Changes in the role of the CFO in building & implementing sustainable development strategies

Motivation to promote green transformation from stakeholders

Investors

The addition of the Environmental & Social Impact Report/Sustainable Development Report, built according to international assessment standards such as GRI, TCFD or SASB, helps increase confidence from investors, as well as Demonstrates the company's commitment to strategies and implementation of Sustainable Development activities.

Consumers & Customers

Business commitment to environmental responsibility has and will influence purchasing decisions, with 62% of Vietnamese consumers and 80% expressing concern about the long-term impact of artificial materials (according to the survey). Nielsen Vietnam's survey was presented at the Workshop "Brand Strategy for Sustainable Development" organized by the Department of Trade Promotion, Ministry of Industry and Trade). Impressive numbers – 86% of participants are willing to pay more for brands that have a positive impact on society and the environment.

NielsenIQ's 2023 survey shows growing consumer preference for sustainability. With 49% choosing reusable bags, 47% prioritizing essential purchases to reduce waste, and 45% actively recycling and saving electricity, consumers are actively participating in eco-friendly activities. environment.

The research highlights consumers' growing expectations for businesses to adopt tangible environmental initiatives, with 38% saying such efforts are extremely important. Only 3% said these actions were unimportant, signaling a significant shift towards brands with a sustainable approach.

International markets

One of the factors promoting sustainable development practices is also the pressure from demanding markets in international greenhouse gas inventory and emissions management, typically the EU and Japan... Regulations and mechanisms on greenhouse gas inventory from production and operation activities, as well as greenhouse gas emission quotas for businesses, can become barriers and reduce the competitiveness of Vietnamese businesses. South in these markets.

The impact of these inventory and emission quota mechanisms has left many impacts on industries such as the textile and garment industry and agricultural and aquatic product exports. In recent months, Vietnam has lost orders to Bangladesh and may be stripped of its position as the world's second largest garment exporter by this South Asian country due to delays in the green transition process. The European Union (EU) has also implemented the Carbon Border Adjustment Mechanism (CBAM) for Vietnam, which will impact a number of Vietnamese export manufacturing enterprises.

All of these development trends require businesses to make adaptive adjustments in business strategies and carefully build sustainable development strategies. This is aimed at enhancing overall competitiveness along both the value and supply chains.

It's time to re-establish the CFO's role in building ESG strategy

The company's Board of Directors needs to have a long-term vision and prepare for changes in ESG activities in the business. In particular, it is extremely important for the CFO to be equipped with knowledge about ESG practices and corporate-level Sustainable Development strategies. As the integration of sustainable development strategies is increasingly concerned and expected, the Board of Directors in general and the CFO in particular need to reassess their role and level of intervention, from building and promoting ESG strategies to monitoring, reporting and compliance activities.

To conclude, the green shift and integration of a business's sustainable development strategy requires the Finance Director to have new management perspectives, to anticipate and adapt to change:

Long-term orientation: CFOs need to have a longer-term vision of sustainable development strategies and activities, through developing and implementing a sustainable financial strategy to balance resources and financial risks, thereby contributing profits to the 3 business bottom lines: profit, people and planet.

Build flexible risk management and action plans: The CFO's leadership role changes flexibly, depending on the maturity stage of the business's strategy and ESG potential. In particular, establishing an environmental and social impact report is one of the first steps on a business's ESG transformation journey, requiring the CFO to proactively carry out activities to quantify environmental impacts. business environment and society. In addition, CFOs also need to proactively plan risk scenarios related to sustainability and perform assessments and forecasts. As the company's ESG potential increases, CFOs also need to pay attention to strengthening their team's potential and understanding of ESG, as well as consider building and controlling budgets for sustainable development activities. (for example: budget for measuring the amount of greenhouse gases arising directly/indirectly from business operations, etc.)

Communicate information effectively: CFOs must be able to communicate sustainability-related goals and performance to a wide audience. Audiences also expect sustainability goals and performance to be specific, transparent and solidly grounded in data. Audiences that need to convey information to the CFO may include: investors, regulators, tax officials, customers, suppliers and internal members.

Reference source: Summary

Compiled by the DTSVN author group - Digital transformation solutions for the Finance and Banking industry.

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