Therefore, for CEOs and CFOs, timely, accurate, validated ESG information is vital, delivered to them in a comparable language, as ESG is increasingly affecting their ability to drive financial value inside their organizations, and in turn seek cost effective funds in a timely manner. In fact, an area of complaint from boards is the lack of ability for sustainability departments to communicate their work at a business and finance level. This may be due, in part, that typically the CSO is too distant from the board, yet it is not beyond the ken of sustainability departments to understand the circles of sustainability across a value chain, as well as investment chain. And, as financial valuation models become more widely available, as companies become more experienced with integrated reporting, ESG will expand from risk and liability issues. This therefore suggests the quality of reporting and disclosure will be evidently seen as a value driver, to improve access to investment, and the removal of a price reduction lever.
To ease this shift, according to the Deloitte 2012 Sustainability Study, 61% of CFOs expect involvement to increase over the next two years, underpinning internal collaboration, internal knowledge transfer and fostering the removal of the silo mentality. And to attain economic strength, ESG factors are going to add a dominant perspective, in not only driving a more regenerative and socially just economy, but also deliver a clear understanding to relevant stakeholders how and why ESG efforts are material and core to business as well as illustrate the value drivers showing ESG efforts at the nexus of financial materiality.
Ultimately, ESG and sustainability performance is becoming inextricably linked to financial value, whether a public or private business, of all sizes. And, in the pursuit of a more sustainable and just world, it is the translation of that vision, delivered in appropriate language to the appropriate stakeholders where currently misunderstanding happens. First understand, before making yourself understood.
Christopher Gleadle is author of Sustainable Growth Through Sustainable Business and founder & CEO of the sustainability performance agency The CMG Consultancy.
