* Editor's note: This article is co-produced by Sukhpreet Kaur
The Accenture report, CFO Now: Breakthrough speed for breakout value, noted that colleagues across the enterprise are looking to the CFO to ensure that the company appropriately mitigates risk by addressing security and environmental, social and governance (ESG) challenges.
Bur mitigating isn’t and shouldn’t be the only metric for which an organisation seeks to understand, and even capitalise on, the opportunities that ESG presents.
Given CFOs’ access to information not only about their company but about the industry and markets, they are in the best position to better discover the risks and opportunities of any initiative.
As Jorge Gomez, executive vice president and chief financial officer at Dentsply Sirona said: “Circumstances are forcing us as finance professionals to embrace the need to keep learning, to understand what was useful yesterday may not be useful tomorrow. We need to be our own self-disruptors.”
FutureCFO spoke to Joweehlyn Liao, financial director and head of business transformation at Watsons Personal Care Stores (Philippines) for her take on the value proposition CFOs bring to an organisation’s ESG initiative.
To Liao, ESG determines the success of the company and the success of the CFO, so they are intertwined.
“It is not something just for marketing, it is a company strategy to succeed.”Joweehlyn Liao
As CFOs address the issues around ESG, how should they prepare for this?
Joweehlyn Liao: CFOs focus on maximizing value creation. Have a framework, work out your short- and long-term plans and based on that framework, match the drivers for ESG and sustainability. Internal planning is of utmost importance to overcome external pressures.
How can CFOs who set their sights on ROI translate non-financial metrics as a source of value?
Joweehlyn Liao: It is about balancing short- and long-term needs. As CFO, you are also liable to your shareholders and your management to deliver short-term results without jeopardising your long-term existence. I support the short terms that are bearable, but at the same time, keep the long terms in mind.
Should companies integrate their ESG reporting with their financial reporting?
Joweehlyn Liao: ESG has to be embedded into your core strategies. For example, you must source or buy sustainable products if you want sustainable products. It goes directly to your pricing, to your profitability hence you cannot separate.
What is your observation of ESG adoption in Asia?
Joweehlyn Liao: It is just a matter of time. In a recent study, more millennials, even boomers, during the pandemic, are willing to buy more sustainable products now whereas Gen Z's awareness level is very high. The companies must adapt eventually.
What are the challenges CFOs face in driving ESG commitments?
Joweehlyn Liao: ESG initiatives are companywide. It impacts all departments and even further such as your supply chain. The challenge is that CFOs are very focused on short-term deliverables instead of prioritising ESG culture or practices within the company.
How can technology help CFOs fulfil their expanded role where ESG is concerned?
Joweehlyn Liao: ESG aims to quantify and put measures and frankly speaking, there are many expectations. If you look at ESG reporting, if you’re talking about a retail company with 1000 stores, it is not possible without technology. If you really want to be true to that vision, invest in technology or else, it will just be on paper.