How can you persuade your finance department to invest in finding your company's business case for sustainability? It's not easy, but it can be done.
Sustainability professionals often find themselves caught in a vicious circle: They need resources to investigate the business case and the accountants won't release resources without a business case.
In a previous post I gave Six Lessons on Finding the Business Case for Sustainability Initiatives. This blog sets out how to take your finance managers step-by-step to the point where they understand the financial rewards in sustainability and are willing to support big projects, based on our experience at Forum for the Future helping companies escape from this trap.
1. View the business case as part of a wider change program. That means knowing who are the internal stakeholders you need to influence, especially in the finance function. Is there someone who could be a champion, or at least a curious friend, among the accountants?
Also, it is a good idea to have a core message that frames the search for your business case, for instance: "Sustainability is an opportunity as well as a risk to be managed."
2. Go to the finance department with a safe pilot. Unless someone in your C-suite has an epiphany, you will need to start with a small and safe pilot. Identify something -- an initiative, project, decision or process -- where the business case can be investigated without requiring too much resource. Whatever you investigate must also be relatively unimportant, so you don't trigger defense routines. I'll return to the technical part of the pilot in my next blog.
3. Use the pilot to build credibility and awareness. Wherever possible get the finance department themselves to investigate the business case. They will find their own results the most credible. You can use the pilot to learn how to speak their accounting language better, and to help them them understand sustainability too.
In our experience, rather paradoxically, it is not vital that there is a great business case for whatever you investigate. More important is demonstrating, first, that you are searching for how sustainability can create profits, and, second, that there probably is a business case for the company, even if not with what was piloted.
4. Keep creating a "permission and results" cycle. Hopefully, by this stage you have some credibility and interest from the finance function. You can use that to address larger and more important areas. How can you bring sustainability into capital expenditure decisions? Do sustainability-related risks get valued correctly in the risk register? Do people in strategy planning understand the size of sustainability-related opportunities?
Throughout the process, continue to build permission to investigate more of the business case, and use the results to get the next round of permission. Along the way you will want to build the capacity of individuals to understand and act on sustainability.
Of course, in an ideal world you would start with the big and important items listed at stage four, not least because they often have a more compelling business case. But in practice, you need support from the finance department, and you can only get that permission by starting small.
There is one final piece in the puzzle: How do you actually investigate the business case for a sustainability-related initiative, project, decision or process? That will be the subject of my next post.
This blog was first published on GreenBiz.com.
This is the second of three blogs looking at the business case for sustainability. The other blogs are: Six Key Lessons on Mapping Out a Business Case for Sustainability Initiatives and Investigating the business case for sustainability: seven steps that could make you millions
Comments
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The language of business?
I’d like to take issue with your assertion that accounting is the only language of business, and that Finance call the shots. This will be true in a finance-driven organisation. However, in many organisations, a financial case will be a fallback when a project fails to meet the business’s strategic position in other respects.
For example, in a technology-driven organisation, development and capture of innovation is the key to future growth and success. A proposal to turn off computers at night may not thrill anyone but the Finance Director, and so will get little more than lip service from senior management. On the other hand, development of proprietary hardware or software that manages energy consumption in some aspect of the facilities may be a winner, even if the cost of development would eliminate most of the savings. If senior management in a technology-driven company are persuaded that this innovation could be commercialised, they may back it strongly, not because of arguments from Finance but because of the strategic fit.
In a market-driven company, the key issue will be demand, and whether the proposal helps the company improve its position in the marketplace. This type of company increases its shareholder value by exploiting the current and near-future market. So if your innovation is nothing to do with your market, you will have to fall back on a cost savings proposal. But suppose your company is focussing on a “green” image drive – your proposal could generate broad senior management support, even if the cost savings are negligible and the financial benefits of the image are difficult to quantify.
Understanding how your proposal fits with the organisation’s overall strategy is key to winning strong and sustained support for sustainability projects at the highest level. Speak the language of the CEO – if your proposal really does fit with your firm’s strategy, then this is your most likely route to success.