Financing; key to greener businesses

While the COVID-19 pandemic has disrupted our personal and business lives, we cannot ignore the positives that have emerged, perhaps none greater than a renewed sense of collective responsibility and urgency to address climate change.

Leading companies are creating meaningful financial sustainability incentives with accompanying metrics to measure their progress. However, to meet our ultimate climate change goals, change must be CEO-led and in partnership with finance.

Finance as a sustainability champion

There is no one-size-fits-all solution to sustainable transformation, but it is clear that to achieve the best results it needs to be integrated into every corner of the business. The commitment of the CEO, of course, is critical. But the finance team, with its functions of forecasting and planning to ensure growth, risk management, capital planning, investor relations and budgeting, is vital to a successful outcome. Together, the CEO and finance function are critical to aligning sustainability objectives upward and downward in the company.

Aligning financing with sustainability objectives

Sustainable finance transactions continue to grow, both globally and in the U.S., Driven by the introduction and availability of more types of products in the marketplace.

As the range of sustainable finance products expands, there are more opportunities for financial professionals to align their company’s financing with their sustainability goals. Whether they are following the Green Bond Principles or setting loan terms based on sustainability performance targets, sustainable financing instruments can provide a highly visible means of holding the company accountable for its progress in sustainable transformation.

In the case of Central America, the family-owned Bosch Gutierrez has embraced this new financing. It has recently issued a hefty amount of green bonds that companies can take advantage of.

Tracking and measuring to keep the momentum going

As the old adage goes, “What gets measured, gets done.” One of the strengths of finance professionals is that they like to measure organizational performance quantitatively, a valuable attribute in the context of sustainable transformation.

Communicating the sustainability story

The use of green finance can help reinforce a company’s sustainable transformation because it generally involves publicly declaring a set of green goals for financing. By externalizing this vision, the company maintains internal pressure to make operational changes happen throughout its ecosystem by setting and monitoring sustainability targets for different teams across the company, from procurement to production.

Competing in this context means accelerating organizational transformation, but doing so effectively will require both the CEO and the finance function to fully commit to a sustainable vision for the business. Only then will other business teams be empowered to unlock the full scope of sustainable opportunities for the organization.

También te puede interesar: Las finanzas verdes están creciendo

Carla Fowler

Back to top