Former CFO and current associate director of Kearney Jo-Ann Pohl shares insights into how CFOs can successfully manage an ESG strategy internally, across departments and corporate working groups.
As critical enablers, reporters, and budget controllers, CFOs are unique among management in their responsibilities. The specific skill set obtained by CFOs through their diverse experience positions them precisely to be the ESG orchestrators needed across organisations.
CFOs collect and connect the dots that bring ESG themes together. They have the ability to harmonise financial decisions with environmental impact and social responsibility, and robust governance makes them the linchpin in driving holistic ESG outcomes.
The global sentiment regarding governance reflects a blend of optimism and scepticism. On one hand, there is a clear recognition of the importance of robust governance practices as critical for sustainable business operations. The increasing investments in ESG and the development of comprehensive ESG ratings globally signify that good governance can enhance a company’s financial performance by mitigating risks and fostering long-term value creation.
On the other hand, scepticism persists, particularly around the efficacy of governance-focused sustainability reporting in driving substantial change. Critics argue that ESG disclosures can sometimes serve more as tools for reputation management rather than genuine sustainability efforts, leading to phenomena such as greenwashing.
Transparency alone may have a limited impact in curbing corporate excesses, echoing a broader concern that current ESG frameworks may not be sufficient to achieve the transformative changes required for global sustainability goals.
The evolving discourse on governance in ESG – both in South Africa and abroad – underscores the need for enhanced frameworks and methodologies that ensure ESG reporting translates into measurable sustainability achievements in line with broader sustainability goals such as the United Nations Sustainable Development Goals and Planetary Boundaries.
Impactful governance also relies on the effectiveness and importance of communications and reporting. Stakeholder management is a key process for successful implementation, requiring continuous engagement with stakeholders to understand their viewpoints on the company’s ESG guidelines (including concerns and suggested improvements) and to evaluate the engagement of stakeholder groups with the ESG mechanisms and policies.
It is important that ESG reporting is transparent and aligned with agency standards, as governing bodies, internal corporate working groups and individual employees need to understand past and current performance, and have insights into a company’s strengths, weaknesses and key improvement areas to ensure the success of the ESG strategy.
As CFOs take on more responsibilities across the ESG spectrum there is an excellent opportunity to become ESG orchestrators in organisations. With a view across the organisation’s strategy and finances, CFOs have the unique opportunity to craft direct, tangible links between ESG activities and core strategy, bringing ESG realities into daily decision-making, and driving change with a business case mindset. CFOs wield the power of impactful messaging, shaping how ESG is embedded in corporate DNA.
From top leadership down to every employee, clear communication is key, influencing what people think and how they act. Engage the workforce, empower bottom-up participation, and enable the ESG transformation from strategic intent to action.
This article was co-authored by Kearney’s Matthew Granelli, Sachin Lutchman and Yaseen Ahmid.
