Finance Flip the Script - Treasurers as CFOs of Sustainability

As stakeholders intensify calls for bolder climate action and social accountability in 2024, corporate treasurers find themselves at the nexus of rising ESG expectations. Their financial oversight and risk lens make them apt sustainability champions within today’s enterprises.

However, organizational silos and competing priorities still impede the treasury function from spearheading the ESG charge at most companies.

Treasury Crucial to ESG Execution

Of all finance departments, corporate treasury teams boast perhaps the most direct line of sight into tangible ESG progress and reporting. They structure financing arrangements that fund green infrastructure projects. They manage investments and cash that could be directed based on ESG criteria. Their emphasis on risk management injects sustainability considerations into strategic decisions. And their grasp of data streams and compliance requirements empowers comprehensive, consistent ESG disclosures.

Simply put, treasurers’ reach into ethical, responsible growth is far and deep within modern, complex organizations. As expectations build, their elevated participation is vital to align enterprises with societal needs. Especially as governments agree on bolder emission goals and investors intensify targeted ESG mandates.

Yet despite the immense potential impact, feew corporate treasury teams currently implement sustainability considerations across relevant elements of their role. Most remain stuck playing catch up amid greater organizational emphasis on environment and social governance during 2022.

Resource and Data Constraints Prevent Progress

What explains this lag when treasury seemingly has so much capacity to drive positive ESG change? The reality is many treasurers fight just to manage extensive daily responsibilities, never mind spearheading opaque sustainable finance initiatives. Some lack the specialized skillsets or sustainability fluency to confidently lead. Others note ESG carries compliance risk that warrants careful assessment before engagement.

However, the most consistent treasury pain points center on resources constraints, data deficiencies, and organizational misalignments preventing teams from realizing their ESG potential:

1. Overburdened Teams Struggle to Incorporate ESG – Corporate treasurers grapple with wide-ranging cash, risk, and liquidity management priorities daily. Thin teams have little bandwidth to adequately track sustainability metrics or program climate change mitigation efforts without more headcount. Difficult for thinly spread staff to incorporate yet another complex priority meaningfully.
2. Fragmented Access and Visibility into ESG Data – Necessary emissions, diversity, ethical sourcing and other ESG data reside across various enterprise silos. Treasury teams would face major uphill battle managing and reporting firm-wide sustainability footprint without centralized information pools.
3. Misaligned Incentives and Performance Metrics – Corporate treasurer success still heavily predicated on traditional metrics like working capital efficiency, bad debt reduction etc. Hard to focus teams on evolving amorphous ESG concerns without incentives tied to tangible sustainability results and behaviors.

Bridging the ESG Ambition Gap

Still, treasurers keen to drive progress enjoy clear avenues to address resource deficiencies, data access issues, and incentive misalignments that hinder their current ESG participation. Those able to make inroads position themselves for internal influence, professional development, and competitive differentiation.

Treasurers prioritizing substantive ESG inroads can consider following actions in 2024:

1. Secure dedicated team resources expressly to spearhead ESG financial initiatives as part of multi-year growth plan
2. Actively train staff on Environmental, Social and Governance issues through internal workshops, external certifications etc.
3. Implement financial systems centralizing real-time ESG data enterprise-wide to power intelligent decision-making and reporting transparency
4. Set ESG Key Performance Indicators tied to sustainable lending volume, investment portfolio ESG ratings, emission reduction financing etc.
5. Develop formal partnership approach with Corporate Sustainability teams to break down silos and align priorities to mutual goals.

Through strategic allocation of resources, skill development, data consolidation, shared accountability and aligned incentives, corporate treasurers can pivot from ESG blockers towards ESG drivers within their organizations in 2024.

The organizational and societal opportunities outweigh inertia. Solutions exist for motivated teams to bridge the ambition gap. Climate resilience, ethical integrity and economic prosperity need not be mutually exclusive through proactive financial stewardship this decade. Corporate treasurers able and willing can play instrumental role creating that sustainable future.