About Sustainability

Loving Controlling - Chapter 7: Sustainability Financial Controller, my (your) future role

  • Published onDecember 22, 2017
Juan Jose Piedra Galan

Juan Jose Piedra Galan

Back in 1996, more than 20 years ago, I was just starting in my professional career. At that time I was a young, full of energy guy working in the logistics department of an automotive organization, before moving to Controlling. That company organized a yearly internal contest in order to collect productivity and sustainable initiatives, and I decided to submit an idea which in summary was based on the use of recycled paper and implementation of paper bins. My idea had a very positive response and actually won the Region Europe award under the sustainability category but, honestly speaking, today I recognize the simplicity of the idea, and the low impact in the environment didn’t deserve such recognition.

Fortunately during this time things have dramatically changed: sustainability is key within the strategy of many multinational companies. Some of them create an individual, yearly sustainability report: The Coca-Cola Company (TCCC), Procter & Gamble (P&G), Apple, General Motors (GM), etc and have own Chief Sustainability Officers (CSOs or equivalent positions) reporting to the CEO, as an evidence of the important position they hold.

I attended recently to a presentation done by Bérangere Magarinos-Ruchat, Global Head of Sustainability at Firmenich, my current company, and I must admit it was really inspiring (it was actually the trigger of this article). In her speech she mentioned the 17 sustainable development goals for 2030 from United Nations, which among others include:

-         No poverty: No people living with less than $1.25 a day,..

-         Zero hunger: Ending all forms of malnutrition, especially in children and vulnerable communities,...

-         Quality education: All girls and boys complete free, equitable and quality primary and secondary education,...

-         Gender equality: End all forms of discrimination and / or violence against all women and girls everywhere,…

-         Clean water and sanitation: Achieve universal and equitable access to safe and affordable drinking water for everyone,…

-         Reduced inequalities: Achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average,…

-         Responsible consumption and production: halve per capita global food waste at the retail and consumer levels and reduce food losses among production and supply chains,…

-         Climate action: Integrate climate change measures into national policies, strategies and planning,...

-         Partnership for the goals: Adopt and implement investment promotion regimes for least development countries,…

These goals are fully aligned with the targets declared in the UN Climate Change Conference held in Paris in December 2015 where the countries specifically committed to:

  • Holding the increase in the global average temperature to well below 2ºC above pre-industrial levels (if possible 1.5 ºC)
  • Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas (GHGs) emissions development, in a manner that does not threaten food productions
  • Making finance flows consistent with a pathway towards low GHGs emissions

All the above goals and commitments linked to sustainability are established at country level, so you may think nothing will change from micro-economical point of view, but I don’t think that will be the case. Companies will be for sure impacted by those targets because two main reasons: first, national laws and regulations connected to sustainability will be adjusted to those UN goals sooner or later and timelines are quit stretched (12 years is a narrow time-frame in a multinational lifetime) so it will be important to make an step ahead as quick as possible. The second cause is a matter of reputation: companies are starting to share their sustainability achievements at the same level of importance as the financial ones, in a kind of race to be positioned on the first place as best sustainable company within their own sector. 

Considering the above context, I strongly believe the position of Sustainability Financial Controller (SFC) will be soon created in large multinational companies. The skills and techniques of finance business partners such make comprehensive reports to analyze data or drive and lead productivity initiatives are fully applicable under the umbrella of sustainability topics. SFCs shall be responsible of, among others, the following tasks:

  • Calculate sNPV (sustainability NPV) and sPayback (sustainability Payback) using comparable drivers such CO2e (CO2 equivalent) or CO2/kg produced. In these calculations it will be necessary to use an equivalent of a cost of capital for the financial ones, that could be based on the percentage of temperature increase provided by international environmental organizations.
  • Support right prioritization of alternatives to reduce GHGs – Scope 3 (emissions that are a consequence of the operations of an organization, but are not directly owned or controlled by the organization) including employee commuting, business travel, third-party distribution and logistics, production of purchased goods
  • Lead productivity initiatives to improve waste efficiency rates, including fees to offset carbon footprint e.g. via carbonfund.org


I really hope this vision will come true. And I expect that in 2030 the sustainability financial controller will be a standard financial role to apply to in many companies. Today I see obsolete the idea I had 20 years ago on implementing recycled paper in the office so, hopefully in the next 10 years, this article will be also considered obsolete.


Loving Controlling' is a set of articles based of finance topics with a main goal: shake your brains. Juan Jose Piedra is a finance controller, Star Trek follower, Real Madrid supporter, Mary J. Blige fan, flawed writer and above all a proud father

Nel Def 2018 i 12 indicatori di benessere equo e sostenibile

Selezionati i 12 indicatori tratti dal contesto del BES che saranno inclusi nell’esercizio di simulazione di impatto delle politicheGrazie all’introduzione degli indicatori di benessere equo e sostenibile nel ciclo di bilancio, l’Italia è il primo e a oggi unico paese dell’Unione Europea e del G7 ad avere introdotto nel ciclo di programmazione e disegno delle politiche pubbliche l’uso degli indicatori di benessere

1. Reddito medio disponibile aggiustato pro capite;

2. Indice di diseguaglianza del reddito disponibile;

3. Indice di povertà assoluta;

4. Speranza di vita in buona salute alla nascita;

5 Eccesso di peso;

6. Uscita precoce dal sistema di istruzione e formazione;

7. Tasso di mancata partecipazione al lavoro;

8. Rapporto tra tasso di occupazione delle donne di 25-49 anni con figli di età prescolare e delle donne senza figli;

9. Indice di criminalità predatoria;

10. Indice di efficienza della giustizia civile;

11. Emissioni di C02 e altri gas clima alteranti;

12. Indice di abusivismo edilizio (in attesa del Consumo di suolo).

Sono questi i 12 indicatori di benessere equo e sostenibile individuati dal Comitato per gli indicatori di benessere equo e sostenibile, istituito presso l’Istat che saranno considerati nel Def, Documento di Economia e Finanza.

Finanza e Sostenibilità: gli investimenti responsabili protagonisti del cambiamento

La finanza sostenibile rappresenta ad oggi una modalità nota e consolidata di intendere e praticare l’investimento finanziario. Sempre più organizzazioni del settore investono ed offrono strumenti finanziari integrando considerazioni di tipo ambientale, sociale e di corporate governance intercettando anche le esigenze degli investitori e della comunità globale e influenzando in tal modo il cambiamento verso un modello di sviluppo più sostenibile. Si è svolto a Milano il convegno con la partecipazione di:

prof. Stefano Pogutz – Università Bocconi – Moderatore

Giulia Guidi: Former J.P. Morgan Chase - Il ruolo della banca di investimento nel percorso verso la sostenibilità
Sara LovisoloLondon Stock Exchange ESG e trasparenza:  il ruolo del reporting delle società per la sostenibilità degli investimenti
Luciano Balbo: Oltre Venture - Il caso del primo fondo italiano di venture capital sociale
Alessandro Cremona: Goldmann & Partners - Finanza immobiliare SRPI sustainable and responsible property investments - green lease, certificazioni, social bond

Seguite i links per saperne di più e vedi Impact investing

About digitization, Lean and sustainability, and how to make them work together -Published on November 9, 2017 Fabien Tertois

A few days ago a bunch of articles made the headlines about how absurd Bitcoin energy consumption has become. It is well summed up in this Financial Times article but let me give you one take-away: Bitcoin mining and transactions will soon consume as much electricity as Switzerland. According to this index (where assumptions and sources are well documented so that you can get your own opinion on how reliable it is), energy consumption has raised by 30% in the last month only and places the Bitcoin network a couple of steps behind Ireland. In other articles from less renown sources - and maybe less reliable so I spare you the links, but this information is easily googable - it is also mentioned that one Bitcoin transaction uses 5000 times more energy than a Visa transaction! I was considering buying a fraction of Bitcoin just to see how it was done and what I could do with it, but now that I am aware of the environmental impact there is no way I will. I'm checking out other crypto currencies that have been substantially better eco-designed using different kind of algorithms.

Digitization leaders need to be much more aware of sustainability

Eco-design and sustainability unfortunately are absent from most shortlists of benefits or even requirements when you think of digitization. Most often you are looking for "efficiencies" which is the current politically correct word to say you will have workers laid off - but even though social impacts of digitization are one of my prime concerns, there are not the topic here so I will not discuss them further. Automation, digitization, artificial intelligence all require energy to function and implementing such solutions will have an impact on your environmental footprint. As leader of my employer's incubator for Industry 4.0 solutions, I am often presented with devices and solutions that will help increasing our equipment or process efficiency. All of them involve cloud-based solutions, so sustainability-aware customers should be careful in making sure that at least the infrastructure running the target system meets their own sustainability requirements.

Some services also require additional devices such as tablets which are short-lived and not repairable, which should be a concern when you operate them in an industrial environment. I am very worried about the current trend we see with hi-tech consumer goods being less and less repairable - yes Apple I'm especially thinking about you and your 10 years stretch of not allowing your customers to replace batteries in Iphones and Ipads, but unfortunately you are not the only one out there in that trend. For Industrial applications, we may be tempted by going also for the cheap devices and just dump them and replace them when they start failing, but this goes against all sustainability principles that a vast majority of companies are saying sit as their core values. We are all accountable for sustainability and we are all actors in building it. Which brings me to the last point I wanted to make, about how Lean fits in all this.

Digitization works better on what has already been optimized

The most visible aspect of Lean management is waste elimination or reduction. This is sustainability by and large. Every action, every operation has an environmental footprint which can be positive or negative. In Lean (as long as we see a positive footprint action as value added), eliminating waste or reducing waste should result in increased sustainability and value. And what about digitization ? I have often seen digitization started before process streamlining or waste elimination and reduction was even considered. Companies are mistaken if they think they will accelerate in "skipping this step". It's not skipping a step to move forward quicker, it's loosing an opportunity to improve even more. Okay, you may have your digital solution sooner if you do it that way. The problem is, there are high chances you automatized or virtualized waste by doing so.

And this is definitely something you don't want. Once your waste is automatized or virtualized, it is much harder to identify. And once it is identified, it is also much harder to eliminate because the root causes and impacts may not be tangible things anymore. Of course, analytics tools will help you there, but that means you need a new tool to correct the almost new tool you may not even have needed in the first place. Doesn't sound such a good idea to me. Waste reduction should first be considered when things are physical and tangible before going for digitization, this is in my humble opinion how we can leverage most digital opportunities to their optimum. And yes, companies may be in need of new tools to spot and eliminate wastes in Operations in the first place.

This is where my thoughts trailed after reading these Bitcoin energy consumption articles. In a nutshell:

  • It's not because you digitize that you're more sustainable
  • Lean can (and should) be done with sustainability in mind
  • Lean is among the first things to consider in a digital journey

That's how I personally connect the 3 concepts. I probably missed many things! What are your own thoughts ?

U.S. Report Says Humans Cause Climate Change - Leaders needed for Sustainable Growth

Humans cause the Global Temperature rise

Directly contradicting much of the Trump administration’s position on climate change, as reported by the New York Times, 13 federal agencies unveiled an exhaustive scientific report on Friday that says humans are the dominant cause of the global temperature rise that has created the warmest period in the history of civilization.

The report says the Earth has set temperature highs for three years running, and six of the last 17 years are the warmest years on record for the globe. Weather catastrophes from floods to hurricanes to heat waves have cost the United States $1.1 trillion since 1980, and the report warns that such phenomena may become common.

“The frequency and intensity of extreme high temperature events are virtually certain to increase in the future as global temperature increases,” the report notes. “Extreme precipitation events will very likely continue to increase in frequency and intensity throughout most of the world.”

In the United States, the report finds that every part of the country has been touched by warming, from droughts in the Southeast to flooding in the Midwest to a worrying rise in air and ground temperatures in Alaska, and conditions will continue to worsen.

This assessment concludes, based on extensive evidence, that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century,” the report states. “For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence.”

The findings, other researchers said, create an unusual situation in which the government’s policies are in direct opposition to the science it is producing.

“This profoundly affects our ability to be leaders in developing new technologies and understanding how to build successful communities and businesses in the 21st century,” said Christopher Field, director of the Stanford Woods Institute for the Environment. “Choosing to be dumb about our relationship with the natural world is choosing to be behind the eight ball.”

A Call to action for every Company Leader

To assure its future and the sustainability of its growth every company has to set its proper strategic targets to help the World face this challenge. As Neil Carson, chief executive of FTSE 100 chemicals and process technologies firm Johnson Matthey from 2004-14, presciently said of corporate sustainability:

“It’s like the quality revolution that we had in the 1980s. What happened was that companies either ‘got’ quality, or they died. And one day this is going to be the same for sustainability. But there’s an interim period where that’s only true for some companies, not all companies.

So what exactly are the corporate sustainability leadership competencies that are required in organisations that don’t want to die?

An influential taskforce-based study, involving corporate leaders’ own views on the issue, was published in 2010 by Business in the Community, a business-led charity promoting responsible business and corporate responsibility.

Entitled Leadership Skills for a Sustainable Economy, it defined a number of corporate sustainability leadership attributes, including the ability to consistently work towards a longer term vision of how the organisation might contribute to a sustainable economy, together with an ability to inspire people—both inside and outside the organisation—to take action on corporate sustainability

When it comes to corporate sustainability leadership competencies, David Grayson,  Professor of Corporate Responsibility and Director of the Doughty Centre for Corporate Responsibility, suggests these four qualities are amongst the critical building blocks:

  • The ability to contextualise; to understand sustainable development trends, and how and where your own organisation fits into the wider system - strategic systems thinking;
  • The surfacing of a personal purpose, together with authentic values;
  • A capacity to inspire and empower in a corporate sustainability context; and increasingly,
  • The ability to conceive, create, continuously improve and—where appropriate—exit collaborations with other businesses and interested parties.

Easy? Simple? Straightforward? Of course not. But then, corporate sustainability itself isn’t any of these things, either.

Are the leaders of our companies ready to embark in a journey of change? Read more on TheHappyCFO  how Finance leaders can help.


Forum on Sustainability hosted in Paris by BNP. Very interesting material

How Our Company Connected Our Strategy to Sustainability Goals


Sustainability is one of those ubiquitous words, which can also be very slippery, as different people understand the word differently.

At a planetary level, sustainability is meeting the needs of the present generation without compromising the ability of future generations to meet their needs (Brundtland - 1987); and how 9-10 billion people can live reasonably well within the constraints of one planet by mid-century (WBCSD 2010).

It is particularly important to remember that there are three pillars of sustainability: social, environmental, and economic – it is not just the environmental dimension.

At the firm level, sustainability is the purpose, business models, strategy, skills and resources required in order for a business to continue into the indefinite future. This means managing resource constraints (for example carbon budget, water, talent). Increasingly, we see businesses moving beyond doing no harm, and defining a societal purpose: “a concrete, pro-social goal or objective for the firm that reaches beyond profit maximisation.”(Henderson & Van der Steen 2015); and seeking to be net positive.

Hence corporate sustainability can be defined as “a business commitment to sustainable development, and an approach that creates long-term shareholder and societal value by embracing the opportunities and managing the risks associated with economic, environmental and social developments.” (Doughty Centre - Expanded from PWC - SAM - The Sustainability Yearbook 2008). There are broadly similar definitions from the UN Global Compact, The Conference Board and others.

Corporate sustainability commitments are increasingly common. But they’re also often ill-defined, narrow in scope, sometimes disconnected from broader corporate goals, and can be hampered by a lack of leadership ‘buy in’.

Yet look at the direction of travel, and it’s clear that it won’t always be that way—as forward-looking business leaders are already seeing.

Neil Carson, chief executive of FTSE 100 chemicals and process technologies firm Johnson Matthey from 2004-14, presciently said this of corporate sustainability, for instance:

“It’s like the quality revolution that we had in the 1980s. What happened was that companies either ‘got’ quality, or they died. And one day this is going to be the same for sustainability. But there’s an interim period where that’s only true for some companies, not all companies.”

So what exactly are the corporate sustainability leadership competencies that are required in organisations that don’t want to die?

Let’s look at three separate ‘takes’ on the answer.

The business leaders’ perspective

An influential taskforce-based study, involving corporate leaders’ own views on the issue, was published in 2010 by Business in the Community, a business-led charity promoting responsible business and corporate responsibility.

Entitled Leadership Skills for a Sustainable Economy, it defined a number of corporate sustainability leadership attributes, including the ability to consistently work towards a longer term vision of how the organisation might contribute to a sustainable economy, together with an ability to inspire people—both inside and outside the organisation—to take action on corporate sustainability.

Also important, the taskforce argued, was the ability to empower those people within the organisation to make corporate sustainability business decisions, commercial awareness to identify the risks and opportunities that might lie behind those decisions, and sufficient knowledge about corporate sustainability to develop successful business strategies.

Just as valuable were the ability to innovate in terms of sustainable approaches, technologies, products and services; the ability to work collaboratively with different stakeholders, and the possession of effective and persuasive communication skills.

The survey-based perspective

Cranfield’s Doughty Centre for Corporate Responsibility, visiting fellow Anita Hoffmann has published her own take on the issue, with the corporate responsibility coalition Business for Social Responsibility (BSR).

An experienced board level executive coach, she surveyed chief executives, chief human resource officers, company chairs, industry experts, NGOs, and chief sustainability officers around the world, probing their views on what constituted effective corporate sustainability leadership.

The answer? Six separate corporate sustainability leadership competencies: ethics and integrity; external awareness and appreciation of trends; visioning and strategy formulation; risk awareness, assessment and management; stakeholder engagement; and flexibility and adaptability to change.

The corporate sustainability expert’s perspective

Finally, for still another take on the issue, Canadian corporate sustainability expert Coro Strandberg’s 2015 report Sustainability Talent Management: The New Business Imperative distilled a decade of sustainability and management literature into just five interdependent competencies.

These, she decided, were systems thinking; external collaboration; social innovation; sustainability literacy; and active values.

Shared values

Clearly, as you might expect, there are some common themes here and also common ground with the views of real-world companies that have explored the issue of corporate sustainability leadership.

Look at those corporate sustainability corporate competencies viewed as valuable by Unilever—now widely recognised as a global leader in corporate sustainability—for instance, and distinct echoes of all of the above emerge. Unilever now has four key leadership competencies: adaptability; systems-thinking; empowerment; purpose & authenticity.

But defining corporate sustainability leadership competencies is one thing—and possessing them quite another.

So precisely what qualities is it that busy corporate executives should be working to develop?

Our perspective

When it comes to corporate sustainability leadership competencies, I’d suggest these four qualities are amongst the critical building blocks:

  • The ability to contextualise; to understand sustainable development trends, and how and where your own organisation fits into the wider system - strategic systems thinking;
  • The surfacing of a personal purpose, together with authentic values;
  • A capacity to inspire and empower in a corporate sustainability context; and increasingly,
  • The ability to conceive, create, continuously improve and—where appropriate—exit collaborations with other businesses and interested parties.

Easy? Simple? Straightforward? Of course not. But then, corporate sustainability itself isn’t any of these things, either.

A subsequent blog in this series will explore how busy executives can work to develop these attributes.

David Grayson CBE is Professor of Corporate Responsibility and Director of the Doughty Centre for Corporate Responsibility. He is co-author with Jane Nelson from Harvard’s Kennedy School of Government of the award winning book Corporate Responsibility Coalitions: The Past, Present & Future of Alliances for Sustainable Capitalism.


A profound shift in attitudes is underway all over the world. People are now recognising that 'progress' should be about increasing human happiness and wellbeing, not just growing the economy.



What’s in a name? Doing business responsibly and sustainably…

You might be familiar with the classic definition of sustainable development as formulated by the Brundtland Commission in 1987: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Today, we might more immediately define sustainable development as how 9-10 billion people will live at least reasonably well, within the constraints of One Planet, by mid-century.

For a more detailed understanding of what the international community (Governments, business, Civil Society) now understand by sustainable development, it is worth examining the Sustainable Development Goals (SDGs), formally adopted by the UN General Assembly in September 2015[1]. The 17 SDGs to end poverty, protect the planet, and ensure prosperity for all, are inextricably interlinked. There has to be progress on them all: quality education; gender equality; clean water & sanitation; responsible consumption & production; peace, justice and strong institutions and so on. The SDGs speak to the interlocking three pillars of sustainability, identified by Brundtland: the Social, Environmental and Economic (SEE).

Without education, without access to sustainable jobs and economic development, we can’t be surprised, for example, if impoverished people cut down precious rainforests for energy and livelihoods, and thereby exacerbate climate change. Without respect for human rights, there is less understanding and commitment to our stewardship responsibilities for the planet.

In recent years, there has been an unhealthy and ultimately unsustainable emphasis on the economic: on un- or under-regulated markets, and a misguided theory of Maximising Shareholder-Value as the purpose of business – when actually, optimising value over the medium to long-term for all stakeholders, should be the consequence but not the purpose of a well-run business[2]. Otherwise, it is like saying breathing is the purpose of life[3].

Today, mainstream investors like Blackrock – the world’s largest institutional investor – now recognise that sustainable value-creation, requires organisations to identify and manage proactively their SEE impacts[4]. In economic terms, this is about managing the externalities. A mature approach to corporate sustainability understands that all three SEE pillars matter and need to be aligned.

Taking responsibility for SEE impacts requires a business first of all, to minimise negative SEE impacts. This year’s influential Edelman Trust Barometer (an annual global survey of general and informed publics and their trust or otherwise in governments, business, NGOs and the media), for example, specifically identifies several risk areas, which businesses must avoid. These include not transferring profits around the world to aggressively avoid tax; not getting executive remuneration too out of line with the average worker in the organisation; not moving jobs aggressively to the other side of the world; not compromising on product or service quality through reducing jobs; and not bribing or being party to corruption[5].

To be clear: this is the “do no harm” minimum: the basics to retain a licence to operate.

True corporate sustainability, however, is not just about managing the risks by minimising SEE impacts; but also explicitly emphasises maximising positive SEE impacts that a business has. Hence definitions of Corporate Sustainability as “a business commitment to sustainable development, and an approach that creates long-term shareholder and societal value by embracing the opportunities and managing the risks associated with economic, environmental and social developments.”[6]

Or as the UN Global Compact says: “Corporate Sustainability is a company’s delivery of long-term value in financial, environmental, social and ethical terms. [7]

This is especially important if sustainability is going to be truly embedded in business. I don’t know of any successful entrepreneur, any enduring business which has been built on a risk mitigation mindset. On the contrary, entrepreneurs look for business opportunities. Shortly before he died, the great management guru Peter Drucker declared: “Every single social and global issue of our day, is a business opportunity in disguise.”[8] The challenges of sustainable development offer myriad business opportunities – and I think this is incredibly exciting!

Boards and senior management teams (SMT) have to see sustainability not just as about minimising SEE risks but also about maximising opportunities. It is no coincidence that the recently established Business & Sustainable Development Commission has published papers with titles such as “Mapping The SDGs, Corporate Tax, And Business Accountability” and “Business, Human Rights, and the Sustainable Development Goals.” However, their flagship report Better Business, Better World, articulates and quantifies the compelling economic case for business to achieve the SDGs. Better Business, Better World says: “Achieving the Global Goals opens up US$12 trillion of market opportunities in the four economic systems examined by the Commission. These are food and agriculture, cities, energy and materials, and health and well-being. They represent around 60 percent of the real economy and are critical to delivering the Global Goals.”[9]

Most recently, a follow-up study specifically covering Asia, suggests sustainable businesses can unlock US$5 trillion in new market value in Asia by 2030 and that key market “hotspots” in food an agriculture, energy, cities and health could also generate 230 million new jobs—12% of the Asian labour force.[10]

In almost forty years of working at the interface of business and society, initially on the ground with a start-up social enterprise in the north-east of England, then mobilising business nationally and internationally through Corporate Responsibility Coalitions, and most recently in my ten years in management education as Cranfield professor of Corporate Responsibility, I am very conscious of how our understanding about the responsibilities of business have evolved enormously. This is reflected in changing language from Corporate Philanthropy to Corporate Community Involvement & then Investment, to Corporate Social Responsibility (CSR), to Corporate Responsibility & Responsible Business, and now to Corporate Sustainability that can deliver profit and purpose.

Along the way, we have understood the growing range of issues covered by “Corporate Sustainability.” Human Rights, Modern Slavery and accountable supply chains. Health & Well-Being and being a good employer for working carers. Responsible marketing especially to vulnerable customers and taking responsible for the mis-use of products and services (think alcohol, gambling, financial services). Responsible use of water and preserving bio-diversity.

These demand a range of new leadership skills – especially for collaboration on sustainable development with other businesses, NGOs, governments, international development institutions etc – as I discuss in two other recent blogs[11].

This is an exciting agenda demanding an integrated approach, embracing science, technology andmanagement capacity. This integrated approach is something which we are committed to achieving at Cranfield University. A good example is in our response to disruptive new business models such as the Circular Economy, which leading strategy consultants like Accenture believe has the potential to be a game-changer for corporate sustainability. Successful adoption of Circular Economy will require new technology solutions, sophisticated change-management, new strategic lens, board and senior management leadership, revolutionising supply chain and logistics, and new approaches to collaboration.

[1] http://www.un.org/sustainabledevelopment/sustainable-development-goals/


[2] Combining profit with purpose, Doughty Centre for Corporate Responsibility for Coca-Cola Enterprises 2014 https://www.cokecce.com/insights/combining-profit-and-purpose


[3] John Kay, The Future of Purpose-Driven Business, Blueprint for Better Business, 2014 http://www.blueprintforbusiness.org/wp-content/uploads/2015/04/John-Kay-transcript.pdf


[4] http://uk.businessinsider.com/blackrock-ceo-larry-fink-letter-to-sp-500-ceos-2016-2


[5] http://www.edelman.com/trust2017/

Auditing Sustainability and The Greater Good

Auditing Sustainability and The Greater Good

This article is co-written by Anders Liu-Lindberg and Wei Chien Yoong.

Is climate change a hoax? That has been a question debated by many. But for those of us living in the tropics, near the equator, temperature is rising, and raining season seems to be more erratic then before, and most peculiar would be some exceptionally cool weather which is hard to imagine near the tropics!

Now as finance professionals, we ask ourselves what the profession can do to make a difference to mother earth and humanity. While searching for an answer, we also realize climate change is not the only human survival issue, it is much broader – it is a question of how do we sustain our existence (in good quality) for generations to come. 

From research and work Wei Chien has done on the topic of sustainability audit, consensus appeared as: sustainability is an emerging risk area that is yet to be covered comprehensively by most traditional internal audit functions.  However, it is certainly an area of focus for the future. Most of the professional audit/ advisory services firms provide sustainability reporting and assurance services, focusing on reporting and regulatory compliance. There remain huge opportunities for internal audit to add value by partnering with businesses in addressing risks associated with social, environmental and economy and how to mitigate them.   

What is a Sustainability Audit?

Before we can answer the question, we probably need to have a conceptual understanding of what is sustainability There are many definitions, but the best will be a picture of 3 elements existing in perfect harmony, hence, ensuring life of our future generations are secured.

Now an audit can be an assessment of any of the above elements yet the most commonly focus area has been environment. However, an environment audit does not equate to a comprehensive sustainability audit hence businesses need to start exploring the other areas too.

Audit Approach

The delivery of such audit may take the form as what Anders and Maya Hotait have shared on the step by step model, from planning to contracting and recommendation. To do the sustainability audit effectively, an auditor certainly require those “internal audit master” characteristics that have been highlighted by Anders and Maya. However, a sustainability audit is certainly not a business as usual financial or operational audit! Below are the main differences you need to look out for if you want to audit sustainability. 

Strategic risk imperative and understanding of macro and megatrends: Sustainability is an emerging strategic risk for business, and an imperative for business survival. Audit has a role to call it out in a broader perspective, from changes in industry, consumer behavior; to much broader global public policy and agenda shift. To do this effectively, an audit master needs to collaborate with subject matter experts (both internal and external) to keep abreast of emerging trends.  

High level support: While connecting the external dots to specific sustainability opportunities or risks that a business is facing, the internal auditor is then able to conduct a progressive and productive discussion with the C-suite and audit committee, hence, lobbying for support. To effectively roll out the sustainability audit initiative in the organization, endorsement of senior leadership is absolutely critical. 

Collaborative and using external help: A sustainability audit takes a snapshot of the current state, in terms of policies, procedures and practices in sustainability. To make the audit meaningful, the current state will be referenced against industry best practices, and the audit identifies risks/opportunities across a wide range of sustainability categories. To execute the audit effectively, requires internal audit to leverage and work with different functions, notably supply chain, which encompasses most of the goods or services movement. Given that the skillset may not reside within the internal audit function, leveraging on external consulting company is common. 

Communicate and impact change proactively: To effectively communicate the findings and impact, internal audit is required to put on hat of the business stakeholder and here strong business partnering skills will be helpful. What will make the business stakeholders buy in to your recommendations?

  • Costs savings or waste elimination.
  • Broader consumer demand preference, new segment or market opportunity.
  • Reputation risk at stake.

If we get the above right, before internal audit knows it, there will be stakeholders knocking on the door for an audit visit, and that is the demand model internal audit should thrive for!  

Let’s Visualize it for You

As we started the post with weather changes at the tropics, let us talk about the role of sustainability audit in the world’s most controversial and rapidly growing industries: Palm Oil

A Malaysian conglomerate – IOI – has been under some external scrutiny on their sustainability practice last while. Specific areas under attack were – deforestation and labour abuses, which are the environment and society dimensions of sustainability. 

In hindsight, a sustainability audit driven by the internal audit team to evaluate customer demands or what is happening at the broader industry level would have benefited the company with an identification of opportunities vs threats. This is a great example of how internal audit by focusing on sustainability would be able to help you stay ahead of these issues and tackle them proactively. 

We Want to Hear from You!

While finance is exploring ways to better partner the business in midst of changing dynamics of profit, margin and risk, opportunities exist in the space of sustainability, where finance can be at the front line, influencing and driving on positive change to our community, environment and economic prosperity. 

What insight do you have on sustainability audits? What good practices have you observed? We encourage you to add it all in the commentary field and we will update the article as they tick in. If you disagree to some of the statements in this article what would you do instead? We look forward to feedback and comments to start a good discussion on sustainability, and how internal audit and Finance can pioneer the change.



Crescita sostenibile e finanza di A. Bubbio

Crescita sostenibile e finanza Le responsabilità dei CFO

Pianificare strategie di crescita che tengano conto di molteplici fattori.

Prestare attenzione non solo al profitto, ma anche al Pianeta e alle persone.

Cercando di mantenere invariato il grado di indebitamento.

Una crescita sostenibile anche sotto il profilo finanziario è possibile

"Come viene segnalato dagli studiosi più attenti ai temi di ‘frontiera’ e da alcune ricerche, sarà necessaria, rispetto al passato, una 3P growth strategy, dove la tripla P sta per Profit, Planet e People. In base a questo approccio si suggerisce di adottare una strategia di crescita che a livello aziendale presti attenzione: oltre ai risultati eco-fin e alla sostenibilità finanziaria della crescita (Profit), all’impatto ambientale della crescita aziendale (Planet) e alle conseguenze sociali della stessa (People).

Solo così si darà attuazione a una crescita sostenibile e duratura, anche quando il mercato tornerà a frenare."



A Sustainable Model : Profit People Planet

Responsabilità sociale: scatta l’obbligo per 300 società italiane


L’obiettivo dell’Unione Europea con la Direttiva 2014/95/Ue è quello di spingere le aziende a integrare la sostenibilità nel business.

Il recepimento in Italia delle nuove regole (con il D. Lgs. N.254/2016, in vigore da gennaio 2017) impone alle grandi aziende di depositare - dal prossimo anno - una dichiarazione di carattere non finanziario, per spiegare l'impegno nella tutela dell’ambiente, nella corretta gestione del personale, nella garanzia del rispetto dei diritti umani e nella lotta alla corruzione. Il documento deve essere redatto sotto la responsabilità del CdA ed è soggetto a revisione come il bilancio finanziario. 

Con il D.Lgs. 254/2016 si passa dalla responsabilità sociale d’impresa adottata su base volontaria a una rendicontazione obbligatoria per società quotate, banche, imprese di assicurazione che hanno almeno 500 dipendenti e almeno uno dei due requisiti seguenti alla chiusura del bilancio

  • Il superamento dei 20 milioni di euro di stato patrimoniale
  • e/o il superamento dei 40 milioni di euro nel totale dei ricavi netti delle vendite e delle prestazioni. 

Le società alle quali spetta quest’obbligo sono circa 300, con una sanzione per l’inadempimento che va da 20 mila a 100 mila euro

Le altre aziende, di dimensioni più piccole, possono redigere dichiarazioni volontarie di carattere non finanziario «conformi» alle disposizioni del D.Lgs. 254/2016.

Gli investitori sono sempre più interessati alle aziende con un elevato tasso di sostenibilità e sarà sempre più importante e necessario che la sostenibilità entri a far parte delle scelte strategiche di un’azienda

Il decreto di recepimento impone anche di inserire informazioni sulle misure adottate per prevenire le violazioni dei diritti umani, dato non sempre facilmente reperibile, in quanto richiede una conoscenza approfondita della filiera e della condotta dei fornitori, sia nazionali che esteri.

L’introduzione del principio “comply or explain” permette una maggiore flessibilità all'impresa per l'adeguamento del proprio sistema di governo societario alle nuove regole.

Nelle imprese italiane si evidenzia come ci sia un certo di ritardo rispetto gli altri paesi sui principi di sostenibilità e che le aziende dell’industria alimentare e dell’energia adottino con più frequenza il bilancio di sostenibilità e il bilancio integrato a differenza di quelle della moda e del settore assicurativo che diffondono meno informazioni sulle strategie di corporate social responsibility adottate. 

Gli effetti operativi delle nuove norme e la corretta applicazione dei nuovi principi saranno approfonditi nell'ambito dell’evento Paradigma “Le informazioni non finanziarie: reporting sociale e sviluppo sostenibile” che si terrà il 27 giugno 2017 a Milano con il qualificato contributo di esperti di corporate reporting e di responsabilità sociale.


Italy is the first among G7 and EU countries to fix its 2020 targets adding non-economic measures combined with GDP growth, country deficit and Debt to GDP ratio. Specific policies are then included in the Economic Financial Document (DEF) approved on April 12th 2017 to improve population well being. 

Thomas Jefferson’s proposal to politicians that “the care of human life and happiness … is the only legitimate object of good government.” Is taking some concrete steps.

Italy aligns also with United Nations aspiration that the pursuit of happiness is a fundamental human goal, recognizing the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings around the world and the importance of their recognition in public policy objectives, recognizing also the need for a more inclusive, equitable and balanced approach to economic growth that promotes sustainable development, poverty eradicationhappiness and the well-being of all peoples.

Italy takes action despite uncertainty in defining and measuring Happiness

While the debate is still on how best define Happiness – by Wikipedia is a mental or emotional state of well being defined by positive or pleasant emotions ranging from contentment to intense joy but various research groups, including positive psychology and happiness economics are employing the scientific method to research questions about what "happiness" is, and how it might be attained and measured. Academia is still reflecting among the at least 3 types of definitions: economic happiness, well-being and eudemonic - after 7 years of preparation, Italian government selected 4 out of the many measures proposed by different international institutions to fix its aim.

While various international organizations (UN, OECD, EU commissions) are debating about the way to measure it, for example OECD has even issued in 2013 Guidelines that “mark an important turning point in our knowledge of how subjective wellbeing (happiness) can, and should, be measured” after its 2009 decision that individual well being should be multidimensional, taking into account individual assessment of his/her status as well as defining indicators about environmental and social effects.  In 2011, the OECD developed its first ever framework for measuring well-being, focusing on 11 key aspects of life: The OECD “How’s Life?” report provides evidence on well-being in 34 OECD countries and some emerging economies. The third edition on of “How’s Life?” was released in October 2015. In it 11 dimensions to define well-being were set: Housing Income and wealth, Jobs and earnings, Social connections, Education and skills, Environmental quality, Civic engagement and governance, Health status, Subjective well-being, Personal security, Work-life balance.

Then many institutions are trying to measure it while Italy decided to target it, taking the lead and publicly stating its commitment


Italy aims to a Fair and Sustainable Well Being 

Fair and Sustainable Well Being  (BES) Commission, born in 2010 with the intent to measure human well being (health, education) and social wellness, has finally identified the four measures that will base the non economic policies in Italy in the next 5 years. The first one is Average available per capita income that was flat at about 21.7k euros until 2016 will grow by 13% until 2020 to 23.9K euro where GDP is expected to grow half that percentage. Policies that will reduce taxation, ease access of people to work, reduce poverty should aim to reach that result. The second target is the index that measure Perceived inequality of income between top 20% of population with the bottom 20%. It will improve from 6.4 to 5.8 allowing a fairer distribution of wealth and income within the country. After the crisis the delta between these two groups has increased, then readjustment policies should be set. The third target measure Active population willing or available to be involved in the job market. Being unemployed is seen as one major cause of unhappiness then social support and specific policies will increase participation to work by about 10% allowing more people to work. Finally, CO2 emissions will grow less than the GDP improving its environmental impact.

For each indicator a macro economic model has been utilize to estimate both the trend and the impact of DEF.


To know more on BES: 

To Know more about Happiness how to measure, increase and manage 

Are you a giver or a taker? | Adam Grant

Pubblicato il 24 gen 2017
In every workplace, there are three basic kinds of people: givers, takers and matchers. Organizational psychologist Adam Grant breaks down these personalities and offers simple strategies to promote a culture of generosity and keep self-serving employees from taking more than their share.

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Monica Vitali aggiorna sul Bilancio Sociale

Non è certamente una novità dare informazioni che esulano dall’ambito eco-fin perché di bilancio sociale se ne parla da almeno 20 anni, e anche in assenza di veri e propri obblighi di legge molte imprese si sono già impegnate da tempo a rendicontare la propria sostenibilità in termini ambientali e sociali.


Questo perché la reputazione in termini di sostenibilità di un'azienda e dei propri marchiè diventata nel tempo sempre più importante per i consumatori finali (specie per i millennials), ma dietro non deve esserci soltanto un maquillage di facciata perché i clienti lo percepiscono se c’è autenticità e coerenza. Insomma, la trasparenza deve essere effettiva altrimenti rischia di diventare come quella di Volkswagen che chiosava la responsabilità sociale mentre manometteva i test sull’emissione dei gas inquinanti.


In quest’ottica l’economia della reputazione non è contraria al profitto, anzi, sembra che le imprese che la applicano abbiano performance migliori della media. Al contrario invece ammettere pubblicamente l’inattività su temi importanti può avere ripercussioni negative, specie per le grandi aziende alle quali il mercato chiede di prendere posizione sulla scacchiera dell’ESG (enviroment, sustenibility, governance) per essere competitive.


Ecco allora che il recepimento italiano della nuova direttiva 2014/95 a partire dal 2017 può contribuire ad arricchire lo scenario fornendo quella che dovrebbe diventareun’opportunità, anche nei mercati esteri o nei confronti del mondo bancario.


Sustainability for All