How can companies make sustainability part and parcel of their financial decision-making? HRH The Prince of Wales has established a new leadership network to help find the answer. Andrew Bonfield, National Grid’s Finance Director, explains why he’s involved and what he hopes to achieve.
Finding the right balance
"We will be able to more accurately predict the consequences of the decisions we make, and therefore take a more considered, well-rounded and long-term view of how we should best do business."
Andrew Bonfield, National Grid’s Finance Director
16 – the number of Chief Financial Officers in the leadership network.
Source: The Prince’s Accounting for Sustainability
Today, I’m proud to be one of sixteen Chief Financial Officers who have signed a letter to the Telegraph arguing for greater consideration of environmental and social factors in business strategy. The Chief Financial Officer Leadership Network is supported by The Prince’s Accounting for Sustainability (A4S) Project, an organisation set up by HRH The Prince of Wales to help create a more sustainable economy that delivers long-term benefits for society and the environment.
The network is a welcome move. Since the National Grid Sustainability Summit last year, I’ve been enthused by the lessons that emerged from the event and how they’ve gained traction internally and externally. It’s one of the reasons why I decided our participation in the network is vital, not just for the company but for the whole sustainability agenda. This is an opportunity for National Grid to take a leadership role in a defining issue of our times, and to share our expertise at the forefront of sustainable best practice.
As it stands, traditional accounting measures simply do not accurately reflect the cost of doing business over the long term. For instance, if we continue to deplete fossil fuel reserves now, how best do we calculate the cost of replacing them in the future? What are the real financial implications of a decarbonised economy? And how can we build such sustainability metrics into our day-to-day financial reporting systems?
These are the questions facing myself and my counterparts in the leadership network. Together with chief financial officers from the likes of Unilever, Sainsbury’s and Marks & Spencer, I’ll be working in the coming months to identify how senior business leaders can make better and more responsible financial decisions.
That’s not to say our work alone will create a more sustainable economy. But what it does mean is that we will be able to more accurately predict the consequences of the decisions we make, and therefore take a more considered, well-rounded and long-term view of how we should best do business.
Education and engagement
Many of those financial officers in the network represent very competitive industries and lead companies under huge pressure to deliver quality at the right cost in the short term. To make compromises in these areas in the name of sustainable practice will inevitably invite close scrutiny from investors and, in the case of National Grid, regulators.
So the problem we face in the network is ultimately one of education and engagement. Sustainability is about trade-offs: sacrificing things now for the benefit of future generations. That’s a hard argument to push and it won’t be won overnight. Accounting practices and businesses attitudes will not change instantly.
Which means it is the responsibility of myself and the rest of the network to show leadership on this issue, framing the debate in the right way so we can educate stakeholders and persuade them not to look at their individual circumstances in isolation. Sustainability, especially in the energy industry, is hugely complex. Decisions taken out of self-interest in one area can have a myriad of unforeseen consequences elsewhere, so we need to encourage greater awareness of the broader issues at stake.
Fundamentally, today’s launch of the Chief Financial Officer Leadership Network is about the prosperity of future generations, and what the business decisions we take today will mean for our descendents. I’m very excited to be part of this unique network of people.
Together we can learn a great deal from each other. Working as a team, we have a real opportunity to make people in our profession look beyond next quarter’s balance sheets and think about the significance of such numbers in years to come.
The CFO Leadership Network members are:
- Scott Longhurst, Managing Director of Finance & Non Regulated Business, Anglian Water
- Evelyn Bourke, Chief Financial Officer BUPA
- Carol Fairweather, Chief Financial Officer, Burberry Group
- Pierre-Andre Terisse, Chief Financial Officer, Danone
- John Rogers, Chief Financial Officer, J Sainsbury (Co-Chair)
- Rolf-Dieter Schwalb, Chief Financial Officer, Koninklijke DSM NV
- Alan Stewart, Chief Finance Officer, Marks and Spencer
- Andrew Bonfield, Finance Director, National Grid
- Susan Davy, Finance and Regulatory Director, South West Water
- Gregor Alexander, Finance Director, SSE
- Lucinda Bell, Finance Director, The British Land Company
- John Lelliott, Director of Finance and Information Systems, The Crown Estate
- Russ Houlden, Chief Financial Officer, United Utilities
- Jean-Marc Huet Chief Financial Officer, Unilever
- Richard Mayfield, Chief Financial Officer, Walmart EMEA
- Liz Barber, Group Director of Finance and Regulation, Yorkshire Water