Climate strategies need to be supported by clear strategies and data. Finance leaders will play a leading role in creating the necessary plans and delivering sustainability reports.
The climate summit ended with several commitments and announcements targeting climate action and requiring significant implications for businesses and organisations. Countries agreed to adopt the Glasgow Climate Pact involving putting an end to fossil-fuel subsidies, phasing out coal, implementing measures for carbon markets and supporting climate efforts in poorer nations.
The Glasgow Financial Alliance for Net Zero (GFANZ), a group of 450 financial institutions within the region of $130 trillion of assets, has committed to financing a transition towards a net-zero economy.
COP26 provided an early insight for businesses into the future and how regulations are transforming. For finance professionals working with businesses with climate targets, the next big step is creating a clear and comprehensive strategy. It’s one thing to pledge a goal and another to deliver on them with consistent actions. Partnerships and collaboration between the public and private sectors are critical to meeting climate commitments. Businesses may also have to partner with other organisations across multiple industries to reach their net-zero targets.
Following a strategy, businesses need to deliver on what actions should be taken and report on their progress. For the finance industry, one of the most developments was the IFRS Foundation announcement of developing the International Sustainability Standards Board (ISSB) and the IFRS Foundation consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF).
The new sustainability board provides a path for sustainability reporting to become a common language that helps businesses deliver a consistent and connected strategy that drives vital decisions.
CFOs should start getting data from the source and measuring, managing and reporting on metrics. An important factor in this entire process is training the finance team for the future. Some industry experts believe there aren’t enough finance professionals that exist and understand sustainability reporting. Goals have to be reinforced by systems, processes and data. Businesses that utilise this data and information will create clear communication with investors and ultimately deliver greater access to capital.
Businesses recognition of the climate crisis is an opportunity for finance professionals to take more control of business decisions. It is an opportunity for finance professionals to take a leading position rather than being led. Finance people need to recognise that individuals are emphasizing individual responsibility towards the environment and the community.