Sustainability LIVE: Net Zero – CFO’s Role in Sustainability

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Emmeline Skelton highlighted the role of finance in the global transition to net zero, addressing the challenges and opportunities for organisations

At Sustainability LIVE: Net Zero 2024, Emmeline Skelton, Head of Sustainability at ACCA, spoke to a packed audience about the vital role finance plays in developing transition plans to achieve net zero.

With sustainability now a priority for many companies, her presentation emphasised that while progress is being made, there’s still much work to be done, especially for small and medium-sized enterprises (SMEs).

The complexity of transition planning

Emmeline opened by addressing the audience of finance professionals, explaining the importance of their role in sustainability.

“When ESG or sustainability issues arise, it often falls within the finance function,” she said. ACCA, with its 250,000 members globally, conducted extensive research to understand how finance departments are driving the transition to a net-zero future. The research revealed that many organisations, particularly SMEs, are unsure how to begin the journey toward reducing emissions.

The challenge, as Emmeline explained, is that transition planning is complex.

At COP26, countries around the world committed to achieving net zero by 2050, but it is up to individual organisations to create detailed plans that will help them reach these targets. While some sectors, such as energy and infrastructure, are leading the way, many other companies are falling behind.

“We found that a majority of members do not have transition plans, and even more worryingly, 70% of those without plans had no intention to start developing them,” Emmeline noted.

The role of finance in developing transition plans

While some larger companies are making strides in their sustainability efforts, the research showed that many businesses, particularly outside North America, are not prioritising emission reduction planning. For those who do have plans, the primary motivation appears to be seizing competitive advantages and enhancing public reputation. Surprisingly, Emmeline noted, “regulation was not the leading driver for companies developing transition plans.”

She went on to emphasise that finance departments are uniquely positioned to take ownership of this process. The finance function’s skills in data collection, financial planning, and scenario modelling make them critical to driving emission reduction strategies. “Good governance is essential,” Emmeline stressed, particularly as companies seek to align their sustainability goals with overall business objectives. However, despite the importance of governance, she revealed that many organisations lack clear accountability for managing ESG initiatives, with no single department taking the lead.

Emmeline Skelton, Head of Sustainability at ACCA

Data challenges and the path forward

A key issue that emerged from the research was the challenge of collecting and managing ESG data. Emmeline pointed out that many finance professionals find themselves responsible for non-financial data, which often comes from various departments within the organisation. “Good data matters,” she said, but admitted that the quality of non-financial data is often poor and that ESG data standards are constantly evolving.

Emmeline drew a comparison to the early days of Sarbanes-Oxley, a major regulatory reform in the financial world, to illustrate how organisations are struggling to develop the internal controls necessary for managing ESG data. She noted that 77% of respondents in the survey are beginning to address this by developing internal controls for their emission plans, but acknowledged that smaller companies face significant challenges due to limited resources.

Despite the obstacles, Emmeline remained hopeful. She highlighted the role of continuous learning within the finance profession and encouraged professionals to embrace ESG as part of their ongoing development. “The finance team has the skills and knowledge to start on this journey,” she said, calling for finance leaders to act as connectors across the organisation to align efforts and drive success.

Building the business case for sustainability

Emmeline wrapped up her presentation by discussing the business case for sustainability. Transitioning to a lower-emission economy offers long-term value creation and competitive advantages for companies that take it seriously. She cited that 41% of respondents in AK’s survey viewed the transformation as an opportunity to review business models and position themselves for future success.

However, she also warned that time is running out. “The world is facing a climate emergency, and the need for transition planning is urgent,” she said, emphasising that while regulation is coming, it should not be the only reason companies act.

Finance departments have a crucial role to play in making sure organisations don’t just set ambitious goals but also have a clear plan for how to achieve them.

As Emmeline concluded her talk, she urged finance professionals to step up and lead the charge. “You are in the best position to act as connectors and facilitators in this transition,” she said, encouraging the audience to take ownership of sustainability within their companies and start developing robust transition plans.

At Sustainability LIVE: Net Zero, Emmeline Skelton’s insights made it clear that the journey to net zero will require more than just ambition—it will require practical, data-driven strategies, with finance at the helm.

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