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CFOs Have Two Key Roles In Sustainability

Nov 25, 2024

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2 min read

Written by

Lily Turnbull
People & Skills
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How organizations manage sustainability is changing. ESG and climate-related reporting frameworks have, at large, shifted from voluntary to mandatory – increasing reputational and financial pressure to produce consistent, investor-grade disclosures. In the EU, especially, the regulatory burden of the CSRD has extended internal responsibilities beyond the sustainability team to stakeholders across the organization. One role that is witnessing a notable evolution in its responsibilities? The CFO.

Taking on new roles in the face of mounting sustainability pressure, CFOs should be prepared to:

  • Support the development of ESG data governance practices.
    For some sustainability teams, the concept of creating ESG data governance policies and designing data controls may be relatively new. However, managing controls, assurance and data sign-offs are core responsibilities of finance teams. Accordingly, many sustainability teams are leveraging the expertise of their finance departments to ensure that sustainability data achieve the same level of quality and credibility as financial data, either through creating cross-functional working groups or by setting up processes to bring sustainability data into the control environment of finance.
  • Assist sustainability teams in preparing for external assurance.
    Under the CSRD, firms will need to seek assurance of sustainability disclosures, beginning with limited assurance and moving to reasonable assurance. Non-compliance can entail significant penalties: France, for example, will impose criminal sanctions for breach of the requirements, including a fine of up to €30,000 and imprisonment of up to two years for failing to appoint an auditor or independent third-party organization to conduct assurance. Many sustainability teams are engaging external assurance providers for the first time. CFOs, with their experience, can offer guidance on how to prepare for assurance and how to select the best-fit provider.

To fully comply with the CSRD – as well as other regulatory requirements across the world – sustainability needs to be a team sport; and CFOs have a crucial role to play. But this is far from a two-step process. Ultimately, the CSRD requires a much broader business transformation for sustainability. The CFO will also be critical in helping to integrate sustainability decision-making across the organization, connecting sustainability and business strategies, and directing investment towards sustainability opportunities.

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Lily Turnbull

Lily is an Industry Analyst in the Verdantix ESG & Sustainability practice. Her current research agenda focuses on ESG and sustainability services, ESG assurance, and sustainable finance. Lily joined Verdantix in 2022 and has previous experience in social impact research and ESG software development. She holds an MSc in Women, Peace & Security from the London School of Economics and Political Science and a BA in Theology & Religion from the University of Bristol.

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