Whether under pre-existing acronyms or driven by global interest groups, employees, supply chain partners, regulators, activists and other stakeholders, the impetus to address ESG and Sustainability has been long underway. Under the backdrop of COVID persistence, and global geopolitical and economic challenges, the playing field continues to evolve. It reminds me of the phrase (or the REM song) “you can’t get there from here” when I think about how complex the road can get; that is, without a great map, an experienced guide and that arrow pointing to “you are here” to know how best to figure it all out.

For purposes of this note, I ask that you think about ESG & Sustainability more broadly than the technical sense and more in line with what we call enterprise sustainability. Enterprise Sustainability, in the relevant business context and for purposes of this discussion, is the art and science of measuring the endurance and competitiveness of a business over the long-term.

Despite some progress, evolving corporate commitments, employee, investor and activist noise and deepening global regulatory engagement, many would argue that at this juncture, neither the results nor the cadence is in line with what is expected given the attention being paid. Being in the marketplace every day, I am not surprised. Why? It is likely that policy has not accounted for the magnitude of behavioral and economic transitions required —  or the additional implications in executing on such significant transformations. Think of the strategic corporate adage: solve one problem and thus create another that needs to be solved as you solve for the first. That is why corporate transformations, while incredibly effective, are so challenging. When well-orchestrated — with the right people and expertise – these transformations can solidify a positive and differentiating trajectory for the business.

Below are some of the questions I recommend be considered to practically integrate the drivers of doing well while doing good:

Are we expecting a one-size fits most solution?

• Are organizations being pressured to focus exclusively on the environmental issues (vs. the social and governance aspects)?
• Why is there emphasis placed mostly on the energy sectors? Too often, challengers believe a falsehood, that the issues don’t really apply in industries not directly connected to industrial or energy related businesses.
• Why is the conversation mostly framed in the context of cost (or on the flip side philanthropy) and not on the opportunity for added value to the business?
• Are ESG and Sustainability categorized as liabilities instead of differentiators?

Understandably, there is no one answer to any of these questions; however, there is a common thread in answering all the above. It is understanding that the application of ESG & Sustainability (i) is appreciably company unique (ii) centers on people and (iii) requires flexibility when evaluating, not removing from, organizational priorities in challenging economic environments.  The bottom line is that Enterprise Sustainability should not be viewed as tangential, or mutually exclusive, to company performance (public or private) and it is people who turn strategy into outcomes.

Regardless of the reasons why the global corporate arena is not further along, I recommend that it is time to apply less defensive and more opportunistic approaches to achieve even greater progress. It is also time to push towards creating methods of attributing Enterprise Sustainability drivers, especially the significant value of human capital and culture, to overall financial performance and company valuations. Given the evolution of the role of the CFO, the lasting COVID impact on how we do business, and as we remain in a “haven’t seen this economic climate in decades” period, there are compelling reasons to make the CFO an integral part of the ownership conversation, both driving and reporting.

Critical to progress is being business realistic and acknowledging that (i) the environmental, social and governance factors are dynamic and not static and (ii) organizations need to be well positioned to consider, prioritize, and incorporate these factors into their corporate growth and risk management formulas. While many still believe that ESG and Sustainability are primarily compliance functions, the reality is that Enterprise Sustainability requires alignment, if not integration, with a businesses’ organizational structure, operating model, board and governance structure, executive and employee compensation, culture, talent profiles, risk and resilience planning and the revenue and profitability strategy.

While the most passionate advocates (who are integral in creating change) encourage action for the greater good, the context/reality is that C-Suites and their boards are called upon for the ultimate balancing act of managing stakeholder and shareholder interests. While not mutually exclusive, another business realism is they do not always perfectly align and that is okay. Management teams and boards are called upon to establish priorities in the best interests of the business and that requires complex priority management. This includes preparing for the future – curating, engaging, and among other priorities, valuing the largest asset on the books – their people– to best serve customers, address market demands all while evolving with the social- and technology-driven times. All of the above falls under Enterprise Sustainability, with the additional demand for contemporaneously delivering positive financial performance. Clearly, management teams, regulators, activists, employees, and customers are all in fundamental agreement that ESG & Sustainability is great for business. However, slaying this business dragon will require the CFO, in their role as key driver of corporate strategy, to recognize and incorporate the value and impact of people on the company’s financial performance. That is, if we are going to get to a place where Enterprise Sustainability becomes more directly attributable to the top and bottom line.

So, stepping into the demanding shoes of the CFO and their teams, I’ll leave you with the question I most often raise with clients for consideration as we begin our work at Korn Ferry: What does the right balance look like for your company, as a corporate fiduciary and a socially responsible organization?

Critical to answering all of these questions, businesses need to identify business drivers, track and analyze data, work to extrapolate the most illustrative business insights, and factor in what I’d argue carries a weighty factor in the equation – people.

Enter the Chief Financial Officer, the C-executive who may be the lynchpin to driving the value and outcomes we need to move the needle further and faster — and getting us one step closer to determining human capital’s contribution to outperformance aka the alpha in investment speak. We can get there from here.