Why Sustainability Matters To Finance Leaders In Growing Companies

By Neil Krefsky, Head of Finance and Risk Product Marketing, SAP

Finance leaders from growing companies have a keen sense of how risks, opportunities, and investments affect the bottom line. And this trait is becoming increasing evident as they focus more on sustainability as a top priority.

According to an SAP Insights survey of midsize companies, one-third of finance leaders listed “increasing sustainability in products and services” as a revenue driver on par with increasing sales to existing customers, creating new products and services, and improving customer experiences. When considering how to improve business efficiency, making “operational processes more sustainable” ranked second.

This evolving perspective represents a dramatic shift in finance operations. While sustainability initiatives were once solely the responsibility of operations managers, finance organizations are now deliberately making decisions and delivering outcomes that help satisfy intensifying environmental, social, and governance (ESG) challenges.

Modernizing finance with an eye on sustainability

Finance leaders have long demonstrated the ability to stimulate and drive change, not only within their own function but also across the entire business. Using the power of the purse strings and integrated data, they have prioritized initiatives and investments that add value to the company.

The SAP Insights research indicates that finance organizations are reimagining that capability to target areas for ESG improvement, starting with adjustments that significantly impact the company. One major trend is adopting intelligent technologies that increase productivity, efficiency, and speed to keep the business profitable while moving forward faster. Such digital investments include solutions and platforms for process automation, collaboration, cloud computing, business intelligence dashboards, and application development.

These findings also reveal a crucial transformation within the finance organization. While quantifying the financial value created with digital investments, they can proactively resolve potential sustainability risks and conflicts within the business strategy.

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Uniting commonly siloed data into one company-wide source helps improve alignment and understanding of the impact of every decision, especially those related to spending and compliance. These insights can help pinpoint the business’s most-pressing ESG issues and quantify the long-term impact of new equipment, mergers and acquisitions, supplier partnerships, and other finance-related investments.

Then, and only then, organizations finance and non-finance can avoid developing inherently inconsistent strategies that raise doubts about their commitment to sustainability as they grow. Finance organizations can also leverage their digital investments to help ensure the relevance, compliance, and accuracy of their sustainability disclosures and other reports provided to employees, customers, suppliers, partners, auditors, and other stakeholders.

At a minimum, they can prove that their company understands the urgency around ESG issues and complies fully with increasing complex sustainability mandates to avoid hefty fines. But they can go a step further by identifying, addressing, and measuring all risks, recommending the right solutions, and advancing sustainability topics that are meaningful to long-term business interests and growth.

Building a foundation for a greener, high-growth future

Over the past two years, virtually every organization has gained new insights about their business when responding to sudden shifts in customer demand, competitive pressure, economic forces, and business strategies.

For finance leaders, those same lessons inspired an expansion of traditional strategies to shift their resources and mindshare toward sustainability. With a combination of technology and process modernization, they are turning ESG challenges into opportunities to fuel greater spending control, operational efficiency, and regulatory compliance all while resetting their business for ongoing growth.

Discover how finance leaders from midsize companies are rethinking organizational priorities, opportunities, and risks in the SAP Insights research study “The Transformation Mindset: Expanding Priorities for Finance Leaders of Growing Companies.”