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The Role of Finance in Environmental Sustainability Efforts

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Finance & Risk Management

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Abstract:
What role does finance play in environmental sustainability initiatives? Does finance have the tools and frameworks it needs to evaluate, measure, and report on these initiatives? Our research reveals that the finance functionýs most prominent role in sustainability efforts is through decision support, although finance rarely plays a leading role in the management of environmental performance. Finance executives cite a lack of decision making frameworks that take environmental factors into account and an inability to document a link between sustainability initiatives and shareholder value as barriers to financeýs increased involvement in sustainability efforts. Our research suggests that as companies begin to realize the benefits of environmental sustainability efforts, and develop the analytical tools needed to evaluate and measure these efforts, the finance function is likely to become more involved in environmental sustainability.

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