ESG in Finance

Put Finance at the forefront of your ESG transition to build trust and drive sustainable value

In recent years, businesses have been sent a clear message, especially by external stakeholders: conduct business responsibly. Stakeholders have expanded beyond shareholders to include regulators, investors, consumers, financiers, insurance carriers, suppliers, employees and the communities they serve. Their expectation is clear: that businesses operate in line with the parameters of sustainable development. The products of today should not become the problems of tomorrow, and businesses should focus equally on long-term impacts and short-term profits.

And while corporate sustainability is receiving increasing attention from regulators, investors and consumers, global non-financial reporting standards and other sustainability regulations are being rapidly developed.

To show that they are transforming their business to meet these expectations and regulations, companies are entering a new era of environmental, social and governance (ESG) transparency and accountability.  CFOs have a key role to play in this endeavour.

Finance function — A key business partner in the ESG transition

As ESG becomes integrated into the whole business, every department must be part of the ESG transformation. Finance is uniquely positioned. As ESG becomes more and more integrated into the business, and as companies integrate financial and sustainability ambitions, the Finance function will increasingly be a key strategic partner to the business.

Finance professionals have unique skills and capabilities. They can help companies better manage their data quality, implement disciplined processes and controls and integrate them with performance management, and liaise with auditors to provide assurance. And they bring a unique commercial perspective on how the business operates.

Integrating sustainability into the Finance function

Finance functions have already begun their transition to sustainability enablement, for example by addressing historical sustainability reporting requirements. Sustainability issues have moved up the business agenda and boards are now setting clearer strategies on sustainability for the whole organisation.

The integration of ESG into the Finance function is happening at different rates, usually linked to the company’s overall maturity in ESG integration into the business. 

The graphic below shows the level of different functions as ESG maturity increases.

ESG finance transformation adoption level graph

Common challenges to prepare for ESG in Finance

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Case study: integrating environmental impact into financial planning & analysis (FP&A)

Background and challenges: A global clothing brand that manufactures a broad range of T-shirts wanted to monitor the full expected environmental impact of each of its T-shirt production runs.

Solution: To help this client monitor their environmental impact, PwC started by quantifying the impact of different choices across the entire value chain in terms of raw materials, distribution channels and store consumption. Subsequently, PwC generated a dashboard powered by Anaplan (a cloud-based business planning software) to generate insights into the environmental impact throughout the value chain. Outputs can be used for scenario analysis, target setting, measuring progress against strategy, and for internal and external reporting. This resulted in enhanced insights and allowed for better decision making with regards to sourcing and product mix. PwC integrated this dashboard into the entire FP&A process. 

This project enabled the client to embed ESG factors into their business decision-making process and run scenario analyses based on ESG data.

Partner with PwC on your ESG journey

At PwC, our suite of credentials, expertise and offerings pertaining to an ESG-infused Finance transformation continues to grow. We are able to support your company every step of the way, covering: 

  • maturity and baselining
  • strategy development
  • transformation planning and roadmapping
  • implementation (design, develop and implement)
  • operationalising and delivering sustained outcomes.
Esg finance two professionals talking

Sustainability in the Finance function

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Kristien Bruggeman

Kristien Bruggeman

Senior Manager, PwC Belgium

Tel: +32 491 16 78 04