April 25, 2024

Our predictions for 2023 | Future Proof Finance

The impact of ESG on finance goes far beyond disclosure management. Going forward, sustainability will be integrated into performance management processes. It will become part of how the CFO looks at the company’s current performance. In other words, performance will not only be viewed from a financial perspective. However, this will only be possible if the company internalises the KPIs linked to ESG, and if it actually complies with them. In this light, ESG is no longer just a mandatory, external reporting perspective, but a strategic mainstay of the organisation.

Along with compliance and disclosure, finance also monitors ESG performance. The current possibilities and resources for performance management mean that finance can play an important part in this. Finance already has this responsibility within the organisation today, and must seize this opportunity to further expand its role. Existing performance management processes can play a significant role in establishing KPIs linked to ESG and the corresponding goals.

It is up to management and the board of directors to find answers to the question of what role sustainability plays in the company. It’s not just about asking whether the company is green. Another crucial question is whether the company will lose or gain value. As a CFO, you need to know the impact of products that will no longer have market value in 10 years’ time on your financial parameters. Sustainability is increasingly valued economically, and finance needs the capacity to use this data to measure the impact on the organisation.

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