DUBAI — As public and investor focus on environmental, social, and governance (ESG) issues sharpens, it’s evident that a successful Chief Financial Officer (CFO) is responsible for far more than just strong earnings. Imtiaz Mahtab, Founding Partner of Hydeal, emphasizes that today’s emphasis is on the “triple bottom line” of people, planet, and profit, not just earnings. Although some CFOs have yet to embrace this, ESG considerations are quickly becoming integral to their roles, as well as to CEOs’.
This shift is driven by investor demands for robust ESG strategies. Despite claims from nearly all large organizations about prioritizing sustainability, ESG initiatives often remain sporadic and misaligned with business objectives, leading to increasing skepticism. CFOs can lend their inherent rigor to these efforts.
The integration of ESG into finance, spanning sectors from energy to banking, reflects broader expectations for CFOs to transition from support roles to business drivers, with a growing emphasis on “green financing.”
Banks, investors, and increasingly consumers now prioritize sustainability, favoring brands committed to environmental responsibility. Transparent reporting is essential for understanding a company’s environmental impact and its ESG progress, including emissions, carbon footprint reduction, energy use, labor practices, ethical business conduct, workplace health and safety, staff turnover, and community impact. Today’s CFOs must have a deep understanding of all business aspects, its societal impact, and vice versa.
In-house research indicates that 89% of CFOs view communication as the most crucial skill for finance leaders, beyond job-specific skills. However, only 51% believe these skills are common in their field. Other essential leadership qualities include a clear sense of purpose, adaptability, empathy, and resilience.
Alongside the CEO, the CFO plays a crucial role in promoting ESG culture and sustainable practices within the company. This often requires adopting a more open-minded approach and a willingness to learn a significant amount of new information.
“It’s about shifting from a ‘know it all’ mindset to a ‘learn it all’ mindset,” says Cynthia Wehbe, CFO of Pizza Hut Middle East, Turkey, and Africa. She emphasizes the importance of recognizing the value of ESG initiatives beyond their immediate financial impact. ‘Green’ investments, though usually costlier than less eco-friendly options, can drive positive change when a CFO focuses on long-term value over short-term profits. “The difference between a good and a bad CFO is their focus on value, which leads to sustainable profits rather than short-term gains.”
Mahtab highlights that companies thriving in today’s market integrate sustainability into their core business strategies. “Investing in sustainable solutions to customer problems is crucial, along with a commitment to continuous improvement and innovation. We reinvest at least 10% of our profit into enhancing our products and systems.”
He also notes the importance of detailed and frequent updates on sustainability progress, as achievements may not always be immediately visible.
Dubai-based Sameer Tonapi, Head of Global Services Operations Finance at GE Vernova, suggests that understanding an organization’s ESG priorities requires firsthand experience with operational teams. This engagement fosters a deeper awareness of both internal and external challenges.
“The CFO should not only be seen as a finance gatekeeper but as an executive deeply versed in the business’s needs,” he states.
This blend of financial acumen and business insight is key to adding value and making decisions that promote the organization’s financial well-being and long-term stability. To offer effective ESG guidance, Tonapi recommends gaining diverse cross-sector and international experience early in one’s career.
In reality, the CFO’s role as an ESG guardian and promoter varies significantly across organizations. CFOs with limited ESG experience should deepen their understanding by connecting with different business areas to see how sustainability affects each function and by engaging with investors on the topic. This approach clarifies the business’s specific ESG expectations, enabling CFOs to influence and even lead these efforts. Moreover, CFOs have a growing responsibility to monitor their competitors’ ESG initiatives, both to identify competitive advantages and to prevent falling behind.
Although ESG has become a buzzword, taking meaningful action based on its principles is essential for sustaining a successful business. The more detailed the insight a CFO can provide in this area, the better the future looks for their organization and themselves.
Suvi Kitchloo is principal in Heidrick & Struggles’ Dubai office and a member of the global Industrial Practice.
The opinions expressed are those of the author and may not reflect the editorial policy or an official position held by TRENDS.