Sustainability Has Become A Corporate Financial Issue

Improving sustainability related performance will become a top five priority for 60 percent of major Western European and North American CEOs by 2015, Gartner has claimed in its latest report.

Sustainability is no longer about risk mitigation, focused on compliance, reputation, philanthropy, the triple bottom line (people, planet, profit), and generally being seen as doing “good things”, Gartner’s analysts claimed. The issues are much closer to the daily running of the organisation: operational efficiency and business enablement.

Improved finances management and performance is increasingly achieved by optimising the use of expensive natural resources, minimising costs in disposing of waste, and reducing emissions to exploit the increasing fiscal incentives and tax breaks.

Low Carbon Becomes High Priority

As we develop a low-carbon economy, these issues will become just as important as any other aspects of running a business, the Gartner claimed.

“For many consumer-facing and resource-intensive industry sectors, we anticipate a steady shift in the strategic intent of sustainability from operational efficiency to more of a core capability directly impacting products and services,” said Simon Mingay, research vice president at Gartner.

“Although many CFOs have historically been sceptical of the financial or business enablement value of sustainability, volatile and escalating resource costs – most notably, energy costs – along with changing customer, consumer and investor expectations in many developed economies, are changing the value equation,” he suggested.

Mingay believes that, in IT provision, energy-efficiency moves on their own cannot meet tomorrow’s challenges. The much bigger opportunity is applying IT to analyse, optimise, manage and otherwise improve the sustainability performance of the business itself.

“One factor that has limited the traction of sustainability programmes by the CFO and finance team, in particular, has been the lack of frameworks, systems and tools, which expose sustainability-related performance data and practices, provide decision support, and connect sustainability performance to financial performance,” Mingay said.

The development and implementation of such tools offer a company’s finance team a basis for making and approving sustainability-based decisions in an informed and balanced way.

A Roadmap To The Future

In the report CFO Advisory: The Impact of Sustainability on Enterprise Performance, Mingay points out the routes available towards this decision-making framework. These can begin with the easy and obvious, such as the use of online collaboration tools and video conferencing as a substitute for travel, and increased buildings resources management and remote working.

The harder options are the use of IT to re-engineer manufacturing processes; real-time automation and control in production environments; real-time route optimisation for vehicles; optimal natural resource use; management of the supply chain; and business analytics. All of these, he claimed, deliver efficiencies and reduce costs.

“Sustainability is no longer a ‘soft’ and tangential aspect to organisation performance,” Mingay said. “A sustainable approach to business activities is generating tangible business benefits for organisations today, through a combination of operational efficiencies and market growth opportunities.”