Sustainability as a Financial Priority

Harvard Law School Forum on Corporate Governance just published the top 10 corporate sustainability priorities for the back half of 2025 (via The Conference Board). A few things stood out to me: 1/ ESG must be embedded. I’ve said this before (and I may never stop saying it): ESG can’t be siloed off. To be successful, it needs to live inside core business functions. At Atlassian, for example, our Sustainability and Procurement teams partner closely on supplier engagement goals—because that kind of alignment drives real outcomes at scale. 2/ Supply chain transparency is rising. With new due diligence laws and increasing reputational risk, we’re seeing more customer questions about ESG commitments during deal flow. If your sustainability strategy doesn’t include your customers, you’re missing a critical piece. 3/ Climate strategy now influences financial decisions. In FY26, we’ll be preparing for Australia’s ASRS regulation—which goes beyond disclosure, asking companies to demonstrate how climate-related financial risks and opportunities are integrated into business decision-making. (Think: beyond TCFD.) 4/ The regulatory demand is real. We’ve tackled California. Next up: ASRS which will be followed by CSRD and CSDDD. Of course we also know some of the guidelines here will change and new regulations will emerge. The fragmentation makes compliance a moving target—and keeping up requires serious agility and focus. 👉 The takeaway: Sustainability priorities are evolving quickly. The companies making real progress are the ones embedding it across their operations, supply chains, reporting, and decision-making. https://lnkd.in/gGJCy-kT

In our previous discussions, I talked about how the role of CSOs is rapidly changing and they are increasingly seen as a catalyst for enterprise transformation. In this context, CSOs need to speak the language of business and communicate the ROI and bottom-line impact of their work. As ESG factors become increasingly critical for organizations' success, CSOs play a crucial role in enabling CFOs to achieve ESG-led operational efficiencies and build enterprise resilience. Identifying Key Financial Metrics - Recent research indicates that ESG regulations have increased globally by 155% over the past decade. With so many regulations and standards, such as BRSR, SFDR, CSRD, NFRD, the recent SEC Climate Rule, etc. navigating this landscape can be overwhelming. Many companies have announced their net-zero goals, and CSOs can help CFOs calculate the cost of getting there, as well as the benefits. The concept of "carbon pricing" is gaining momentum, according to The World Bank, about 40 countries are already using a form of carbon pricing. As carbon price becomes a standard across major economies, CFOs will look to partner with CSOs to get ahead of their net-zero goals and potentially profit, thus making carbon a P&L issue. Risk Management - Typically, Chief Risk Officers (CROs) report to the CFO. CSOs can work with the CRO in risk and compliance management. The US SEC Climate rule has just been finalized and the proposed rule would require publicly listed companies to disclose their GHG emissions. This means ESG/sustainability/climate risks must be assessed/quantified and included in ERM (Enterprise Risk Management). Additionally, social & governance risks are becoming increasingly essential in our rapidly evolving business environment and impacting how all stakeholders perceive a company. The CRO has to extend its traditional risk universe to include the impact of sustainability performance on revenues. We recently signed up a client whose primary goal was to improve their EcoVadis rating based on a couple of their clients mandating it. This is also an excellent example of converting risk into an opportunity by achieving high ratings and potentially winning more business. Strengthening Investor Relations – It is a well-established fact that Investors continue to use an ESG lens to reduce risks and improve returns. The Head of Investor Relations has recognized the need to collaborate with CSOs to provide Investors and Analysts with an ESG performance update along with quarterly financial results. The same transparency around, strategy, goals & targets, roadmap, and KPIs can be shared proactively as part of engaging with third-party rating agencies and thus avoiding inaccuracies from publicly available sources of data. By working collaboratively, #CSOs and #CFOs can drive profitability and organizational resilience by aligning the company's sustainability initiatives with its financial objectives.  #NetZero #ESG #Sustainability #Collaboration

ESG: The key to unlocking your company's full potential 🔑   In my recent article for the CAIA Association, (link to the article: bit.ly/3ZwIR4A), I argued that prioritizing #ESG is essential for corporate long-term success. In this post, I take a deeper look into the business case for ESG and provide insights on how to communicate effectively about ESG, based on a McKinsey & Company research report that sheds light on what investors want to know about corporate #sustainability programs. Highlights of the McKinsey study:   WHAT INVESTORS WANT TO KNOW   Investors want to understand how your company's sustainability initiatives create value. They want to know how you are addressing market changes, how your sustainability strategy aligns with your overall strategy, and how you are creating value for all stakeholders. They also want to see evidence of your success in achieving your sustainability goals, and to understand the risks and opportunities associated with your sustainability strategy.   THE INVESTORS’ “WANT TO KNOW” IS STRONG 💪 85% of chief investment officers state that ESG is an important factor in their investment decisions.   💪💪 60% of respondents review their overall portfolio for ESG considerations, and about 80% assess individual company positions in the context of how ESG affects forecasted cash flows.   💪💪💪 A significant majority are prepared to pay a 💲premium for companies that show a clear link between their ESG efforts and financial performance.   Obviously, companies that prioritize sustainability are well-positioned to attract capital and grow their businesses. sustainability can be a source of competitive advantage for businesses.   HOW TO COMMUNICATE EFFECTIVELY WITH INVESTORS   To communicate effectively with investors about sustainability, it is important to know your audience. Intrinsic investors, who focus on long-term value creation, are particularly interested in sustainability. When communicating with investors about sustainability, be sure to:   ✔️ Clearly articulate how your ESG initiatives tie to value creation.   ✔️ Address market changes, strategy, value creation, evidence of success, and risks/opportunities.   ✔️ Be clear, granular, and specific in your communication.   THE BENEFITS OF CLEAR SUSTAINABILITY COMMUNICATION   Clear communication about sustainability and how it integrates into your business to create shareholder value can help you to attract and retain discerning investors. It can also help you to improve your company's reputation and attract top talent.   CONCLUSION 📈   Prioritizing sustainability is essential for corporate long-term success. Clearly communicating your sustainability strategy and its link to financial performance to investors unlocks the full potential of your company's sustainability efforts. #sustainability #environment #investing #climatechange #riskmanagement #opportunity   https://mck.co/3EXQRSl