In 2023, a year marked by global economic uncertainty, the world continues to face challenges such as the pandemic, the war in Ukraine, and climate change. For financial leaders, this is a time that demands courage and action. Julien Gattoni, CFO of the World Economic Forum, believes that in order to achieve the net-zero emissions target by 2030, the private sector—especially Chief Financial Officers (CFOs)—must play a crucial role in this transformation:
“We need to translate a company’s sustainability goals from high-level objectives into concrete financial actions.”
Acknowledging Knowledge Gaps and Seeking External Expertise
Gattoni believes that, in the face of climate change challenges, acknowledging our knowledge gaps and actively seeking external expertise is key. “Financial leaders should ask questions, as this can initiate a process of knowledge influx and foster the generation of substantial impact.” Many CFOs have already begun to consider how to incorporate carbon credits into corporate strategies and explore more effective ways to reduce emissions. He emphasized that CFOs also need to focus on the value of biodiversity and human capital, which are essential factors that cannot be overlooked in a company’s journey toward sustainability.
Under the pressure of climate action, CFOs can no longer simply follow a “less commitment, more delivery” approach to ensure stable financial performance. Gattoni pointed out, “Now, we must be willing to take risks, even if the outcomes may not meet expectations.” As the impacts of climate change intensify, businesses that fail to take proactive measures may face even higher risks. He encourages CFOs to create an environment that allows for experimentation and learning from mistakes, as this will lead to greater success in the pursuit of a sustainable future.
Enhancing Transparency and Accountability Mechanisms
Financial reporting has always been one of the core responsibilities of the CFO, and Gattoni believes that the scope of reporting now needs to expand to include metrics for all stakeholders. “We need to ensure that businesses are accountable for their sustainability commitments and publicly disclose them.” The Measuring Stakeholder Capitalism report, launched by the World Economic Forum in 2020, provided businesses with a set of standards to track their contributions to the Sustainable Development Goals (SDG). He noted that over 121 companies have already integrated these metrics into their mainstream reporting and encouraged more businesses to continue exploring more detailed ways to measure their impact.
Pursuing a Just Transition and Supporting Vulnerable Regions
Gattoni emphasized that the net-zero transformation must take fairness into account, especially for developing countries that have a small climate responsibility but are significantly impacted. He pointed out, “We must ensure that these countries have the necessary resources to participate in the net-zero transformation.” He suggested that CFOs should consider the needs of different regions when measuring success, ensuring that the distribution of resources aligns with social equity principles, particularly when it comes to small and medium-sized enterprises and vulnerable groups.
Gattoni believes that real impact requires a coordinated shift in the market, which must be achieved through collective efforts from the private sector. The “Sustainable Markets Initiative” is a global effort launched by Charles III at the 2020 Davos Annual Meeting, aimed at accelerating the global net-zero transformation through corporate collaboration. He emphasized that “pressure creates talent,” urging CFOs to embrace the challenge and work together to build climate resilience in supply chains and markets, thus achieving mutual growth for both businesses and society.
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