CFOs Seek Boldness and Shareholder Value in Sustainability

by | Jun 13, 2012

As point person for finance and risk management, the chief financial officer plays a critical role in advancing corporate sustainability. Much support for this theme came in the form of a lively and highly quotable CFO panel discussion at the Silicon Valley Leadership Group’s annual Sustainable Corporation conference, held on May 2.

For those requesting investment dollars to make a company’s products or operations more sustainable, visiting the CFO’s office can be about as much fun as a root canal. A CFO’s traditional focus on quarterly results and return on investment criteria makes “no” a common answer for investment requests, especially those justified mainly on qualitative merits of sustainability. But it doesn’t have to be this way.

Three chief financial officers, Lauralee Martin of Jones Lang LaSalle, Mark Hawkins of Autodesk, and Chuck Boyton of SunPower, shared their experience and advice on effective cases for corporate sustainability. The conversation was moderated by Gil Friend of Natural Logic.

The panelists each described how their respective companies are committed to sustainability. In so doing, they provided a view into the CFO’s motivations and contributions, and the importance of being strategic, shareholder value-driven, and numbers oriented. Among the conversation’s punchier points:

  • carbon is not how CFOs think
  • calling something a sustainability investment can result in problems from the start
  • economics versus the environment is a false choice
  • there’s a need for bold action, and the world won’t be saved with two-sided paper
  • there has to be numbers, and there has to be math
  • CFOs love to find real value, and push it out to investors

Lauralee Martin of JLL noted that “carbon is not how a CFO thinks.” Rather, cases for carbon reduction and improved sustainability must be equated with economic opportunity – meaning energy savings, cost/revenue dollars, brand, risk management and the like.

For instance, while their direct carbon footprint is small, JLL manages a huge real estate footprint on behalf of their clients. Through efficiency efforts, JLL has helped clients save $125M in energy costs, and reduce carbon footprints accordingly. Further, this cash savings amounts to an increase in client property values of $2 billion. This is an example of the need she sees for “doing something bold” for sustainability, and at the same time, producing the kind of “value a CFO loves to find and push out there to investors.”

At Autodesk, CFO Mark Hawkins stresses support for “numbers and math.” Efficiency efforts in the company’s data centers are demonstrating measurable energy savings of 60 percent, and a clear business case for investment.

At the same time, he notes that a far more leveraged opportunity for Autodesk is helping their customers “imagine, design, and create a better world” through use of new sustainability-related features in the company’s design software offerings.  Along these lines, Autodesk is actively expanding its product capabilities related to energy efficiency in building design, and is engaging in new software partnerships with a rapidly expanding market of clean technology companies.

SunPower, a manufacturer and integrator of solar photovoltaic systems, is striving to “change the way the world is powered.”  Sustainability is core to the company’s mission and business value, and as such, reputational risk is taken very seriously. CFO Chuck Boyton notes that it is hard to quantify such risk, but it’s important to frame these intangibles as “our reputation is a huge asset and must be protected accordingly.” Also, he sees reducing freight costs and improving supply chain efficiency having strong sustainably benefits and value to customers.

As a group, the CFO panelists agreed that sustainability is most compelling in terms of what makes, and keeps, a company valuable to its shareholders. While two-sided paper is a smart thing to do, CFOs are motivated by higher level needs, strategies and opportunities. They stressed that sustainability should not be treated as a check-the-box exercise.

For those seeking investment, it is important to get the dialog right, and focus on the potential for high-value impacts. In CFO terms, the panelists all agreed that saying “yes” to sustainability-related initiatives becomes easy when it means setting new standards for products and operations, establishing new levels of performance, and growing markets.

Don Bray is cofounder and president of AltaTerra Research. He has led a broad range of research and consulting engagements in corporate sustainability, resource efficiency, and renewable energy systems. He has deep expertise in enterprise information systems, and has authored several reports on enterprise sustainability management solutions. He is a frequent writer, speaker, and moderator on emerging developments in resource efficiency and corporate sustainability.

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