Best Ways to Practice Sustainable Finance in Corporate Processes

Conversations and initiatives surrounding sustainability are becoming more and more apparent.

Individuals are taking action to live a more eco-friendly life, and so are corporations. Companies worldwide are committing to making their operations more sustainable and making significant contributions to bettering the health of our planet.

A relatively new approach corporations take is through their financial divisions with sustainable finance. A simple definition of sustainable finance is financial decisions that account for the health of our environment.

Business owners and CFOs can use these actionable tips to integrate sustainable finance into their corporate finance processes.

Audit Your Finances

To integrate sustainable finance into your processes, you must first fully understand where your corporate finances are today. Take the time you need to bring your financial team together and thoroughly audit your finances.

Comb through the following to understand the full scope of where your company is financially:

• Cash flows
• Investments
• Profit margins
• Debt
• Assets and liabilities
• Short and long-term financial goals
• Funding
• Taxes
• Projected revenue
• Expenses
• Budgets
• Business credit
• Payroll

In addition to auditing your financial landscape, analyze your current commitment to sustainability.

Analyze Your Current Commitment to Sustainability

Sustainable finance can be broken down into three main pillars:

• Corporate Social Responsibility (CSR)
• Sustainable and Responsible Investing (SRI)
• Environmental, Social, and Governance (ESG)

A corporation practicing sustainable finance engages in CSR activities focused on bettering human and environmental well-being. Those activities and initiatives attract investors willing to support them through SRI. And finally, ESG factors are used to measure the success of CSR and SRI activities to show the impact of sustainable finance.

You’ll want to analyze whether you’re currently engaging in the three-pronged approach to sustainable finance. You’ll also want to explore your existing devotion to sustainability in general. That way, you’ll have a solid starting point for integrating sustainable finance into your corporate processes.

Once you’ve audited your finances and analyzed your current commitment to sustainability, it’s time to put together a detailed sustainable finance plan.

Create a Detailed Sustainable Finance Plan

It’s one thing to talk about practicing sustainable finance. It’s a whole other thing to actually start the integration process and carry it to completion and beyond. The only way to ensure the latter happens is to document a detailed sustainable finance plan.

In other words, write it down and/or make a digital record of what you want to do regarding sustainable finance, why you want to do it, and how you will bring your vision to life.

Your detailed sustainable finance plan should include:

• Your corporation’s sustainability commitments
• Short and long-term sustainability goals
• Potential investment opportunities
• How you’ll maintain a positive financial outlook in the process
• A risk assessment for each potential investment
• Internal teams and external partnerships that will be involved

Also, note that this plan isn’t set in stone. You should continually update and adjust it to ensure you’re evolving when necessary regarding sustainable finance.

With your detailed sustainable finance plan in hand, focus on embedding sustainability in your business processes generally.

Embed Sustainability in Business Processes

It’s easy to make grand gestures and commitments to sustainability, but at some point, you’ll have to back them up and show that you’re genuinely committed to bettering human and environmental wellbeing.

It’s critical to ensure that not just your investments support sustainability but that your business activities do too. Embed sustainability into your business processes.

For example, for e-commerce businesses, it’s important to be aware of the negative impacts the model has on the environment, such as transportation and packaging issues. Fortunately, investing in eco-friendly packaging and more sustainable shipping methods could help you actively reduce unnecessary waste, energy consumption, and digital footprint. You could also commit to only working with sustainable companies and using eco-friendly products throughout your organization.

Bring awareness to sustainability issues as well. Share your corporation’s sustainability commitments with your internal teams and external audiences through internal communications and marketing materials regularly.

As sustainability becomes more entrenched in your corporation’s core, move forward with eco-friendly investments.

Start Small With Eco-Friendly Investments

As mentioned above, a primary part of sustainable finance is investments. As enticing as it is to jump headfirst into significant sustainability investments, it may not be a wise business decision.

Starting small with your sustainability investments is much more practical and less risky. Work with your team to define which investors and investments are most reasonable at this time, considering your current financial outlook, sustainability goals, and team’s capacity. Lean on your CFO, in particular, for guidance in this area.

It’s also essential to invest in tech tools that fuel sustainability.

Invest In Tech Tools That Fuel Sustainability

Technology plays an integral role in a corporation’s overall success. But it can be incredibly impactful in putting sustainable finance into practice.

On the one hand, advanced technology, like cloud software, artificial intelligence tools, and internet of things (IoT) devices, can improve efficiency throughout your corporation, which supports embedding sustainability in your business practices.

On the other hand, making intelligent, sustainability-based decisions about investing in advanced technology is at the crux of sustainable finance. So, you’re tackling two core components of sustainable finance simultaneously.

Make thoughtful decisions about your technology investments to ensure they support sustainable finance and fuel sustainability throughout your company generally.

Conclusion

Practicing sustainable finance in corporate processes requires strategy, patience, and flexibility. But all the effort is worth the advantageous outcomes associated with the successful integration of sustainable finance in your corporate finance processes. Use the tips above to get you started.

By Indiana Lee, BOSS contributor