Judge Business School at the University of Cambridge is inviting senior finance leaders to a special, in-person course on how to embed an environmental, social and governance (ESG) outlook into their business strategies. 

Developed in partnership with ICAEW and set to take place this autumn, the four-day course will comprise a series of expert talks and interactive sessions on the evolving role of business in driving sustainability-based innovation. It is aimed at board members, partners and CFOs.

Asked why a course with that focus is so important at this time, Michael Willis, Management Practice Associate Professor at Cambridge Judge Business School, explains: “There’s just so much happening in ESG right now. Even at the calmest of times, the senior finance leader must strive to balance the needs of various stakeholders: customers, suppliers, the government, regulators, the planet, communities and workers. Sometimes, those needs seem to conflict. So, a major part of the senior finance leader’s role is to manage and lead stakeholders through those tensions.”

Now, though, the stakes are even higher. Day by day, evidence is building to suggest that climate change will bring serious repercussions around the world, affecting the planet, the financial system and business. Willis notes: “Creating long-term value has always been the capitalist world’s primary goal. At this point, that means building organisations that are resilient to climate change and will engage with adaptation and mitigation.”

Providing clarity

In parallel, Willis points out, there is a mounting sense that companies must do much better on social topics. Diversity, equity and inclusion (DEI) is one – and so is the question of how corporate business models affect employees and other workers in the value chain, such as indigenous groups.

At the same time, businesses are increasingly required to comply with new and emerging regulations on sustainability-related activities and relevant disclosures. “It’s important to be aware of the risks and liabilities that those regulations present,” Willis says. “But we must also understand the opportunities.”

Turning to the biggest hurdles that finance leaders are currently facing with framing ESG in strategic terms, Willis points to the unique challenge of uncertainty.

“Essentially, there’s a need to understand the practical impacts of a whole range of ESG factors and how to implement strategies that address them in value-creating ways,” he says. So, part of the purpose of this course is to bring in the latest research on what actually works for driving desired outcomes in organisations.”

In Willis’s assessment, some of the key questions that finance leaders are grappling with at this time may include:

• What do we really want to achieve through building an awareness and understanding of climate matters in our organisations?
• What will be the economic impacts that our businesses will feel as a result of factors such as climate change, pollution and the circular economy?
• How should DEI best be operationalised in a for-profit – or even non-profit – organisation?
• What sort of shape could we get our businesses into by applying DEI as a strategic lever – and how do we get there?

“By harnessing research with an applied focus,” Willis says, “the course seeks to provide clarity on a number of areas that are currently opaque.”

Deep dive

With that aim in mind, he says, senior figures who sign up to the course will hear from a range of experts on a variety of ESG and sustainability matters, covering climate change and other environmental issues, along with finance, disclosure and systems-thinking approaches. Among the subjects that will be covered are:

1. The changing business landscape
   An overview of how ESG and sustainability topics are reshaping the commercial world and forcing businesses to change their priorities and actions. “We’re going to orient learners around that,” Willis says.

2. What climate change really means for business
   Based on best-quality projections, what does the latest science and economic modelling think the future world that companies will have to do business in is going to look like? What will be the physical, political, legal and economic impacts of climate change?

3. Consumers’ attitudes
   Amid the focus on regulation and compliance, consumers’ thoughts on sustainability are often lost in the ESG debate. As such, the course will present research on which ESG areas the people that businesses serve care about most.

4. Measurement and reporting of carbon emissions
   Including insights on offsets and other carbon-related markets, plus carbon pricing and tax.

5. Annual reporting and disclosure
   “Businesses around the world are facing new, mandatory reporting requirements related to climate and broader ESG matters,” Willis says. “UK-based companies with operations abroad will potentially have to deal with multiple jurisdictional requirements around new disclosures and getting assurance on them.”

6. Climate scenario analysis
   “This is critical and goes right to the heart of how we build resilience,” Willis says. “Under the rules of the Taskforce on Climate-related Financial Disclosures and other disclosure frameworks, you must understand different business scenarios that could arise in, say, 2030, 2040 and 2050, then think about which steps you must take in the present to put the necessary contingencies in place. This is one of the hardest ESG requirements to get right.”

7. DEI
   A look at research and case studies on what’s working and what’s not.

8. Governance
   “After our deep dive into the previous points,” Willis says, “this is where we come up for air again and zoom out. So, you’re on a board or audit committee, or you’re CFO or a senior executive, and your governance responsibility is to set up a range of procedures and accountability structures around everything we’ve discussed. How do you do that?”

Embedding ESG

Willis hopes finance leaders will come away from the course feeling energised and invigorated, with a sharper focus on the risks and opportunities that lie ahead. “I want them to leave Cambridge buzzing about what they’re going to do the following Monday to put their learnings into practice,” he says. “That’s the mark of a quality course.”

ICAEW Sustainability Director Richard Spencer believes the new programme will help finance professionals embed ESG and sustainability further into their organisations. 

He says: “Chartered accountants are in a unique position to champion sustainability, as they are found working across the economy in businesses and finance, as well as the public and third sectors. This programme will be an invaluable addition to their toolkit for dealing with the challenges of sustainability.”