SUSTAINABILITY
I would encourage finance leaders to stop presenting decarbonisation as simply a sustainability expense and instead present it as a capitalallocation decision
Saffron Gilbert-Kaluba CEO of The Law Chronicle and UN Ambassador The Law Chronicle
In 2022, research conducted by Capgemini found that 53 % of executives felt that the costs of pursuing sustainability initiatives outweighed the benefits. Just one year later, that number had more than halved to 24 %, while the percentage of respondents who believed that the business case for sustainability tripled from 21 % to 63 %. This can be seen in the way organisations are looking at these investments today – treating climate projects as strategic business decisions to build a competitive advantage and drive value. This means carefully calculating risks and long term value, instead of focusing solely on immediate profit. According to Cara, there are several key KPIs finance teams should present to convince board members that investing in climate resilience is a smart financial decision.“ Look at abatement cost, energy savings, carbon-cost exposure, payback and IRR,” she says.“ For resilience, focus on losses avoided, downtime reduced, revenue protected and asset life extended. And always show the cost of doing nothing – through thorough scenario analysis one can easily see how that can completely change the economics.” Saffron advocates for a similar shift in attitude.“ I would encourage finance leaders to stop presenting decarbonisation as simply a sustainability expense and instead present it as a capital-allocation decision,” she says.“ A board should be able to understand both the financial return and the risk-adjusted transition value of an investment.
financechief. com
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