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There are several areas for CFOs and finance leaders that will likely be important as the finance function continues to evolve and provide the trusted and enhanced reporting insights their business requires.¹ The CFO needs to ensure there is a strong connection between financial and nonfinancial reporting, and that ESG risks and opportunities are reflected across the balance sheet, income statement and cash flow statement. CFOs and finance leaders should be proactive and work across business units to understand ESG risks under different scenarios of the future.
What are the top 3 things the CFO should activate immediately?
What are the CFO’s key considerations with respect to ESG risk?
Resolve the ESG reporting gap with investors
CFOs and finance leaders can play an instrumental role in helping to meet ESG requirements from investors. Transition risks of policies, technology impact, legal framework – quantify financial impact and report to shareholders.
Stay abreast on developments from key regulators such as the International Financial Reporting Standards (IFRS) Foundation, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB).
Take the lead in advancing the integration of ESG risks into
the overall enterprise risk management program
ESG is a strategic risk for organizations that requires immediate attention from your Enterprise Risk Management function. They need to review the company’s risk universe for completeness of ESG-specific risks and assess your monitoring and reporting processes as they can help enhance your operational risk response.
Related case study
Large health insurance provider:
▉ A $75b health insurance provider needed to determine how changes in the economy resulting from the transition to a zero-carbon future would impact sectors, markets and the client’s current and future customer base. The EY organization performed a climate change scenario analysis, modeled economic impacts through 2050, and developed an assessment of potential physical risks posts to different economic sectors under a range of climate scenarios.
