Robert manages Sustainable Business Council's Sustainable Leadership programme. This growing programme includes initiatives on mainstreaming sustainable business practices throughout New Zealand, business leadership and reframing business with a societal purpose to deliver lasting value for people, profit and prosperity.
Post-COVID-19 there is a real risk that sustainability and climate change may be a lower priority on the CFO agenda. Taking a long-view is more critical now than ever and sustainable business practices are the pathway to achieving long-term resilience.
As we assess and respond to the impacts of COVID-19, there are some qualities at the heart of resilient leadership that distinguishes success among organisations. We firmly believe that recovery actions must be carefully selected in the context of the broader sustainability challenge which this event has highlighted.
We find that organisations that embrace the long view understand the various capitals that they depend on to thrive and the impacts they have on the broader economic, social and environmental systems they operate within. CFOs have a key role in driving a more holistic view of value and success in their organisations, which will enable greater organisational resilience and sustainability in environments of disruption and black swan events.
While emphasising the importance of resilience, COVID-19 also provides us with a rare opportunity to pause and reimagine how we might do things differently going forward. Here are some prompts and key questions to help CFOs think about how they can lead their recoveries through driving sustainable business practices that will improve their resilience.
As a CFO you are well placed to lead the response to COVID-19, and create long-term opportunities in managing climate risk and creating value
Staying focussed on the horizon means seeing past the uncertainties of today and anticipating the opportunities, new business models and innovations that are likely to emerge and may define tomorrow. Start by considering your answers to the following:
- How can you capitalise on changes in consumer preferences and habits? For example, are there opportunities to incentivise more enduring shifts in trends of buying and travelling locally?
- What innovations are appearing at this time that you could learn from? We have seen creative approaches to delivering products and services in a socially distant manner across various sectors.
- What opportunities are there for you to get involved in advocating for or driving a more sustainable or resilient recovery to grow brand value?
There is a role for the CFO to continue to drive environmental sustainability efforts through the impacts of COVID-19
In this recent Deloitte Global survey of 350 executives worldwide, two-thirds said they anticipate their organisations making cutbacks in their environmental efforts in the event of an economic downturn. However resource optimisation and efficiency gains through sustainability initiatives could be key to cutting costs with long term value creation benefits.
- How can recent reductions in transport emissions be ‘locked-in’ going forward? Is your organisation willing to embed policies going forward to allow for remote working and mandate virtual meetings to increase productivity, reduce costs, and reduce carbon emissions?
- Can you lock-in your new low-waste benchmark - despite transitioning staff back into the workplace or ramping business activity back up - in order to reduce both costs and your environmental footprint? You might do so by reconsidering your procurement and waste disposal strategies.
CFOs must ensure their organisations are prepared for whichever scenario plays out, while also embedding long term sustainability objectives
Several emerging scenarios illustrate the various ways in which the world may unfold after the crisis. No-one has certainty as to how things will play out so it is critical to assess the scenarios in relation to what drives value in your organisation and then determine resulting strategies to build resilience.
- Are there opportunities for your organisation to improve its supply chain resilience, through identifying your key dependencies across your supply chain, undertaking scenario testing to challenge its vulnerabilities and investigating lower risk alternative channels?
- How can integrated thinking and reporting help you to understand what drives value in your organisation and key dependencies?
- Are there parallels that can be drawn between COVID-19 and climate change that you, as CFO, can use to help your organisation to understand the importance of taking a long view? For example, that the costs of prevention are likely to be far outweighed by the costs of their various impact; or that collective action is required but it is possible and it is effective.
Your organisations’ economic recovery and sustainability objectives should not have to exist as conflicting priorities; instead there may be opportunities to both fast-track your recovery and build long-term resilience by focussing on developing enduring sustainable business practices. CFOs in their role as custodians of strategy, risk management, performance and value creation can play a significant role in shaping how organisations will navigate their way through this challenging but defining moment.
Just a few months ago, the Sustainable Business Council (SBC) and Deloitte brought a group of New Zealand’s leading CFOs together to collectively explore how CFOs can take the lead in managing climate risk and creating long-term value. We agreed that climate-related risk and other ESG issues are central to emerging role of CFOs and growing stakeholder expectations around transparency of ESG performance and decision making.
We will be bringing like-minded CFOs together again to share insights, tips and tricks to help them and others to incorporate sustainability in their business planning processes to accelerate their recovery.
For more information around mitigating the impact of COVID-19, our COVID-19 webpages provide further guidance to help you navigate this quickly evolving situation.