CFOs own sustainability reporting: here’s what they need to know
CFOs taking charge of sustainability reporting is no surprise. Their experience in reporting and assurance is directly applicable to sustainability reporting demands and regulatory requirements.
Sustainability has shifted from being a peripheral concern to a central element of corporate governance. In Australia, the rollout of mandatory climate-related financial disclosure laws combined with growing expectations of transparency from shareholders, industry groups and society have made sustainability reporting inescapable.
Increasingly, the Chief Financial Officer (CFO) is playing the leading role in the sustainability reporting process at many organisations. Deloitte’s worldwide 2024 ESG reporting benchmark found that CFOs held primary accountability for sustainability reporting at 32 per cent of surveyed organisations.
For context, Chief Sustainability Officers (CSOs) took the lead at 16 per cent of organisations, while a further 16 per cent of respondents said accountability was split between the CFO and CSO.
It should be no surprise that CFOs are taking charge of sustainability reporting. Their extensive experience in reporting and assurance is directly applicable to sustainability reporting demands and evolving regulatory requirements.
Additionally, boards and investors expect CFOs to own the financial implications of sustainability risks, making it difficult for CFOs to separate themselves from sustainability reporting, even when they are not leading it. It is a lot of responsibility – so how can CFOs rise to the occasion?
The first step towards success is having a clear plan and strong operating model. This means forming a dedicated team with in-house sustainability knowledge to lead the reporting process, as many parts of the business feeding in data are unlikely to have sustainability experience. It also involves building controls in stages with a defined road map and a clear governance framework.
From there it is important to ensure the data you are collecting is fit for purpose – because your sustainability reports will only be as good as your data. This is a major stumbling block for many organisations. Three-quarters of the respondents to Deloitte’s ESG Benchmark cite a lack of data analysis and data management skills and almost half report critical data gaps.
For CFOs, being transparent about data quality and gaps is critical. The stakes are high. The quality of data inputs determines not just the quality of reporting outputs and achieving compliance, but the value organisations can create from new sustainability insights.
However, long-term value cannot be built solely on strong processes. It also requires ambition. CFOs must work collaboratively with all stakeholders to drive sustainability reporting ambition across the organisation.
It should be thought of as more than a compliance exercise – standards need to match the rigour of financial reporting. This isn’t only because Australia is moving towards reasonable assurance sustainability reporting standards, but because more thorough reporting drives better insights and more strategic decision making.
CFOs are uniquely positioned to elevate sustainability reporting from a mere compliance duty to a strategic move. By embedding sustainability into existing systems and decision-making processes, CFOs help shift it from a standalone priority to a fundamental component of long-term strategic success.
For example, if a company were to adopt sustainability reporting to regularly track its resource consumption and waste generation across its operations, it might uncover that certain areas consume more energy and generate more waste than others.
With these insights, leadership could implement energy-efficient practices and improve waste management where it’s excessive. This approach and example are an easy way to reduce operational costs.
Over time, embedding sustainability into the company’s long-term strategy can unlock ongoing cost savings, foster competitive differentiation and create greater value for stakeholders.
Still, for CFOs managing lean teams, producing sustainability reporting that feels meaningful and impactful can be a challenge. In fact, fewer than 50 per cent of respondents to Deloitte’s 2024 ESG benchmark expressed confidence in their sustainability reporting controls. This makes it unlikely that they would feel confident using such reports to inform and drive strategic decisions.
To address these challenges, CFOs should view technology and process accelerators as essential tools in their arsenal. Automating tasks like data collection, validation and consolidation not only reduces the reporting burden but also improves accuracy and ensures consistency across disclosures.
These tools are critical for keeping pace with evolving regulations and stakeholder expectations. They also free up time to focus on higher-value strategic analysis. Technology enables CFOs to efficiently identify relevant public disclosures, align them with reporting standards and generate reliable outputs for expert review. This helps turn sustainability data into a foundation for smarter decision-making.
As the CFO role continues to evolve, sustainability reporting is becoming an integral part of the agenda. By proactively integrating it into financial planning and risk management, CFOs are well positioned to transform sustainability from a compliance requirement into a strategic lever for long-term business success.
Andrea Culligan is Partner, Strategy, Innovation & Ventures Partner and Sarah Kinsela is Partner, Audit and Assurance.
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