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The Role of Finance in Environmental Sustainability Efforts

3-1-2008
In the first in-depth study of its kind, CFOs and other senior finance executives overwhelmingly report that environmental sustainability is an increasingly important issue for their companies, and that a range of significant financial benefits are achievable for companies that can implement strategies that truly reduce their impact on the environment.
Conducted by CFO Research in collaboration with leading global commercial real estate and money management firm Jones Lang LaSalle, the study surveyed 175 corporate CFOs and senior finance executives. Among the key findings of the report:
•More than half of finance executives believe their companies are "very likely" or "somewhat likely" to increase revenue, reduce operating costs, improve investor returns and shareholder value, and improve employee retention through sustainability. The most often cited benefits were reduced risk ("very" or "somewhat" likely to produce benefits at 78% of companies), enhanced brand and reputation (77%), customer retention (72%), and improved employee health and productivity (68%).
•The highest priority objectives in corporate sustainability are regulatory compliance (ranked as a high priority for 61% and a mid-level priority for 26% of respondents), improving energy efficiency and reducing greenhouse gas emissions (a high priority for 47%, mid-level for 32%), and reducing the environmental impact of operations (45% and 32%).
•The greatest barriers to incorporating sustainability into financial strategy include the inability to measure the effects of sustainability on shareholder value (ranked among the top three challenges by 46% of respondents), inability to document the effects on financial performance (37%), and a lack of standard decision-making frameworks that consider environmental factors (36%). The least significant challenge was organization resistance, ranked among the top three barriers by just 20% of respondents.

Although most finance executives acknowledged that their own role in driving sustainability was limited, the survey results point to a tremendous opportunity for CFOs to guide their companies to sustainable strategies that bring financial success, according to Lauralee Martin, Global Chief Operating and Financial Officer at Jones Lang LaSalle.

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