As a rapidly developing nation, Indonesia faces unique sustainability challenges—from managing its natural resources to addressing social inequalities.
The environmental, social and governance principles have become integral to the country's long-term growth and development strategies as business and policy-makers recognise the need to balance economic progress with environmental protection and social responsibility.
At the forefront of this situation, the archipelago's chief financial officers and finance leaders are expected to be sustainability champions, integrating ESG factors into their financial planning and reporting processes.
The CFO’s role inarguably has evolved over the years, beyond traditional financial management encompassing strategic decision-making and risk mitigation.
By aligning financial objectives with sustainability goals, Indonesian CFOs can help their respective organisations maintain a competitive edge, attract investment, and contribute to the country's broader sustainability agenda.
Evolving priority
For Yohanes Jeffry Johary, managing director at facilities services company OCS Indonesia, the journey to sustainability growth has been an evolving priority for a while now.
“Initially, the concept was more closely associated with environmental concern,” says Johary. Over time, however, he says this has come into a more holistic approach that involves environmental, social, and economic dimensions in the business strategies.
“The shift towards sustainable goal gains significant momentum.”
Johary explains that this has been notable following the Paris Climate Accord, considering this international commitment coupled with rising awareness of climate change, which has put pressure on companies to adopt a more sustainable practice.
“In the recent years, the focus has accelerated.”
He says this change bled through the consumer side as customers now are more informed and concerned about the impact of their purchases on the environment and society. “The shift has led to a demand for products and services that are not only high-quality but also ethically sourced and environmentally friendly.”
Meanwhile, government and international bodies introduced stricter regulations to mitigate the environmental impacts such as carbon taxes, waste management laws and requirements for sustainability initiatives to succeed.
In Johary’s view, businesses that fail to address sustainability risks may find it harder to attract investments, thereby making way for an emphasis on sustainability goals among organisations.
“It is not a new initiative, instead, it represents the ongoing maturation of the global movement that has been shaping how businesses operate and compete in the marketplace for many years.”
Johary says the current landscape sees sustainability as a fundamental element of the business strategy rather than as a separate or a secondary concern.
Sustainability and cost efficiency
In terms of the role of CFOs in navigating sustainability-related initiatives and cost efficiency, Johary believes that they are a strong contender to lead the organisation.
Considering the CFOs’ expertise in financial management, risk assessment, and strategic planning is vital in mastering the complexities of balancing these two goals.
“The CFO has a deep understanding of the company's financial structure, which is very crucial for identifying where cost savings can be made without sacrificing those. They know where sources are being spent and how to optimize those expenditures,” Johary explains.
He says This knowledge is invaluable when trying to cut costs while still driving the company forward towards sustainability.
Further, risk management is another area where the CFO shines. Sustainable goals often involve investing in new technology processes or even entering a new market. As the CFO is keen to assess and mitigate those risks, the organisation can be assured it is not just chasing goals.
With the CFO’s strategic vision for long-term planning, organisations can find a way to balance the immediate need for cost efficiency.
He notes that CFOs have a good grasp of the long-term investment required for sustainable goals, which is about ensuring that the company is not just surviving but improving.
“Since they control the company's budget, they (CFOs) can direct funds to what initiatives are both sustainable and cost-effective,” says Johary.
When executed properly and effectively, sustainability becomes not just a buzzword but a financially sound strategy that contributes to the company overall.
Collaboration is crucial
Johary points out that collaboration between various departments of the organisation is important in the implementation of sustainability initiatives.
“This collaboration is crucial for amending sustainability into every aspect of the business while keeping cost efficiency in mind,” says Johary.
He adds that connection with investors is necessary as they are now increasingly focused on sustainability.
Yohanes Jeffry Johary
“A CFO who can communicate how the company's sustainable efforts contribute to long-term profitability can enhance the investors’ confidence.” Yohanes Jeffry Johary
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Arra Czarina Igno is an experienced News Writer with a demonstrated history of working in the financial services industry.
She is a media and communication professional with a Bachelor’s Degree focused in Broadcast Communication from Polytechnic University of the Philippines.
