CFO’s playbook for sustainability strategies: PwC

With new sustainability disclosure regulations on the rise, companies face mounting pressure to deliver transparent, reliable reports on how environmental and social issues affect their business. Many are also taking a hard look at how they can drive sustainability initiatives and identifying who in the organization may lead them. In turn, sustainability’s center of gravity is shifting to the chief financial officer (CFO) and the finance function (including the ESG controller). These leaders have the technical acumen to produce this reporting alongside traditional financial disclosures, can align sustainability initiatives with long-term planning and can allocate the capital needed to successfully execute sustainability strategy.

CFOs already hold one of the most challenging positions within the C-suite. They juggle managing financial stability with setting strategic vision. While they specialize in corporate reporting, they aren’t just number crunchers. They’re relationship builders and innovators, vital to the business, who are using technology and data to better assess risks, manage cash flow and identify new growth opportunities. They’re doing all this while navigating a maze of tax laws and global regulations — including those around sustainability.

That’s a lot for the finance function to tackle, but some CFOs welcome this widening of their roles. They see these added responsibilities as a natural extension of their focus on long-term value and performance. And there are powerful incentives to meet this challenge head on. The global transition to a sustainable economy brings opportunities for investment, innovation and growth. PwC research shows that the companies that take more action on climate-related opportunities and risks can have better financial performance.

PwC’s playbook can help CFOs and their teams understand sustainability’s impact on their business, focus on high-value activities and build the skills they need to lead on these issues. It covers key disclosures, compliance and creating value from sustainability investments, equipping your organization to stay ahead.

Embed sustainability into strategy

How embedding sustainability into strategy can drive growth and reduce risks

Sustainability initiatives can be complex. They typically span multiple geographies and locations, require alignment across business functions, can involve working with third parties and necessitate permitting and approvals. At any given time, companies may have multiple sustainability projects happening simultaneously across their operations.

As markets shift, corporate sustainability plans can fall behind. But forward-looking CFOs know that giving these initiatives the same strategic importance as other endeavors and embedding sustainability into corporate strategy can lead to significant financial and operational benefits. To keep these projects a priority, they earmark financing that allows for completion and they establish an internal cost of carbon, which helps them compare the capital costs of decarbonization projects and the costs of other projects on equal terms during the selection process.

These CFOs also:

Talk about sustainability as a growth driver: Want your executives’ attention? Connect corporate sustainability to revenue growth, cost savings, risk management and brand value. This keeps sustainability central to strategy and funding intact even if priorities change.

Embed sustainability in risk management: Sustainability is key to risk management. As companies confront severe weather, extreme heat, water scarcity and dwindling natural resources, they can better understand and address the impacts and dependencies the business has on the environment and society to help strengthen resiliency and responsibility.

Identify leading indicators aligned with the strategy: Tracking strategic indicators like carbon footprint and health and safety in regular board and management reports enables data-driven decisions and demonstrates tangible results to stakeholders.

Do an energy demand assessment: CFOs can team up with their sustainability leaders and COOs to review resource and energy use, balance reliable supply and cut emissions. This assessment can lead to big savings. The World Economic Forum, in collaboration with PwC, found the potential of demand-side energy action is extraordinary, offering a short-term, cost-efficient 31% reduction of demand without loss of output, shared across all economic sectors.

Invest in sustainability-related innovation: View sustainability as an opportunity, not a cost. Invest in sustainable technologies and processes that can not only reduce your carbon footprint or provide societal benefits but also create new revenue streams. For example, as customers seek low-carbon suppliers and vendors, those that lead on sustainability can win new business, gain market share and may even command higher prices.

Engage the organization on sustainability

Step one for CFOs: Make sustainability the smart choice

CFOs driving sustainability need to unite the organization. Without company-wide buy-in, the strategy may stall.

So how do finance function leaders get the company to think differently about sustainability? Start at the top, with the CEO and the board. CFOs, alongside sustainability leaders, play a pivotal role in showing CEOs that sustainability fuels long-term growth and resilience. Integrating sustainable practices with strategy can boost financial performance, reduce risks and elevate your brand, setting your organization on a strong path.

When it comes to the board, you are accustomed to discussing financials, but now directors need their CFOs and ESG controllers to address sustainability as deadlines for global regulations like the European Union’s Corporate Sustainability Reporting Directive (CSRD) approach. Don’t be surprised by initial skepticism — only 22% of directors in PwC’s 2024 Annual Corporate Directors Survey (ACDS) see ESG impacting the bottom line. In response to questions like, “Isn’t this just a compliance exercise?” CFOs can offer perspective on the additional challenges that come with compliance, such as the collection of new types of information, and how that information can be used to achieve strategic objectives of the company.

Remember other key stakeholders as well. Your workforce is on the front lines of executing sustainability initiatives. Employees need clear direction and context on accountability for producing reliable ESG data and meeting any KPIs. Even more critical, they need to know how their efforts drive business value. Making sustainability work requires contributions from everyone. CFOs also have experience building strong relationships with shareholders. Investors are increasingly incorporating sustainability factors into their investment analysis.

As a CFO, you are well positioned to shed light on the significant commitments needed for new disclosure compliance and a sustainability strategy. Here are ways to build consensus.

Be a strategic visionary and tell a compelling, data-driven story: Use financial and nonfinancial insights that resonate with the board and C-suite. Quantify ESG performance and risks like financial metrics and integrate sustainability data into strategy discussions to foster a value creation mindset. Showcasing reliable data and a visionary outlook can open minds to the growth opportunities in sustainability.
Focus on risk mitigation and growth: Anchor sustainability discussions with the board in risk oversight. Companies are recognizing it as an enterprise-wide concern, requiring specific people, processes and technology to measure impacts like extreme weather on your supply chain or the effects on employees, customers or the environment (such as water use and availability). Collaborate with your chief risk officer and legal teams to spotlight regulatory, reputational and financial risks of compliance, along with operational challenges. This aligns with the board’s oversight role while highlighting how ESG insights can drive operational improvements and new areas of growth.
Share your vision in company-wide communications: Managing shareholder expectations has always been central to a strategic CFO’s role. Now, it means telling the company’s story to make sure this message reaches everyone — from the boardroom to the factory floor.
Create a culture that emphasizes sustainability: Educate and empower employees at every level to adopt sustainable practices. Leadership can set bold goals, celebrate progress and foster a culture that values sustainability for lasting impact.

The CEO’s sustainability checklist

ESG oversight: The corporate director’s guide

2024 Annual Corporate Directors Survey

Lead on sustainable capital projects

Master sustainable capital projects with effective governance and oversight

Meeting sustainability goals with capital projects requires new approaches as they grow in number, complexity and scrutiny. Companies may be planning or executing a variety of projects, from upgrading HVAC systems and installing smart sensors to control temperature and lighting to larger initiatives like solar panel installation or moving to LEED-certified offices. Utilities may even undertake billion-dollar megaprojects like building power plants to meet soaring energy demand, requiring vast resources and years to complete.

To succeed, establish a viable business case for each sustainable capital project, evaluate credits and incentives, secure financing and then meet development schedules within strict budgets. Effective governance and oversight are essential to aligning people, alliances and technology so projects are delivered on time and on budget. Careful supply chain planning is also crucial. Addressing emissions, responsibly sourcing construction materials and efficiently collecting essential data from the start helps meet sustainability targets and upholds fair labor practices.

To meet internal demand, CFOs can work with COOs and others to strategically optimize and manage their growing investment backlog. This includes allocating oversight resources for projects that may stretch beyond traditional commitments.

While CFOs may be familiar with portfolio optimization — selecting, sequencing and timing projects — the criteria for funding may shift as the project profiles evolve. Organizations risk making premature decisions when outdated processes can’t keep up with this evolution.

As sustainability goals evolve, updating review and approval milestones is essential, along with a fresh approach to planning, collaboration and execution. While many companies traditionally self-manage major projects or rely on specialty contractors, consider enhancing project and portfolio oversight to reduce construction delays, control costs and comply with special rules imposed by various grants, incentives, and tax credits.

Investing in project governance, oversight and controls upfront may seem redundant if contractors or third parties are handling these areas. However, with many megaprojects facing delays, cost overruns and potentially costs of noncompliance with grant or tax credit conditions, it’s a proactive way to avoid costly “lessons learned” after a project is completed or abandoned. Even without internal capabilities, consider using a neutral third party for oversight focused solely on the owner’s interests.

Experience in engineering, procurement and construction alone won’t get these projects across the finish line. Meeting sustainability goals demands a multidisciplinary, cross-functional approach from the start. Bringing in technology, tax, finance, reporting, operations, logistics and supply chain management early, with strong project coordination and oversight, is key and can aid in timely delivery and fulfillment of sustainability commitments.

Another consideration is leveraging digital and cloud technologies, which can transform capital projects and create efficient, connected and agile assets across the project life cycle. Major projects generate vast amounts of structured and unstructured data. More than just collecting this data, companies can use technology and generative AI (GenAI) to analyze it in real-time. This helps spot issues, like weather delays or construction setbacks that could ripple through the building schedule for weeks. With these insights, companies can quickly respond to keep projects on track.

For companies with emissions goals tied to capital projects, the stakes are high. Decarbonization targets, often due within the decade, matter to regulators, shareholders, customers and employees. Delays or underperformance carry serious risks. Aligning stakeholders on these risks before approving projects raises the standards for project planning. Assembling a multi-disciplinary team from the outset is essential. Large decarbonization programs may succeed when owners, vendors, suppliers, contractors and service providers adopt innovative contracting and delivery approaches, leverage technology, build resilient supply chains and generate thorough and reliable reporting — paving the way for a sustainable future.

Successful capital project delivery: The art and science of effective governance

Incorporate tax into sustainability

Funding sustainability investments: leveraging tax incentives effectively

The ability to invest in sustainability projects and new technology has never been better because of an unprecedented wave of sustainable tax credits, incentives, grants and other funding sources available to the companies planning, constructing, funding, etc. such projects introduced by the Inflation Reduction Act and the Infrastructure Investment and Jobs Act.

Taking full advantage of these incentives, however, requires careful planning and a nuanced grasp of the evolving commercial, legislative and regulatory landscape, especially post-election. A multidisciplinary approach towards evaluating investments and how the tax incentives and grants can reduce their costs is critical to optimize the cost of the investments. The approach should combine the members of the tax organization with operations, sustainability, capital projects, treasury and business development to optimize the tax costs, increase the return on sustainability investments and deliver value to the organization. Depending on the type of the investment, the tax credits may be transferable creating additional value for the organization.

But there’s a disconnect when it comes to involving the tax team in strategic decisions. PwC’s Global CSRD Survey found that tax was the least involved in ESG reporting efforts of 12 functions studied. That’s a missed opportunity. Tax teams may be unaware of how regulations like CSRD could impact their statutory and tax reporting strategy, governance and risk profile, while sustainability teams often view tax as simply a financial line item rather than an integral piece of the sustainability picture.

Involving the tax function in sustainability reporting and strategy is essential. Here are some areas where your tax team can add significant value.

Capital projects: The use of grants, tax credits and incentives for companies can significantly enhance ROI. The tax team can assist CFOs in pinpointing valuable incentives and credits from the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act, opening doors for companies to invest in capital projects and programs. For energy transition or clean energy projects, the tax team can identify potential grants, incentives or tax credits at the federal, state and local levels, driving substantial cost savings. Involvement of the tax team can help with site selection; modeling and planning; structuring and financing decisions; reporting; the measurement, documentation and transferability of tax credits; as well as due diligence and structuring considerations.

Tax credit monetization: Several IRA tax credits are eligible to be purchased and sold on an established market, while other credits even allow companies to elect to receive a cash payment from the government. These methods for monetizing tax credits can serve as a valuable tool in a CFO’s arsenal for managing cash flow. However, buyers and sellers of tax credits should carefully consider documentation requirements, due diligence efforts and the need for tax insurance that may accompany transferred tax credits.

Regulatory compliance: As regulations like the CSRD expand sustainability reporting, tax policies and data governance increasingly intersect, making tax team involvement crucial. For example, managing consistency and/or differences in data definitions across CSRD, Country-by-Country Reporting, Pillar Two and other external reporting requires appropriate internal controls. As covered in this playbook’s technology section, leveraging IT investments in tech and AI to enable data requirements and reporting across functions not only delivers greater ROI, but also provides stronger data governance. In addition, environmental taxes such as the Carbon Border Adjustment Mechanism (CBAM) carry substantial financial implications that require disclosure. Tax departments can play a key role in quantifying these impacts for accurate, thorough reporting.

Is your company capitalizing on the increased credit opportunity by complying with PWA requirements?

Policy on Demand: Learn more about what is top-of-mind for tax and sustainability

Get reporting and compliance right

If you build it, they will ... work together: A reporting strategy that adapts to evolving regulations

In the past, sustainability reporting was voluntary, guided by what companies considered relevant to investors and stakeholders. Now, mandatory reporting has introduced accounting-level rigor to global sustainability disclosures. A key shift? Extraterritorial impact — these rules affect entities beyond their direct jurisdictions.

This new era demands tighter collaboration between finance, accounting and sustainability teams. With penalties for noncompliance, CFOs, ESG controllers and sustainability leaders need to consider developing a keen understanding of how ESG data flows through company systems, from sourcing to collection, cleaning, storage and calculation. Building strong controls and processes around this data allows them to quickly detect inconsistencies.

No matter the regulation, CFOs and ESG controllers need to be ready to disclose diverse metrics — from workforce conditions and extreme weather impacts to business ethics and greenhouse gas emissions (Scope 1, 2 and 3). This complexity underscores the need for efficient sustainability reporting strategies. Here’s what CFOs and their teams may consider:

Avoid pitfalls in materiality assessments: Compliance with CSRD requires identifying material sustainability impacts, risks and opportunities through a double materiality assessment. While the financial component is still key, this assessment broadens materiality to include stakeholder and societal impacts. When scanning for risks and hidden dependencies, avoid these common pitfalls.
Digitally-enable your ESG data reporting: Many companies struggle to realize value from tech investments. According to PwC’s 2024 Digital Trends in Operations survey, 69% of operations and supply chain officers say tech investments haven’t met expectations. CFOs and CIOs that get this right have a strategic opportunity to transform their decision-making process by grounding it in data that can be analyzed throughout the year.
Build trust through strong internal policies, practices and controls: Your reporting strategy needs to include strong controls and policies to produce reliable and thorough data for regulatory compliance and successful audits. Keep in mind that many global disclosure regulations set deadlines for companies to secure independent assurance. Doing so can build trust among skeptical stakeholders. PwC’s 2023 Global Investor Survey found 94% of respondents believe corporate reporting contains unsupported sustainability claims, but 85% say reasonable assurance would boost their confidence in sustainability reporting significantly. Regulations often start with limited assurance but plan for a shift to reasonable assurance over time.

Our latest views on key global ESG disclosure regulations

Companies are on the cusp of disclosing more sustainability data than ever before, fueled by disclosure regulations and frameworks. Here’s our latest points of view on scoping, requirements and deadlines for three initiatives that your organization may be focusing on.

The Corporate Sustainability Reporting Directive: The European Union’s signature sustainability regulation applies to some 50,000 businesses that are listed in the EU or have significant operations there, regardless of where they’re based. It requires them to report more about their sustainability performance than other pieces of regulation.
California’s climate disclosure laws: Passed in 2023, these laws may likely apply to more than 10,000 US companies, including both public and private organizations as well as subsidiaries of non-US headquartered companies.
The SEC’s climate-related disclosure rules: Adopted in 2024, but currently on hold, these rules significantly expand the required climate-related disclosures in SEC filings. The disclosures cover strategy, governance, risk management, targets and goals, greenhouse gas (GHG) emissions and financial statement effects.

Depending on where your company does business, you’re likely to encounter additional reporting requirements as individual states and countries worldwide develop their own regulations. A centralized, consistent reporting process is the most effective way to comply with diverse requirements.

PwC’s sustainability reporting adoption tracker can be a valuable tool. For companies that may need to meet multiple regulations, this tracker provides a country-by-country view of reporting frameworks, timing, scope and independent assurance requirements.

These sustainability regulations and standards can also impact your business

While the CSRD, California and the SEC grab most of the attention, there are other regulations and standards your company needs to understand. Here are a few examples.

European Union Taxonomy: The EU taxonomy is a classification system that aims to guide investors, companies and policymakers in identifying sustainable economic activities. The taxonomy sets out specific criteria that activities need to meet to be deemed environmentally sustainable, focusing on six key objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.

Corporate Sustainability Due Diligence Directive (CSDDD): The CSDDD establishes rules for most sectors and companies designed to protect human rights (e.g., prevent child labor and worker exploitation) and the environment (e.g., prevent pollution and biodiversity impacts) in its upstream and downstream global value chains. The CSDDD requires a company to take measures to prevent, end, or mitigate its impacts on the rights and prohibitions included in international human rights agreements and environmental impacts that run contrary to a number of multilateral environmental conventions.

Carbon Border Adjustment Mechanism (CBAM): By applying a levy upon the importation of certain carbon-intensive products into the EU, CBAM seeks to level the playing field between these goods and potentially higher-priced EU products operating under the EU Emissions Trading System (EU ETS), which factors in the price of carbon. CBAM was designed to maintain the competitiveness of EU companies’ products against imports.

Australia’s climate disclosure law: The country’s disclosure requirements apply to both public and private entities that meet prescribed size thresholds. The disclosures will be determined by the Australian Accounting Standards Board. The largest entities in scope will be required to report in 2026 (on 2025 information). Phased-in assurance requirements begin with limited assurance on Scope 1 and Scope 2 greenhouse gas emissions from year one of reporting and advance to reasonable assurance of climate disclosures in 2030. 

Many companies have set ambitious decarbonization goals. So why are so many off track?

Sustainability isn’t just a check-the-box endeavor. For many companies, it’s a potential game-changer for growth, innovation and resilience. Yet many organizations fall short in execution. Although today’s headlines seem to suggest that companies are backing away from their sustainability and climate efforts, a PwC study of 214 major publicly traded companies found that only 5% are slowing down their climate ambitions and, surprisingly, 37% were getting more aggressive. A full 90% of the companies studied were maintaining or accelerating their decarbonization goals.

Still, PwC research also uncovered a troubling reality. Ten out of 11 sectors are on track to miss their net zero targets unless they change course.

Here’s why so many companies are missing the mark.

Not doing the right math: Leaders underestimate the data and resources needed, relying on high-level estimates that ignore shifting conditions and technologies.
A focus on short-term wins: Many companies cherry-pick easy projects and defer the tough ones. Investment plans prioritize quick wins over transformative change, making the future achieving of decarbonization goals harder.
Lack of strategic alignment and accountability: Poor coordination and under-resourcing lead to ineffective sustainability efforts.

The good news? There were plenty of companies in the study that had done the detailed planning to understand the initiatives needed to meet their targets, relied on internal carbon pricing to better prioritize their capex investments, focused on a mix of short- and longer-term wins and deployed an effective operating model to better manage the portfolio of decarbonization efforts. Not surprisingly, these companies were on track to reach their decarbonization goals.

Read our views on how companies can grow through decarbonization.

ESG regulations and your company

PwC’s Sustainability Reporting Guide

Worldwide impact of CSRD — are you ready?

Use tech and AI to streamline sustainability

Trusted data and GenAI can lead to better analytics, inform your strategy and help you meet regulatory requirements

ESG data of all stripes are the foundation that underpins sustainability strategies. The insights gleaned from this information inform a company’s view of its carbon footprint, help determine the selection and sequencing of projects to reduce emissions and influence the targets you set and the timeframes for meeting those goals. If the data is of poor quality, companies may get the false sense that they’re making progress, leading to wasted resources, time and capital.

CFOs, working with CSOs and technology leaders, can put in place effective controls, processes and governance that allow companies to have greater confidence in the lineage and traceability of data and to seamlessly collect and share reliable and thorough information not only across the organization — finance, operations, procurement, sustainability, human resources, risk — but also between supplier and customer. Equipped with a holistic view of the organization, this process can allow company leaders to make impactful decisions that enable sustainability initiatives to not only be effective but transformative. In turn, CFOs can act confidently to reconcile long-term vision with near-term challenges and regulatory commitments to shape a strategic direction for your sustainability initiatives that drive value to the business.

A first step in this process involves evaluating your company’s sustainability technology landscape. Assess your current systems with an eye toward identifying capabilities gaps. Cloud-based analytics, carbon calculators, data lakes, ERP add-ons, chat-bots for ad-hoc querying — these solutions may be part of the conversation, but you likely can augment your current systems with cost-effective upgrades. Remember, though, that reporting requirements are bound to evolve and decarbonization will become more complex as you take on advanced projects. The technology you select needs to be flexible enough to adapt to those changing demands.

For this reason, your technology landscape assessment may also cover the potential for how AI and generative AI (GenAI) can help you meet reporting requirements and emissions reductions faster and cheaper. One of the key goals of leveraging technology can be eliminating manual processes. Handheld devices and sensors can help with emissions data collection in warehouses, manufacturing centers, factories or out in the field. In turn, AI and GenAI can automate the content needed for disclosures, perform data quality checks, identify and fill data gaps, scan for updates on cross-border regulations, draft initial regulatory reports (that can then be reviewed by finance function leaders) and create effective process flows and control matrices.

As CFOs, ESG controllers, CSOs and CIOs make decisions about technology use, they also need to understand the total cost of ownership and socialize this expense with the rest of the C-suite. This discussion includes the costs related to licenses, the implementation of new technology with current systems (and the potential for future upgrades), change management, the build out of controls and processes for data collection and storage, and independent third-party assurance of that information.

By doing all of that, your organization is setting itself up to reap the benefits of using this data for other business functions. When technology, data, AI and sustainability are strategically aligned, they can inform third-party risk management, build supply chain resilience, help design and commercialize low carbon products that may command price premiums, strengthen forecasting and planning of capex investments and enable the sharing of the carbon intensity of products to customers. CFOs and CSOs can also track real-time progress against sustainability targets, providing instant insights to stakeholders to support timely adjustments and keep targets on track.

The critical role tech and data plan in strategic sustainability

Building a sustainable path to cleaner ESG data

Upskill on sustainability strategy

Finance goes green: How the workforce can lead the sustainability charge

As the role of the CFO expands with a focus on sustainability, so does the influence of the finance function. But talent with the necessary experience and tech skills is scarce. CFOs may need to reimagine roles and reskill staff, enhancing both technical and nontechnical skills like passion and teamwork, which are equally vital.

Managing a sustainability strategy requires CFOs and their teams to develop key skills, take on essential roles and continuously upskill as sustainability topics evolve. CFOs need to integrate these elements into financial planning, risk management and reporting, using strong analytical skills to assess long-term financial impacts of sustainability initiatives and effectively communicate these impacts to stakeholders.

A crucial addition to your finance team the last few years is the ESG controller, a role dedicated to overseeing the company’s ESG reporting initiatives and a key driver of collaboration across the organization. The ESG controller leads the timely tracking of sustainability metrics, aligning with regulations and stakeholder expectations. By centralizing ESG responsibilities, this role allows CFOs to focus on strategic issues while making sure that sustainability remains a priority.

What's next?

Prepare now for what's around the corner

Every day, leading companies are transforming their operations by embracing and embedding sustainability into their broader strategies. Enabled by technology, these companies look at sustainability holistically, using data, analytics and other tools not just for compliance and reporting requirements, but also for identifying ways to reduce energy demand, cut costs, drive growth and build long-term resiliency.

Even if your company is advanced in its sustainability program, you’ll need to prepare for future requirements. Global regulations may soon mandate reporting on deforestation, sustainable packaging, human rights and nature impacts among other things. This complexity underscores the need for effective sustainability reporting strategies.

This playbook serves as a detailed guide for CFOs, ESG controllers and finance leaders to take on sustainability challenges and drive meaningful change. While the surge in ESG reporting requirements is a primary consideration, CFOs and their teams can also prioritize embedding sustainability across all business functions and integrating these metrics into financial planning, risk management and corporate strategy. This approach not only mitigates risks but also reveals growth opportunities, transforming sustainability from a compliance obligation into a strategic advantage.

The CFO’s sustainability playbook for driving growth