Mat Langley, Strategic Advisor, Emitwise
The role of the Chief Financial Officer (CFO) is undergoing a significant shift. Traditionally focused on financial reporting, risk management, and capital allocation, CFOs are now expected to navigate an increasingly complex landscape where sustainability and procurement are central to business success.
As regulatory frameworks evolve, and investors increasingly demand greater transparency on carbon emissions and sustainability performance, procurement and carbon accounting are no longer just operational concerns—they are financial imperatives for business success and longevity.
Why is this important?
Procurement is no longer just about cost control—it is also about risk mitigation, compliance, and competitive advantage. CFOs must recognise that sustainable procurement strategies are essential for long-term financial stability, and should therefore work closely with procurement leads to bolster supply chain decarbonisation efforts. Here’s why:
The CFO’s expanding role in sustainability
For decades, sustainability was seen as a concern for Chief Sustainability Officers (CSOs) or environmental officers, with little direct impact on financial strategy. However, it has now become increasingly evident that climate risk is financial risk. In fact, a report shows that 50% of GDP could be lost globally due to climate shocks.
Companies are being held accountable for their environmental impact, particularly regarding Scope 3 emissions, the indirect emissions that occur across a company’s value chain, such as those from suppliers and transportation. These emissions are often the hardest to measure but can account for up to 90% of a company’s total carbon output, making procurement one of the most significant levers for decarbonisation.
Regulatory compliance
Many governments and regulatory bodies are needing to fulfil various reporting requirements on carbon emissions. Even though the CSRD, for instance, saw changes which will make the mandate less stringent and more simplified, businesses – and therefore CFOs – will still need to disclose detailed Scope 3 emissions data. If companies fail to meet these standards, they could face significant financial penalties, legal challenges, and exclusion from key markets.
The financial stakes
Investors are increasingly integrating Environmental, Social, and Governance (ESG) metrics into their decision-making processes. 77% of independent global investors say that they are interested in investing in companies or funds that aim to achieve financial returns whilst also accounting for positive ESG outcomes. CFOs who proactively integrate carbon accounting into financial strategy will better position their companies for long-term investment and capital access.
Operational relevance
Energy-efficient suppliers, circular economy models, and responsible sourcing strategies often lead to lower energy costs, reduced material waste, and enhanced supply chain resilience.
Sustainability is now also a market differentiator. Consumers, employees, and business partners are more likely to engage with companies that demonstrate a genuine commitment to reducing their carbon footprint. Businesses that fail to adapt, risk falling behind competitors who leverage sustainability as a key value proposition.
A CFO’s blueprint for integrating procurement and carbon accounting
CFOs who embrace this shift will position their organisations for long-term success. Here’s how:
- Embed Sustainability in Financial Decision-Making: Just as CFOs evaluate investments based on ROI, sustainability metrics should be factored into cost-benefit analyses. Sustainable procurement must be seen not as an expense but as an investment in business resilience.
- Prioritise Supplier Engagement and Transparency: CFOs should collaborate with procurement teams to enhance data and reporting accuracies, which in turn could create stronger financial recommendations.
- Adopt Digital Carbon Accounting Solutions: Advanced software solutions now enable real-time tracking of carbon data. Supporting the sponsorship of Integrating these tools into existing financial reporting systems will enhance data accuracy and compliance.
- Ensure Board-Level and Investor Alignment: CFOs must communicate the financial benefits of sustainable procurement and carbon accounting to board members and investors, securing buy-in for long-term strategic investments in sustainability.
The future CFO: A sustainability champion
The days of CFOs focusing solely on balance sheets are over. In a world where sustainability drives financial performance, CFOs must rethink the role of procurement as a means to reduce financial risks, use supplier sustainability as a lever for cost control and innovation, and collaborate with procurement teams and suppliers for data integration and improving data accuracy. embrace procurement and carbon accounting as essential pillars of corporate strategy. This in turn will also enhance competitive positioning, and secure long-term business success.