Chief Financial Officers (CFOs) are uniquely positioned to deliver significant change in environmental, social and governance (ESG) strategies across the enterprise, according to ServiceNow CFO Gina Mastantuono. Not only that, but Mastantuono maintains that organizations that do not take their ESG responsibilities seriously will find themselves in financial trouble in the future.
At last year’s COP26 event that brought together world leaders to agree on a plan for tackling the climate crisis, and with the growing number of climate regulations being presented, organizations around the world are wrestling with how reach net zero by 2050. Mastantuono leads ESG’s ServiceNow agenda and also works with the vendor’s product team, which advises on its ESG reporting and management tools, which the company believes will bring increasing impact. changes to its entire customer base.
In other words, Mastantuono has invested heavily in both ESG change delivery with ServiceNow, but he also knows that the vendor has an opportunity on its platform to deliver change externally.
I had the opportunity to sit down with the CFO last week, where he talked about how ServiceNow thinks about ESG, but also to discuss how CFOs lead in this area and why companies need to make it a priority. the ESG today. Mastantuono said:
I truly believe that the role of the CFO has changed drastically over the past five or ten years. It is no longer okay to just be a subject matter expert in finance. We really need to be business leaders who can help drive strategy for the company, lead with empathy and compassion, and make sure that employee engagement and employee centrality are at the center of what we do.
There are only a few roles in the C-suite that are actually visible across, from top to bottom, across the enterprise. So I think the best CFOs – and I’ve talked to a lot of them – are really embracing this kind of new normal for what business leadership means and what it means to be a CFO in today’s era.
And sustainability is very cross functional, right? It doesn’t sit in one place, so it’s very difficult to manage, because it’s all over the place. Whether you’re dealing with the supply chain, climate, social aspects, D&I, the management part, it’s literally across the organization. So having a bird’s eye view of the whole organization really helps.
I also think, CFOs are very data driven and numbers driven, right? We always say ‘what cannot be measured, cannot be measured’. And so I think CFOs are pretty strangely positioned that way.
ServiceNow released its latest Global Impact report in April of this year, which measures its ESG growth-and highlights how the company’s executive compensation is tied to certain environmental and diversity goals. The vendor is taking an aggressive approach to climate action, promising net zero emissions by 2030 – rather than the standard 2050 – and said it will deliver customers a carbon neutral cloud by 2022.
Some other highlights from the report include: achieving 100% renewable electricity, delivering a new global diversity, equity and inclusion framework, and making progress in representation for minority groups and women in leadership positions.
As noted above, Mastantuono led the ESG agenda as part of his role as CFO, where he is also responsible for real estate, workplace services, and procurement – all of which have a major impact on ESG. Mastantuono explains:
If you think about all the climate disclosures and climate promises made by companies, there is no customer I’ve talked to who hasn’t focused on the scope of the three emissions, which is about their supply chain.
Not just what they can affect individually, but how their supply chain interacts. And so owning the procurement processes and understanding, procurement risk and vendor risk in this world, I think it’s also unique in positioning CFOs to really understand where the scene is going and how to position properly the company to get there.
The supply chain is very important today, not just for ESG, but just about getting your products to market in an efficient and effective way, due to the supply chain issues we have seen in the market over the past few years. Companies really focus on what this means and how to affect change. We need to make sure we buy from suppliers with a roadmap to get to that zero as well and hold them accountable.
The role of the product
ServiceNow also captures what it has learned about ESG and applies it to its platform, which now offers ESG reporting and measurement functionality. As Mastantuono said, without understanding the data of how your company is performing, it is nearly impossible to manage any significant change.
ServiceNow’s ESG reporting and measurement tool is how ServiceNow itself collects its ESG data for impact reporting, so it understands its very role. Mastantuono said:
Aside from our own internal strategies, it’s all about the platform and how we can strive to multiply our impact, by helping our customers on their ESG journeys. And for that purpose, when I think about ServiceNow’s ESG strategy, the product piece is a big piece, and we spend as much time on the product side as we do on our internal side, because we really believe I’m sure that’s where we’ll have such an incredible impact.
We work with our product teams on understanding customer needs for ESG and how we can develop the product set to manage that.
You can connect the reporting and measurement tool to any enterprise-wide system, because as we discussed earlier, it is very cross functional. The data is on so many different systems, and it’s very manual at times. And so how do you have a place where you can put it all, measure, track it and report it? With the release of new regulations, this is more important than ever. And it’s audible, it’s monitored.
This is good business
Often people’s reaction to ESG is that they don’t understand why an investment in environmental, social or management strategies would deliver them good business profits. This is something Mastantuono wants to clarify, as he believes it is important to the future financial health of a company – including ServiceNow.
The vendor recently conducted a survey of 1,000 C-level business leaders, which found that 73% of finance leaders surveyed said a focus on ESG has helped them deliver better results. result. But why is that? Mastantuono explains:
Yes, you need to invest. I’ll give you an example. If you invest in the right initiatives in D&I, if you invest in the right initiatives in society, employees really love it. They want to work for companies with real meaning and purpose.
If you think about the cost of attrition, it’s overwhelming. So the investments you make in these initiatives will pay off in vain. There is a lot of research showing that companies with strong ESG programs have greater profitability, greater revenue growth, greater growth opportunities.
What is happening now in the B2B world is that when people choose what software provider they want, half of the questionnaire is related to ESG.
So if you’re not doing this thing, you’re in big trouble. I 100% believe that profits, protecting the planet and sustainability are not mutually exclusive. They are interconnected in a very, very effective way.
This conversation is in the C-suite. It is in every boardroom. And if you think you can escape without investing in it, you will be left behind in many, many aspects.
What I take
It was clear from talking to Mastantuono how seriously he took his ESG responsibilities. And his message about the importance of ESG to a company’s future success is one that I think should be openly discussed by more board members. But underlying it all is how data can be used to define strategies and measure impact – something all companies should think about in 2022.
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