69% of CFOs expect higher returns from sustainability initiatives
Leading global consultancy Kearney has today released its new report, ‘Staying the Course: Chief Financial Officers and the Green Transition’, revealing that 69% of CFOs expect higher returns on sustainability initiatives compared to traditional investments.
Regardless of geopolitical uncertainty and increased financial pressure, the data highlights CFOs’ confidence in the long-term value and profitability of sustainable investments. Adding to this optimism, 92% expect their organisations to significantly increase net investment in sustainability this year.
The research, conducted by Kearney and We Don’t Have Time, surveyed 500 CFOs across several geographies including the United Kingdom (UK), United States (US), United Arab Emirates (UAE) and India, to understand how CFOs are embedding sustainability within their strategies.
Financial risks and business cases
According to the research, 93% of CFOs recognise the business case for sustainability investments. However, the survey reveals varying motivations behind these investments. 61% still view these sustainable investments through a cost-focused lens, rather than considering the long-term value they may generate.
On a positive note, 65% of CFOs are now measuring the cost of inaction, signalling an increasing awareness of the long-term risks posted by climate change and regulatory penalties, as well as opportunities related to green transition.
Taking immediate action
The research highlights that CFOs are focusing on sustainability investments that offer clear, short-term benefits in reducing emissions. The top three investment areas that ranked highest include:
1. Increasing the use of sustainable materials
2. Driving sustainable innovation and partnerships
3. Enhancing energy management and waste reduction
Workforce and investment strategies
CFOs are also responding to increasing pressure from employees to align their financial strategies with sustainable practices, with over 71% of CFOs considering sustainability when selecting employee retirement funds.
As ESG awareness rises, the findings suggests that CFOs are also recognising the value of sustainable investments that both benefit the planet and resonate with values-driven investors and employees. As such, an overwhelming majority (94%) of CFOs now incorporate sustainability considerations into broader investment decisions.
Beth Bovis, partner at Kearney and Global Sustainability lead, said: “The perspective of CFOs is often overlooked in the corporate sustainability debate, yet their role is crucial. As those in control of financial levers, CFOs are uniquely positioned to have a long-term impact on business strategy. And our study highlights that they’re already taking steps in this direction.
“ESG reporting is increasingly falling under the CFO’s responsibilities. But beyond simply ensuring regulatory compliance, CFOs can lead the charge in driving investments that not only reduce emissions but also deliver tangible commercial value for the business.”
Ingmar Rentzhog, founder & CEO at We Don’t Have Time, added: “Finance chiefs are increasingly absorbing more of their organisation’s sustainability efforts, and our research shows that they are more than prepared for this responsibility.
“Looking ahead, with the UK government set to release its Sustainability Disclosure Standards this year, organisations will be forced to rethink how they measure and communicate their climate initiatives. CFOs will be crucial in navigating these changes, as they must assess and disclose their environmental impact, adding a new layer to financial reporting.”
Kearney’s full report ‘Staying the Course: Chief Financial Officers and the Green Transition’ is available, here: https://www.kearney.com/service/sustainability/article/staying-the-course-chief-financial-officers-and-the-green-transition