If you Want Your CFO to Understand Sustainability Measure Your Impact

September 26, 2013

I want to say one word about Sustainable Brand’s The New Metrics of Sustainable Business 2013 — awesome. SB’s New Metrics felt like a practitioners convening. The focus on real world cases prompted truly useful dialog. The fact that the audience was largely filled with corporate responsibility (CR) professionals made for a collegial atmosphere that energized participants. It also seems that CR professionals interested in metrics are the same ones that are really driving performance.

There are many takeaways from the conference (I highly recommend attending if you can), but here are the main ones I got:

1) Don’t fear measurement. This meeting was chock full of companies that were surprised at how easy and powerful it was to measure sustainability impact. Multiple presentations stressed how powerful it is if you can talk numbers with the CFO of your organization. They also stressed how surprisingly easy it was to start measuring. Even if you need to use “back of the napkin” estimates in some parts, the message was clear: start converting your efforts to data. 

2) Get specific. Find a specific project or value proposition that you want to make, and then figure out the components that comprise it. Then make the measurements happen. Don't worry about getting the right consultant in the room, and don't worry if you need estimates to fill in various components of your model. Create the space to discuss a measurement model even if you can't run it 100%. Also, don’t fall into the trap of thinking you need to quantify everything all at once. Stick to being concrete on one project. Work iteratively to find the first things you should quantify, and then expand outward from those.

3) Don’t be surprised if CR measurement is already happening inside and outside your company. You know that risk assessment your company made before a new factory was built? You know those credit ratings that outside agencies are applying to your company’s debt? You know those operation costs factored into the new HVAC system your company bought? How about the marketing team’s assessment of your company’s brand value? All of these have estimates relevant to social and environmental sustainability. In some cases the relationship to value can be shockingly direct. Lost productivity due to protests may already be factored into the risk assessment for opening a new factory or mine. Operations may already be collecting millions of data points on the outputs of your HVAC systems. If you can make an argument about how CR reduces these costs (or raises revenue), you may find that CR issues are already recognized by your company as key levers controlling value.

4) Think like finance. Steal from the language of finance. Try to make spreadsheets that look like finance. Think of your projects truly like an investment, and follow through with them as you would a capital investment. Realize also that you've got to make your case as an investment. On a billion dollar revenue base, $10 million in savings might not be enough to push a CFO to make an investment. The CFO will only be swayed so much by arguments that there is a social good above these savings. Also, if you come to the CFO without numbers (and are the only team to do so), how do you think he or she is going to act?

To wrap up – the biggest takeaway was the surprising amount of real, hard, easy-to-prove value that is lying on the table for CR initiatives. Brand value is tied to society's perception of you. Your human capital, if evaluated, might double the value of your company (as Interface is finding out). Having a product hit a government list because of an unacceptable chemical is a CR issue. All of these can be measured to have tangible and large costs. Demonstrate the value of CR to your company and you may find your department's budget growing.