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CFOs & Sustainability - Again!

[This post originally appeared in News From Natural Logic, a more or less monthly newsletter from Natural Logic, Inc. You can subscribe to News From Natural Logic here, and to this blog using the RSS link at the upper right of this page.]

I moderated the panel on "CFOs and sustainability" at Silicon Valley Leadership Group's Sustainable Corporation conference May 2.

This is a matter of considerable interest. For the last few years, I've been writing about the indispensable role of CFOs in sustainability strategy, and the fact that CFOs are missing from the sustainability conversation at most companies -- either entirely absent, unreasonably skeptical or missing the tools they need to guide their companies to the best possible decisions on managing risk and harvesting value.

The buck stops right at the CFO's door. The CFO "owns" risk and value -- and in most companies, the understanding of "sustainability-related risk" is conducted with incorrectly drawn boundaries and flawed analytic models, and overlooks materially significant factors and hidden subsidies. If it is conducted at all. As a result, most companies will sub-optimize at best, leaving money on the table - and potentially violating fiduciary responsibility in the process - in completely avoidable ways.

In addition, CFOs also hold -- or potentially hold -- a weakly understood coordination role; according to Pritzker CFO Kevin Lynch, the CFO "touches more of the organization than any other executive, and serves as a balance point between short-term and long-term interests, between the innovators and stabilizers in an organization."

We had a panel of rockstars -- Chuck Boynton, EVP & CFO of SunPower Corporation, Mark Hawkins, EVP & CFO of Autodesk, and Lauralee Martin, EVP, COO & CFO, at Jones Lang LaSalle -- to provide a perspective from CFOs who get it, from companies that get it. A few highlights:

  • Hawkins defined sustainability as preserving value and eliminating waste. "If a person is not thinking that way, they're accepting false choices. There's a lot of opportunity -- top line gains, better customer experience -- to get get stuck in false choices."

  • Martin also sees great opportunity to create value, but observed that "you have to think the way CFOs think. We think dollars. Talk the way we talk -- and don't get confused by leading w passion and we get a lot done." Her case in point: JLL seeks to deliver its clients energy and carbon savings equivalent to 10 times JLL's own footprint. But wait, there's more, since that $125m saved for client cash flow translates into an additional $2b in capitalized real estate. People can get very excited about that."

  • Boynton talked of the need for metrics like direct ROI; "sometimes we'll require positive ROI, sometimes we'll accept negative with other substantial benefits. It's not purely financial; we live and breath sustainability as a core value, and there are impacts on employees & costumers that are very material & growing."

  • All agreed that it's essential to avoid the trap of short-term thinking that so many companies are driven into by them demands of Wall Street. Long term at the expense of the near term is no better of course; companies need both, just as people can see better with two eyes. JLL has handled this as well as any I've seen; they've stopped providing quarterly guidance, challenging Wall Street to judge them on performance, not prediction.

  • Much to my surprise and delight, each of them spoke about an animating purpose at each company that run far deeper than mere financial goals.

If you are interested in further exploring this intersection, please consider joining the small working group of CFOs we are convening to explore these issues. We'll meet monthly - and privately - over the next six months, and in a public colloquium in early 2012. If you'd like to be considered for participation - or if you would prefer a private, no obligation consultation on how these matters might impact your firm - please contact me immediately on 510-248-4940. CFOs only, please.

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