Three things I’ve learned about sustainability

Taulia CFO Rene Ho on what he has learned working to grow sustainable practices both within and outside of Taulia.

There’s no playbook or manual for building sustainability in any company, whether it’s in internal practices or in the products you offer to the market.

However, verifiable sustainable outcomes have become competitive advantages across a wide variety of industries, so no company can afford to ignore them.

As long ago as 2019, half the respondents to a survey of CFOs by Deloitte were reporting the biggest pressure to take on sustainability issues was coming from their customers rather than internal stakeholders.

This impetus has been complemented by increasing regulation. Last year, the EU introduced the Corporate Sustainability Reporting Directive (CSRD), which made ESG reporting mandatory for almost 50,000 companies across the EU. And, in July this year, the Corporate Sustainability Due Diligence Directive (CSDDD) came into force, aiming to foster sustainable and responsible corporate behavior.

Customer demand and legal obligations are powerful influences on corporate behavior – but what does it mean on the ground to address them?

Based on my experience, I’ve learned that there is no one-size-fits-all solution. Grassroots efforts are just as crucial as corporate policies, and CFOs have a vital role to play in creating a greener and more ethical economy for everyone.

Here’s what I’ve learned about how businesses should be approaching sustainability, boiled down into three key tips.

1. Sustainability doesn’t stop at the office door

When we take a holistic, top-down view of how we approach sustainability at Taulia, we try to focus on how we operate internally and how sustainability concerns are reflected in both our offer and our interactions with the wider business environment.

Importantly, we’ve learned that growing sustainability within a company is as much about culture as it is about how you shape your operations.

With that in mind, for some time now, we have held monthly sessions for Taulians on key questions around sustainability. The goal is to build awareness across our organization on everything from carbon emissions to mental health in the workplace and—of course—sustainability in supply chain finance.

Offices and teams can and do devote a day to working on a cause they feel passionate about; some of whom spent the day caring for the environment.

In isolation, none of these actions amount to much – but, together, they form an effort to promote a constant focus on sustainability throughout all of our working lives. In structuring these efforts, we are guided by three core ideas or goals: education, awareness, and action.

Any macro-level breakthroughs in how we work towards sustainability are, we believe, a product of the micro-level cultural efforts we make. So, while we are playing our role in initiatives like our parent company SAP’s goal of becoming carbon neutral by 2030, we strongly believe that ground-level efforts are just as important.

2. The market has shifted

One of the biggest cultural shifts we’ve seen has been in what questions come up in conversations with our customers.

It’s been a few years since we introduced our Sustainable Supplier Finance solution. It allows our clients to embed sustainability criteria in their supply chains by offering discounts to suppliers that display good or improving performance in ESG/sustainability. These performances are captured in data-led metrics and analyses produced by companies such as EcoVadis.

When engaging with our customers, we hear many questions about these metrics, how they’re captured and leveraged, and the increasing competition to provide them. The days when companies could get away with soft mission statements and non-binding statements seem to be over.

Instead of using imagery of green shoots and forests on the cover sheets of their communications, there is a clear and growing demand now for detailed, reliable, and actionable data. Prospects and existing clients constantly ask us about this data, how it’s gathered and verified, and what our partner firms’ credentials are, from their codes of conduct to their AML or KYC procedures.

3. The role of the CFO is vital

If metrics and disclosure are becoming ever more critical, this means that the role of the CFO is becoming central to any serious effort toward sustainability.

It makes sense that sustainability data is gathered, verified, and distributed by the finance department. CFOs are used to measuring and tracking non-financial achievements, carrying out risk analysis, and conducting other modes of internal monitoring.

Accordingly, they’re uniquely placed to track and analyze the added value contributed by sustainability measures. The tools for tracking and assessing these measures essentially boil down to internal cost accounting methods.

As senior internal stakeholders, CFOs can use their influence to define individual and aggregate performance criteria and encourage the development of new tools and solutions, such as internal dashboards. They have the big-picture, top-down view needed to both define goals and introduce the practices and technology necessary to achieve them.

Remember, to achieve effective sustainability, it’s essential to integrate it into your business culture as a core practice. This practice is fundamentally driven by data, highlighting the crucial role of the CFO and the finance team in any organization.