Tensie Whelan

Elyse Douglas

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 <h4 class="ideainbrief-title">Idea in Brief</h4>
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  <h5>The Problem</h5>
  <p>Corporate sustainability strategies can reduce costs and generate revenue, but many CFOs still don’t believe they can create value. That makes it hard to unlock the internal financing needed to scale them up.</p>
  <h5>The Facts</h5>
  <p>Sustainability strategies can improve financial performance by boosting any of nine “mediating factors”: innovation, operational efficiency, sales and marketing, customer loyalty, risk management, employee relations, supplier relations, media coverage, and stakeholder engagement.</p>
  <h5>The Solution</h5>
  <p>Companies can use an analytic approach called the Return on Sustainability Investment (ROSI) method to precisely measure the value created by sustainability strategies through those nine factors. ROSI analyses in the automotive, pharmaceutical, and agricultural industries have revealed hundreds of millions of dollars of sustainability-related savings.</p>
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</article-ideainbrief><p>By now most companies have committed to improving their environmental, social, and governance performance. Such sustainability efforts have increasingly become table stakes. And yet many CFOs still see them as a cost rather than a source of value. That makes it hard to unlock the internal financing needed to scale them up.</p>

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<p>By now most companies have committed to sustainability efforts&#8212;and yet many CFOs still see those efforts as a cost rather than a source of value. That makes it hard to unlock the internal financing needed to scale them up.</p>
<p>The authors&#8212;the director and a senior scholar at the NYU Stern Center for Sustainable Business&#8212;have developed the Return on Sustainability Investment (ROSI) analytic tool, which companies can use to measure the financial returns on their sustainability activities. Implementing ROSI is a five-step process. Companies should (1) identify their current sustainability strategies, (2) identify related changes in operational or management practices, (3) determine the resulting benefits, (4) quantify the benefits, and (5) calculate the monetary value. The savings and growth thus revealed can reach hundreds of millions of dollars; in large companies, it can be billions.</p>
<p>Particularly now, as companies scrutinize budgets threatened by the Covid-19 pandemic, ROSI analysis can help CFOs improve organizational finances through sustainability investments that create value for investors, employees, customers, and the world at large.</p>

How to Talk to Your CFO About Sustainability

By now most companies have committed to sustainability efforts—and yet many CFOs still see those efforts as a cost rather than a source of value. That makes it hard to unlock the internal financing needed to scale them up. The authors—the director and a senior scholar at the NYU Stern Center for Sustainable Business—have developed the Return on Sustainability Investment (ROSI) analytic tool, which companies can use to measure the financial returns on their sustainability activities. Implementing ROSI is a five-step process. Companies should (1) identify their current sustainability strategies, (2) identify related changes in operational or management practices, (3) determine the resulting benefits, (4) quantify the benefits, and (5) calculate the monetary value. The savings and growth thus revealed can reach hundreds of millions of dollars; in large companies, it can be billions. Particularly now, as companies scrutinize budgets threatened by the Covid-19 pandemic, ROSI analysis can help CFOs improve organizational finances through sustainability investments that create value for investors, employees, customers, and the world at large.

How to Talk to Your CFO About Sustainability

Summary.

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