committee member Martin Hopkins then unpacked how they have done this by integrating it into everyone’s key performance indicators, developing specific training programmes, and more.
Fostering the right skills
During an interactive session, attendees discussed the various challenges they face around ESG and brainstormed solutions together.
One of the key themes that came up was the need to upskill leaders and the rest of the organisation in order to be able to drive these sustainability initiatives. “Our finance teams are trained for the traditional finance responsibilities, like P&L and balance sheet management. But it’s critical to move beyond that now. We need to be intentional about bringing our teams along with us on the journey.”
Similarly, CFOs were concerned that, while these initiatives may be the right thing to do now, there may be better solutions down the line.
“We need to look at how we can develop the skills and technology to unlock these opportunities.”
Ensuring you have the right data
Mike explained that, in a world where automation and technology is driving the future, data and analytics will be the key indicators that measure an organisation’s sustainability impact.
When group financial manager Trevor Wentworth got involved in collating the Adcock Ingram carbon footprint by collecting raw data around fuel, gas and water usage, however, he found that it wasn’t quite that simple.
“I think a lot of leaders still don’t see the relevance or importance of this information, so they delegate it down to a junior level employee or external service providers,” he said during a panel discussion. “That leads to lack of consistency, as well as a lack of accuracy and comparability.”
This resonated with what Mike said during his keynote around the changing role of the CFO as they move away from purely focusing on financial accounting and reporting.
“CFOs will be intricately involved in setting sustainability-related targets, as well as measuring and tracking their progress, while at the same time ensuring their credibility and integrity.”
Everyone agreed that there needs to be a mind shift. “Just because we come from traditional finance backgrounds, doesn’t mean we can’t get involved in the rest of the business.”
Sustainability in Africa
Often when we speak about ESG we focus on the E first, and tend to not focus as much on the S and G parts. In South Africa, the S part is the most important to support, and the easiest, Yusuf said.
Preshanta added to this, explaining that while there is a massive push towards renewable energy, you have to remember that more than 600 million Africans are still without electricity. “Most of these regions only have access to coal, gas and fossil fuels as a source of power. So if we focus too much on the environmental part, we will face new challenges in terms of the social commitments. So you have to support both.”
Attendees agreed that there will have to be trade-offs when it comes to sustainability, but that there is no wrong answer when it comes to implementing these policies – as long as you have the right purpose and intentions.