CFOs Bet Big on Sustainability for Higher Returns

NEW YORK, February 17, 2025 – Financial leaders (FDPs) are changing their sustainability financial strategies, recognizing that it is a key driver for business profitability and resilience. According to a recent survey by Kearney and We Don’t Have Time, 92% of CFOs plan to increase their sustainability investments by 2025, with more than half of them committed to significant spending increases.

The findings question the prevailing narrative that economic uncertainty delays climate action. On the other hand, the CFO doubles sustainability and 69% expect more returns from green initiatives than traditional investments. This marks a fundamental change: sustainability is no longer just a measure of corporate social responsibility; It’s a financial need.

Why does the CFO focus on sustainability?

The survey, which included 500 responses from CFO in the United States, the United Kingdom, the United Arab Emirates and India, revealed that financial leaders integrate sustainability into their basic investment decisions. Most CFOs (94%) now take sustainability considerations into account when allocating capital, indicating a significant shift in corporate financial strategy.

According to the report, the main motivations for increasing sustainability spending are:

• Regulatory compliance: With new ESG disclosure rules emerging globally, CFOs are aligning their strategies with evolving requirements.
• Long-term cost savings: Many CFOs are measuring the cost of inaction, particularly in the US, where 75% have established such metrics.
• Competitive advantage: Companies that prioritize sustainability are positioning themselves as leaders in a rapidly changing business landscape.
• Investor and employee expectations: ESG-focused investment funds and workforce demands for greener practices are influencing financial strategies.

Does the CFO view sustainability as a cost or value regulator?

Despite the growing recognition of the financial benefits of sustainability, it remains a paradox: 61% of CFOs still consider these investments as costs rather than value creators. This suggests that, although green initiatives are increasingly high priority, many financial leaders have not yet fully integrated sustainability into their financial models.

Beth Bovis, Global Sustainability Leader at Kearney, highlighted the changing role of DPF in the green transition:

“The UFO perspective is often overlooked in the business sustainability debate, but its role is crucial. Like those who control financial levers, UFOs are in a unique position to have a long-term impact on the business strategy. And our study points out that they are already taking steps in this direction

Sustainability investment priorities for 2025

Instead of focusing exclusively on long-term net objectives, UFOs direct capital towards immediate sustainability and high impact measures. The main areas of investment are:

• Sustainable materials: Shifting toward renewable and low-impact resources to reduce carbon emissions.
• Energy efficiency: Investing in advanced energy management systems to lower operational costs.
• Waste reduction: Implementing circular economy practices to minimize resource waste.
• Supply chain decarbonization: Partnering with eco-conscious suppliers to cut emissions across value chains.

These practical initiatives reflect a growing trend of UFOs, from passive climate commitments to data-based active sustainability investments.

How are CFO Medindo the cost of inaction?

One of the most striking results of the report is the increased emphasis placed on assessing financial risks not to invest in sustainability. In total, 65% of CFOs now incorporate the cost of inaction into their financial models. This is the most common practice in the United States, where 75 per cent of financial frameworks set clear parameters, compared to 58 per cent in the United Kingdom and India.

By quantifying potential regulatory sanctions, reputational damage and operational disruptions related to climate inaction, CVOs strengthen the sustainability investment business case.

What this means for the future of corporate finance

The survey highlights a significant change in financial leadership: The CFO no longer views sustainability as an optional expenditure, but as a key element of the operational strategy. This change is due both to financial incentives and to the growing expectations of stakeholders.

However, work remains to be done. The fact that 61 per cent of UFOs continue to see sustainable investment through a cost-based target underscores the need for new models of financial valuation. Companies need to develop their frameworks to better understand the financial benefits of sustainability, such as risk mitigation, increased brand value and regulatory benefits.

As sustainability continues to restructure corporate finances, CFOs will play a key role in ensuring that companies not only comply with ESG standards, but are also positioned for long-term profitability in a greener economy.

Source: News-Journal, Digit.fyi, Forbes