CFOs play an important role in conveying how their companies are dealing with social issues related to their business activities and ensuring compliance with the new due diligence regulations and reporting standards that focused on addressing the ‘S’ in ESG concerns.
Businesses need to acknowledge that they are expected to better identify and handle wider social issues, and failing to do so can lead to inequality which will pose systematic risks to the resilience of business operations and value chains.
To assist CFOs in fulfilling this responsibility, the World Business Council for Sustainable Development (“WBCSD”) and Shift have jointly published a primer1 in March 2023, outlining the demands and obstacles of corporate social performances are, as well as key recommendations for enhancing the evaluation of such performance.
The primer mentioned that, moving forward, CFOs and their teams will be called upon to:
1. understand interrelated links between a company’s impacts on people across its operations and value chain, and its financial performance.
2. ensure that ESG considerations are meaningfully integrated into enterprise risk management, statutory compliance, reporting requirements and the CFO’s own strategic guidance to the CEO and board.
3. engage with investors, regulators and standard setters to guide how “S” performance and progress is evaluated internally and by external stakeholders.
4. catalyze the integration of the company’s financial and non-financial data, analysis, decision-making and reporting in ways that meet international and regional standards, including those related to social disclosures such as the European Sustainability Reporting Standards.
HDH can assist companies in adhering to the growing set of human rights-related requirements while providing guidance on optimally responding to the investors’ expectations for social concerns. Contact us for more information.
1This body of work is part of WBCSD’s CFO Network which brings together 50 CFOs from across all sectors and geographies. Members of the CFO Network are collaborating to raise the bar on the “S” in ESG through open discussion and giving input into the global standard-setting processes.