[Podcast] Financial departments facing CSR issues

Posted on February 8, 2022

Are CSR and finance really compatible? How are finance departments adapting? How to navigate through the different methods? Decryption with Gregory Schrobiltgen, member of the People4Impact community and expert in sustainable finance, in the Trajectory podcast, produced by Birdeo, People4Impact and Youmatter.

For a long time, CSR remained very compartmentalized within the company. Perceived as the obstacle to working in circles, the CSR department was the one who came to ask for ESG data, to try to impose new standards but who did not speak too much to the other departments of the company. Finance in particular has long remained closed to CSR issues.

But little by little, things are changing. Under pressure from stakeholders who are increasingly demanding that the company sincerely commit to the transition, finance departments are forced to take an interest in CSR. And this merger changes the game. The methods, practices and objectives of finance departments are evolving and changing.

So what do these developments reflect? Are CSR and finance really compatible? And what does this mean for business transition? We take stock with Gregory Schrobiltgen, finance and CSR expert, in this ninth episode of the Trajectory podcast, produced by Birdeo, People4Impact and Youmatter.

Finance and CSR: towards rapprochement?

So, are CSR and finance really compatible? A priori, one might think not: the world of CSR requires a long time, is interested in the extra-financial and upsets the traditional hierarchies of the business world, which places profit above all rest. Conversely, the world of finance shines rather by its short-termism, and the almost sacred primacy it grants to economic performance.

However, more and more these two worlds intersect. CSR is a change of business model. And who better than the financial department to embody in action a profound transformation of economic models? More and more, companies are becoming aware that the extra-financial and the financial are intrinsically linked and that they feed each other, for good as well as for bad.

The world of finance is therefore beginning, very slowly, to move to integrate social and environmental issues, and this is reflected in the business world by the bringing together of functions: we are now seeing the appearance of “CSR and finance management” functions. “Sustainable Finance Department”.

Towards standardization of CSR finance methods

Gradually, this trend leads to a certain homogenization of ESG finance standards. Integrated accounting is beginning to take shape, and the differences in methods and tools for bringing together financial and extra-financial issues within a single account are becoming more and more sophisticated.

The European taxonomy, which wants to establish a more precise definition of “sustainable” activities, also tries to bring order to the still chaotic world of ESG finance.

In short, a common work base is beginning to be put in place and a more structured reference framework around CSR finance is emerging.

Still a long way to go

Despite everything, for finance departments as well as for CSR departments, these developments remain immense challenges to be met. If the initiatives are structured to provide a framework for these new financial practices, the world of financial and extra-financial evaluation continues to look like a jungle. TCFD, CDSB, and now ISSB, or even CSRD are all acronyms representing each of the initiatives, often private, which would like to set up their repository. It is therefore difficult to find it.

There is still a long way to go before arriving at universally recognized multi-capital valuation and accounting methods, allowing finance to shift towards a real consideration of environmental or social issues. But today, companies, especially the largest ones, are having to work urgently on this subject. Because finance is now under the fire of all criticism and attention, and it will no longer be able to escape the injunction of its stakeholders to take ecological and social reality into account.