3 Steps CFOs Can Take Right Now to Achieve Sustainable Finance

Vanessa Cisz
Vanessa Cisz
Content Development Manager, Coupa

Vanessa Cisz is a B2B storytelling professional with more than 15 years of experience in helping organizations convey the real value of their technology solutions. She holds degrees in creative writing as well as English and German literature.

Read time: 6 mins
3 Steps CFOs Can Take Right Now to Achieve Sustainable Finance

Earth Month may be over, but the responsibility for your organization’s environmental performance (the ‘E’ in ESG) is here to stay. Finance leaders everywhere are increasingly being held accountable by communities, investors, and regulators. It’s a tough position to be in, especially when you’ve already embraced the idea that sustainable finance is a force for good for your business and the planet.

The dimensions of sustainable finance: credibility, transparency, and compliance

High-visibility initiatives like beach cleanups and tree-planting are relatively easy to organize, and they gain a lot of traction on social media. To effect change with lasting impact, however, you’ll have to engage with larger and more complex issues that get at the heart of what your organization stands for:

  • “How do we uphold our company’s reputation?” Customers vote with their wallets. Any misstep on your company’s part can destroy brand value, leading to drops in sales and shareholder value.
  • “How do we disclose the right data?” Broad commitments like “reducing our carbon footprint” aren’t sufficient anymore. Customers and investors want to know the real impact of products and services. They prefer to do business with trustworthy companies which help them make more informed decisions. 
  • “How do we show proof?” Demand for investment products within sustainable finance has skyrocketed. ESG legislation is also expanding on a global scale - most recently with Article 8 funds (“light green funds”) now subject to the EU’s Sustainable Finance Disclosure Regulation.

The process is a daunting one, even if you have a rudimentary roadmap. If you’re wondering “How do I get started?”, you’re not alone.

Drive sustainable finance with business spend

Every transaction a company makes carries the potential for exponential impact on its business and the world. What your company spends on, where, and with whom reflect your company’s actual priorities when it comes to protecting the environment. And companies that harness the power of spend through the wider practice of business spend management (BSM) will transform ad-hoc environmental initiatives into strategic sustainable finance programs. 

The best part? You already have the power of spend at your fingertips. Finance organizations like yours are the best source of information on payments, spend, and liquidity in any business. Your people - already well-trained in reporting and risk/reward analysis - are perfectly positioned to show how to derive value from environmentally sound business practices. Instead of simply reporting sustainable finance data, your disclosures can present and interpret that information in a way that engages, inspires, and convinces a variety of stakeholders. 

(Jump)Start your transformation for sustainable finance today

Does your organization’s spend reflect the values? The time is now. Here are three steps you can take.

Action Item # 1: Commit to measuring environmental data

Roughly half of large companies can’t determine which metrics they should use to report on environmental performance.1 More than 15 unique reporting frameworks currently in play doesn’t make the decision any easier. Before you settle on any sustainable finance metrics, though, your finance organization must be able to collect and measure complex data. Spreadsheets, outdated technology, and siloed, error-prone processes make this nearly impossible. Ask yourself:

  • How easy is it right now to attach environmental data to my ERP system and audit it?
  • How do we find carbon equivalents for our operations, and where do we store that information?
  • To what extent do the environment and climate-related issues shape our cash and liquidity management strategy?

To measure it, you need to see it. Set up your sustainable finance transformation for success with advanced technology that captures and digitizes financial and ESG data on a common platform. Point solutions, such as outsourcing supplier onboarding, solve surface-level efficiency problems, but they don’t reveal how much paper you’ve saved or fuel costs you’ve reduced. A modern BSM approach based on a holistic, unified view of spend allows you to extract meaningful insights from Scope 1, 2, and 3 data for stronger reporting and decisions with greater impact.

Join us at Inspire EMEA 2022, our global community event from March 16-18 in Berlin, Germany for even more insight and inspiration on best practices of ESG progress with sustainable BSM. Just one of our many sessions: How to Make Your Business Spend More Sustainable and Inclusive. Save your spot and register today.  

Action Item #2: Look for quick wins when setting environmental goals 

A company’s environmental programs typically target several specific areas, including energy and emissions, waste, and sustainable procurement. It’s tempting to showcase progress and performance on every front. Companies in the early stages of sustainable finance transformation, however, might need to split their resources between areas of impact and change management. The question is, then, which area do you address first? 

Focus your sustainability goal-setting in the area which will deliver the quickest wins. This will look different for every business — because every business has unique opportunities to be a better environmental steward. If your industry is, for example, anticipating a long-awaited return to business travel and in-person events, optimizing your travel and expense (T&E) management tool is a natural place to start. Here’s what this would look like using a BSM approach:

  • eliminate paper from the reimbursement process
  • gain greater visibility into how your travel providers demonstrate environmental impact, such as carbon footprints
  • access prescriptive recommendations and see what other companies are doing - all based data from more than $3 trillion in community spending on one platform

For more information on how community intelligence can help you set the right interim goals for sustainable finance, explore our Community.ai

Action Item #3: Team up with procurement

As a finance leader, you’re expected to play a central role in delivering your company’s improved environmental performance — but that doesn’t mean you’re on stage alone. In driving overall financial health, CFOs can draw on procurement’s deep expertise in buying effectively and strategically. These functions can work smarter together and create a positive environmental and bottom-line impact. 

Collaborating with procurement on a common data platform is a fast, excellent way to use less paper through digitized spending processes like POs, invoices, and virtual cards. But a BSM approach offers so much more potential to align finance and procurement around shared environmental goals. BSM:

  • makes it easy for the sourcing and procurement professionals you rely on to manage categories and put contracts in place to identify and include sustainable suppliers in sourcing events
  • seamlessly connect contracting with buying to channel spend to sustainable suppliers
  • grants full visibility into supplier contracts, so teams can include and enforce terms in those contracts to require proper procedures and controls for sustainable operations
Join the Coupa Community at this year’s Inspire EMEA in Berlin from May 16-18 to discover how you can harness the power of spend for sustainable finance and hear how other finance leaders are doing right by their businesses and communities. Register today
Can’t make it to Inspire EMEA in Berlin this year? Learn more about how Coupa helps finance leaders like you deliver measurable impact for your business and the broader community.  

Sources:

1 Measuring sustainability. Creating value, Accenture, 20 Jan 2022