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September 22, 2023

Editor’s note: Sunak, French auditors and sustainable CFOs

UK Prime Minister Rishi Sunak holding a press conference on net zero policy change at Downing Street (Photo: Justin Tallis – WPA Pool/Getty Images)
UK Prime Minister Rishi Sunak holding a press conference on net zero policy change at Downing Street (Photo: Justin Tallis – WPA Pool/Getty Images)

The latest edition of our Sustainable Views newsletter

Dear reader,

As you read this, I’ll be on my way back to London after a busy few days in New York, which ended with a UN Global Compact forum on sustainable investment. The event addressed chief financial officers, and their role in steering companies towards more sustainable business models.

There were a fair few congratulatory remarks, but there was also a healthy dose of realism: policy and regulation are playing a big role in companies’ transitions, including in their ability to attract capital to facilitate such a move.

At the event, new research by the UNGC’s CFO coalition and the Climate Bonds Initiative was also presented. We published a preview of the findings yesterday afternoon. The study’s author, Fabrizio Palmucci, surveyed CFOs from companies with a combined market capitalisation of $930bn. In an opinion piece for Sustainable Views, he highlights the need to include new, relevant skills in the finance function.

This is a theme that was likewise discussed during a fascinating panel I attended on Wednesday. A number of authoritative academics and investment professionals stressed the importance of having sustainability experts report to the CFO, rather than sitting in a separate (and possibly disjointed) area.

They also addressed sustainability disclosures. One academic told me that the need to compare companies with each other, which has fed the proliferation of ESG scores, and the ever-expanding work to create reporting frameworks are, in fact, pointless.

The event was under Chatham House rules, so I can’t tell you who said what, but these quotes are worth sharing, even if anonymised (let me know your thoughts):

“If it’s a material issue, it should be in your financial statement.” And, the use of sustainability ratings “is the single biggest driver of corporate misallocation in the [ESG] market right now”.

Science-based targets, on the other hand, are useful, a respected accounting expert told me. They’re also, however, being scrutinised by the US congress. Read more about this and other news (like Germany’s request to lower EU disclosure thresholds for smaller companies) in our weekly round-up.

Grabbing headlines in the UK this week was Prime Minister Rishi Sunak’s decision to delay certain green targets. A number of investors I spoke to in the past few days were unimpressed. As is Chris Hilson, a professor of law and the director of the University of Reading’s climate and justice centre. He takes particular issue with the government’s home insulation policy.

Meanwhile, Claudia has been looking at the other side of the Channel, and reports that the French High Council of Statutory Auditors will be renamed and reshaped to reflect the inclusion of non-financial audit supervision in the institute’s mandate. Read her piece to find out more.

As always for our Friday missive, below you’ll find our most popular articles of the week, plus a suggestion from the team.

Silvia

Silvia Pavoni is the editor of Sustainable Views

This week’s top content

Businesses urged to adopt TNFD recommendations without delay

EU-Mercosur trade deal in peril over sustainability standards

Relaxed UK IPO rules could see activist shareholders ‘resorting to the courts’ over ESG

US Treasury publishes net zero financing principles

A service from the Financial Times