Sustainability and financial governance: the CFO’s growing responsibility

Today’s sustainability challenges have reshaped everyday operations for many companies and organisations. Even though the EU is now reviewing ways to simplify the requirements in the CSRD directive, and Sweden has postponed the requirements for certain companies, sustainability work will remain in focus. The direction is clear: sustainability data will be assessed, audited and used just like financial information. For CFOs, this means a new and expanding area of responsibility.

In this article, we outline why sustainability has become a matter for the finance department, and why the CFO has become a key figure in sustainability reporting.

The financial perspective

Sustainability issues have shifted from being soft values to becoming clear economic factors. Companies now need to analyse sustainability from two perspectives:

External impact:  How the business affects the environment, people and society.

Internal financial impact: How sustainability‑related risks and opportunities affect profit, the balance sheet, cash flow and financing.

Assessing how sustainability‑related risks and opportunities influence profit, the balance sheet and cash flow requires financial analysis and an understanding of the business model. This makes the finance function central in identifying, evaluating and integrating these factors into corporate governance.

Reporting and processes

Sustainability reporting is no longer a separate section alongside financial reporting. It is increasingly integrated into the company’s regular reporting structure and is expected to meet the same standards of quality and traceability as financial information.

• Timelines:  Sustainability data must be produced at the same pace as financial data.
• Quality assurance:  Information must be reliable, traceable and auditable.
• Processes:  The finance department is often best positioned to build the structures and controls required.

This naturally places sustainability reporting close to the CFO’s existing responsibilities for reporting, internal control and data quality.

Information systems – shared platforms and shared data

As sustainability data becomes more important for governance and reporting, sustainability and financial reporting are also converging technically. In practice, both rely on the same systems and data sources:

• ERP systems function as central sources of sustainability data.
• Supplier invoices are used, for example, in emissions calculations.
• BI tools support both financial and sustainability‑related analysis.
• Data warehouses integrate financial and non‑financial information.

Since these systems already fall under the finance function’s responsibility, the CFO becomes a key figure in developing, assuring and coordinating the technical infrastructure for sustainability reporting.

The link to the board and the audit committe

The growing strategic importance of sustainability issues has elevated them to board level. This means that the requirements for quality, transparency and auditabiity in sustainability reporting now resemble those applied to financial reporting.

• The board is responsible for the content and quality of sustainability reporting.
• Within the executive team, responsibility often lies with the CFO, particularly regarding reporting, data quality and internal control.

The CFO therefore becomes the natural link between the board, the audit committee and the operational organisation.

Since the finance function already manages reporting, risk and governance, the CFO is central in ensuring that sustainability information meets the same level of reliability as financial information.

Risk management and internal control

Most sustainability‑related risks are also financial risks. This makes the finance function essential when assessing how factors such as supply chains, resource prices, climate impact or regulatory changes affect the business.

• Risk identification:  The CFO is often best placed to assess sustainability risks from a financial perspective.
• Internal control:  The finance function is accustomed to building structures that ensure data is reliable, traceable and auditable.

As sustainability data becomes part of corporate governance and reporting, it is natural for the CFO to lead the development of the control environment and integrate sustainability risks into the overall risk framework.

What should be done?

Sustainability has become a permanent part of the CFO’s remit. It is not only about meeting requirements, but about strengthening the company’s governance, risk management and decision‑making. For the finance function, this represents an opportunity to take an even more strategic role within the organisation.

Recommended actions:

• Deepen understanding of sustainability issues and their financial implications
• Map existing systems and identify integration opportunities for sustainability data
• Build structured processes for collecting, assuring and reporting sustainability data
• Ensure skills development within the team so that sustainability issues are integrated into daily work

At Azets, we support CFOs in developing modern, data‑driven and efficient finance functions. If you want to strengthen your processes, systems and ways of working so that sustainability‑related information can be managed with the same level of quality as financial data,  get in touch with us today and we will help you move forward.