Summary Transitioning to sustainable finance | Deloitte Insights www2.deloitte.com
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CFOs and finance functions are crucial in incorporating sustainability into company strategies as part of the transition to sustainable finance.
Slides
Slide Presentation (10 slides)
Key Points
- ESG issues are now seen as material risks and opportunities for companies
- Investors and lenders expect companies to have a positive social and environmental impact in addition to strong financial performance
- CFOs have a role to play in promoting the social and ecological transition of their companies
- Sustainability is increasingly relevant to the finance function as ESG considerations shape investor relations and the cost of capital
- The COVID-19 pandemic has accelerated the rise of sustainable finance
- Companies need to integrate sustainability into their strategy and engage with investors on ESG issues
- ESG considerations go beyond environmental issues, with governance and social factors also playing a vital role
- Finance departments have a key role to play in supporting the transition to sustainability
Summaries
18 word summary
CFOs and finance functions play a vital role in transitioning to sustainable finance, integrating sustainability into company strategies.
60 word summary
This article emphasizes the importance of transitioning to sustainable finance and the role of CFOs and finance functions in driving this transition. ESG issues are now seen as significant risks and opportunities for companies, with investors expecting positive social and environmental impact. COVID-19 has accelerated sustainable finance, and companies must integrate sustainability into their strategy to access capital markets effectively.
162 word summary
This article highlights the importance of transitioning to sustainable finance and the role of CFOs and finance functions in promoting this transition. Environmental, social, and governance (ESG) issues are now considered significant risks and opportunities for companies, and investors expect companies to have a positive social and environmental impact. Many companies, however, are not effectively engaging with investors on ESG issues. ESG performance is believed to affect the cost of capital, and third-party ESG ratings are expected to gain significance for investors and lenders. The COVID-19 pandemic has accelerated the rise of sustainable finance, with sustainable debt issuance reaching record levels. Companies must integrate sustainability into their strategy and engage with investors on ESG issues to improve data and ratings. Finance departments have a crucial role in supporting the transition to sustainability by connecting with stakeholders, transforming data capabilities, and integrating sustainability into corporate communications. Embracing sustainability allows companies to access capital markets more effectively and contribute to a more sustainable future.
419 word summary
This article from Deloitte Insights emphasizes the importance of transitioning to sustainable finance. Environmental, social, and governance (ESG) issues are now considered significant risks and opportunities for companies. Investors and lenders are increasingly expecting companies to have a positive social and environmental impact in addition to financial performance. However, many companies are not effectively engaging with investors on ESG issues. CFOs have a role in promoting the social and ecological transition of their companies by using new financing tools and supporting sustainability impact projects. Finance functions are also responsible for ensuring the relevance, compliance, and accuracy of sustainability information provided to external stakeholders.
Sustainability is becoming more relevant to the finance function as ESG considerations shape investor relations and the cost of capital. ESG performance is believed to affect the cost of capital, particularly for publicly listed companies. Private companies also anticipate a future impact on their cost of capital. Third-party ESG ratings are expected to gain significance for investors and lenders.
The COVID-19 pandemic has accelerated the rise of sustainable finance, with investors showing continued interest in ESG investments. Sustainable debt issuance has reached record levels, and ESG funds are outperforming non-ESG funds. Governments are also prioritizing sustainability in their economic recovery packages.
Companies must integrate sustainability into their strategy and engage with investors on ESG issues. While sustainability is now a strategic issue for many companies, there is room for improvement in communicating long-term business performance through ESG indicators and understanding the disclosures that matter most to investors. Engaging with investors on ESG issues can lead to better data and improved ratings.
ESG considerations encompass governance and social factors, in addition to environmental issues. Governance issues have the most significant impact on rating actions for private-sector issuers, while social considerations more frequently result in negative rating actions than environmental issues. Companies should periodically evaluate the materiality of sustainability issues and enhance disclosures accordingly.
Finance departments have a crucial role in supporting the transition to sustainability. They need to connect with relevant stakeholders, assess and transform data capabilities, and adapt to digital non-financial information. Sustainability should be integrated into corporate communications to create a strategic, investor-relevant narrative.
Overall, CFOs and finance functions play a vital role in financing a sustainable transition. They can promote the social and ecological transition of their companies, ensure the relevance and accuracy of sustainability information, and guide financial and non-financial performance using new tools and solutions. Embracing sustainability allows companies to access capital markets more effectively and contribute to a more sustainable future.
518 word summary
Deloitte Insights and its research centers provide proprietary research to help organizations take action on their aspirations. The focus of this article is on transitioning to sustainable finance. Environmental, social, and governance (ESG) issues are now seen as material risks and opportunities for companies. Financial markets are changing as investors and lenders expect companies to have a positive social and environmental impact in addition to strong financial performance. However, many companies are missing opportunities to engage with investors effectively on ESG issues. CFOs have a role to play in promoting the social and ecological transition of their companies by using new financing tools and supporting sustainability impact projects. Finance functions also play a key role in ensuring the relevance, compliance, and accuracy of sustainability information provided to external stakeholders. CFOs need to steer financial and non-financial performance using new tools and solutions, internal dashboards, and performance criteria.
Sustainability is increasingly relevant to the finance function as ESG considerations shape investor relations and the cost of capital. ESG performance is believed to have an impact on the cost of capital, with publicly listed companies more likely to see a high or moderate impact compared to family-owned or closely held companies. While ESG performance may be less relevant for private companies' cost of capital, CFOs expect it to have a moderate or high impact in the future. Third-party ESG ratings are also expected to have a significant increase in relevance for investors and lenders.
The COVID-19 pandemic has accelerated the rise of sustainable finance, with investors showing continued interest in ESG investments. Sustainable debt issuance has reached record levels, and ESG funds are outperforming their non-ESG counterparts. Governments are also making sustainability central to their economic recovery packages.
Companies need to integrate sustainability into their strategy and engage with investors on ESG issues. While sustainability is now a strategic issue for many companies, there is room for improvement in communicating the long-term performance of the business through ESG indicators and understanding the disclosures that matter most to investors. Engaging with investors on ESG issues can lead to better data and improved ratings.
ESG considerations go beyond environmental issues, with governance and social factors also playing a vital role. Governance issues were the most widely mentioned material consideration affecting rating actions for private-sector issuers, and social considerations led to negative rating actions more often than environmental issues. Companies need to periodically evaluate the materiality of sustainability issues and improve disclosures accordingly.
Finance departments have a key role to play in supporting the transition to sustainability. They need to connect with all relevant stakeholders, assess and transform data capabilities, and adapt to digital non-financial information. Sustainability should be integrated into corporate communications to create a strategic, investor-relevant narrative.
Overall, CFOs and finance functions have an important role to play in financing a sustainable transition. They can promote the social and ecological transition of their companies, ensure the relevance and accuracy of sustainability information, and steer financial and non-financial performance using new tools and solutions. By embracing sustainability, companies can gain better access to capital markets and contribute to a more sustainable future.