Chief financial officers at companies including
Ford Motor Co.
are calling on other executives to make sure their businesses help fight poverty and climate change.
A group of CFOs on Monday published a framework to help guide companies’ decision-making in areas such as corporate finance and investing to support the United Nations’ Sustainable Development Goals. These goals, adopted in 2015, include ending poverty by 2030, taking action against climate change and improving access to clean water.
The CFOs are urging other finance executives to allocate their companies’ resources to projects that support the development goals and expand their set of funding instruments to include green bonds and other sustainability-oriented tools, executives said.
“Because of the seats we sit in within our companies, us being seen as supporting it…makes people take a second look and say, ‘Hey, maybe there are things we can do,’” Verizon CFO Matthew Ellis said.
The telecommunications company last week issued a $1 billion green bond and said it would use the proceeds to support four of the U.N.’s 17 goals in areas such as clean energy and economic growth. Verizon plans to invest in solar and wind facilities to power its networks.
Investors increasingly take interest in environmental, social and governance issues. Funds that pursued sustainability targets in their investment strategy during the first half of 2020 attracted $20.9 billion in net new assets from investors. That is roughly on par with the whole of 2019 and about four times as much as in 2018, according to
a ratings company. Morningstar analyzed 334 U.S. funds in its tally.
The CFO group, which made its announcement amid this year’s virtual General Assembly, wants companies to set clear goals for contributing to the sustainable development targets and assess the investments that would be necessary to achieve those goals. Finance executives also should obtain financing that meets sustainability targets and develop sound reporting practices, the group said.
“We’re calling for large, impactful shifts that are companywide,” said Sanda Ojiambo, executive director of U.N. Global Compact, an organization that focuses on sustainable business practices. The CFO group was established by the U.N. Global Compact.
Members of the group include CFOs and other senior finance executives from over 30 companies in a range of industries across the globe. The group is planning to issue guidance, case studies and research on sustainable corporate finance in the months ahead, executives said.
“We believe that being a sustainable company also means that you are more efficient,” said Fernando Tennenbaum, finance chief at brewing giant AB InBev. “It goes hand in hand.”
CFOs play a crucial role in talking to investors, raising capital and making investments. One of the group’s goals is to encourage finance chiefs to work more closely with corporate sustainability officers to improve external reporting and create more ambitious ESG goals, said Scott Mather, chief investment officer of U.S. core strategies at Pacific Investment Management Co., the fund management company.
Global companies raised $80.7 billion in green bonds in 2019, roughly double the amount raised a year earlier, according to data provider Dealogic. These bonds are typically used to fund a designated environmental project.
SpA last year sold a $1.5 billion bond tied to targets linked to a U.N. sustainability goal of generating more renewable energy.
The debt sale, Enel’s first so-called SDG-linked bond offering, included a step-up coupon mechanism that requires the company to pay an additional 0.25% in interest to bondholders if it doesn’t achieve its goal, CFO Alberto De Paoli said.
Members of the CFO group said they want more companies to consider using this type of financing tool.
Write to Kristin Broughton at [email protected]
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