In 2021, 28% of CFOs believed environmental sustainability would have the most impact on their profession.
It turns out that belief was well-founded. Environmental sustainability in business is proving beneficial for both the environment and the companies that champion it.
Chief among the benefits of sustainability in business is the response from consumers, as 79% of shoppers report changing their purchase preferences based on a business’s sustainability efforts. In the eyes of the public, environmental sustainability is no longer an optional consideration for businesses—it’s a mandatory responsibility.
Sustainability—and environmental sustainability in particular—has become an integral part of business growth and survival. Because of this, the question for today’s business shouldn’t be whether to prioritize sustainability but how to do it successfully and who should lead the corporate initiative.
Many CEOs believe it’s the finance team’s responsibility to take the lead, with 23% agreeing on the importance of CFOs developing ESG (Environmental, Social, and Governance) capabilities within their organization.
CFOs Are Leading the Charge for Sustainability in Finance
While it might seem odd at first that finance leaders would be the ones to lead sustainability initiatives, it does make sense. Sustainability in finance enables companies to understand and minimize the activities that negatively affect the environment. On the other hand, companies can also maximize the impact of their sustainability efforts toward cost savings and being more efficient.
What’s more, CFOs are uniquely positioned to lead the push to align corporate financial targets with various sustainability metrics. After all, given their role in risk management and cost optimization, financial teams often already possess the foundational skills and knowledge needed to track and report on these metrics.
This expansion of a CFO’s role to include sustainability comes at the perfect time. Financial leaders have already begun to take on new responsibilities within their companies in response to the challenges of globalization, a potential recession, and climate change. The CFO position now encompasses responsibilities extending well beyond the usual purview of finance operations, with sustainability fitting right in.
While every part of leadership will no doubt need to play a role, it will likely fall on the financial officers to steer their organizations into a sustainable future. Luckily, CFOs don’t have to do it alone. Technology, especially automation, is here to help.
How Can Technology Help Sustainability Efforts?
It may not seem like it, but automation and sustainability go hand-in-hand. Finance automation solutions incorporating advanced data analytics and AI-powered technology tools can make the move to sustainability more effective and efficient in several ways, including:
1. Working with accurate real-time data.
Constantly collecting, analyzing, and monitoring data in real time gives CFOs accurate data to help make more informed sustainability decisions that benefit both the business and the environment. For example, real-time data can help finance leaders monitor energy consumption, waste production, and other key sustainability metrics, allowing them to identify areas where they can reduce their company’s environmental impact.
2. Improving cost visibility.
Automation helps finance leaders analyze data that brings hidden environmental costs to light. Without clean and up-to-date data, it can be challenging to properly measure the impact various corporate activities have on the environment. However, by using automation to analyze data and identify hidden environmental costs, finance leaders can better understand the true cost of their company’s activities and make more informed decisions about environmental sustainability and corporate efficiencies.
3. Reducing operational waste.
Automation can help streamline a company’s operations, eliminating inefficiencies that can negatively impact the business and the environment. For instance, analytics solutions can help identify areas where an organization is producing excess waste, allowing the company to take action to reduce its waste output. Additionally, automation can provide more efficient alternatives to wasteful processes, such as automating manual processes or using more sustainable materials.
Another great example is automating vendor payments via electronic and digital payment methods instead of printing and mailing paper checks. Automated electronic payments are faster than paper checks and remove other wasteful logistics from the process, such as paper envelopes, postage, mail handling, and gasoline-filled mail trucks. If a check is physically deposited via an ATM or human teller, the bank will transfer the funds and void the check, only to mail the voided check back to the payer for their records. It’s a lengthy and wasteful process that automation technology can easily solve.
With something as simple as switching over to an automated payment scheme from paper checks, you can substantially reduce your company’s environmental impact while also saving on resources, time, and overhead caused by inefficient manual processes.
Treat Every Day Like Earth Day
Earth Day comes around only once a year, but finance leaders should manage their operations with an Earth Day mentality every day. Today’s growing companies need to focus more on protecting Earth’s natural resources for future generations, and finance leaders are steering the initiative.
Overall, technology can play a key role in helping companies to become more sustainable. By providing real-time data, improving cost visibility, and reducing operational waste, technology can help finance leaders make more informed decisions about sustainability and steer their companies toward a more sustainable future.
The best way to do this is to implement the right financial technology to help them make the most sustainable choices.
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