How To Be A Financial Ambassador For The Planet

Julia Roberts is Mother Nature in a series of short films titled Nature Is Speaking; but are humans listening?

One human who is listening intently and inviting others to listen as well is Dafina Nonkulovska, CFO Lead Sustainability at Rabobank, the Dutch cooperative bank with a mission. Speaking at the recent SAP and SAP Fioneer for Financial Services Forum in Munich, Nonkulovska highlighted the simple message at the heart of the series: Nature doesn’t need people. People need nature.

“Nature will survive the extinction of humanity and carry on for millions of years, just as it always did before humans came along,” she said. “Inherently, sustainability is about the future of humanity. As a cooperative bank, one of our most important stakeholders is society. Our job to deliver social and economic value to our customers for their future well-being.”

Introducing the Chief Value Officer

With its core business focused on food and agriculture, the majority of Rabobank’s customers have a vested interest in working with nature and not against it. The company originally started off supporting farmers and small businesses in the Netherlands, but a few years ago, it made a strategic decision to be part of the global energy transition as well. That’s why Rabobank is banking the transition in two vital sectors: agriculture and renewables. You need both to feed the world.

Rabobank, part of the Net Zero Banking Alliance whose members are financing the transition of the economy to net-zero, has been tackling major societal challenges for 125 years. Remaining relevant and delivering on its strategy for a sustainable future requires a shift in the way Rabobank steers its business.

“We’re moving from a focus only on asset growth and returns to strategic balancing of risk, return, and sustainability. That means reinventing the CFO role,” said Nonkulovska. “By integrating sustainability into the strategic cycle, the CFO becomes the CVO, or Chief Value Officer.”

Rabobank is using a four-step methodology to integrate sustainability into the strategic cycle (PDCA):

· Plan activities, based on double materiality assessment, to integrate sustainability in our business model

· Do monitor the activities in line with the energy and food system transition strategies and vision

· Check the impact through meaningful KPIs and other targets

· Act by providing insights for improvements to the strategic goals and way of doing business

“By taking these steps, financial professionals can become ambassadors for the planet,” said Nonkulovska, who believes sustainability is not a department, but a mindset embedded in every aspect of the business and the organization.

Estimating carbon footprint

It starts with making sure that CFOs and financial professionals understand their role in sustainability. According to Nonkulovska, in addition to their existing skills, financial professionals need to adopt new ways of working. They need to demonstrate greater agility in the new environment and working with colleagues who are not in the finance world. Not only must they learn skills relevant to climate impact and climate accounting, but more importantly, they must use storytelling skills to provide data-driven insights in a meaningful way, making them understandable for many stakeholders.

The bank has established a process of estimating the carbon footprint of clients in various sectors such as transportation, manufacturing, or agriculture, relying on specific indicators in each one. Estimating carbon footprint requires a huge collaborative team. You need people from the business who can provide specific carbon-related information from their clients, along with people from the research department and others delivering market or sector relevant information.

To understand Rabobank’s footprint in a specific investment in a specific country, the bank must understand and assess the client’s overall footprint, based on the assets in that landscape along with the emissions of the relevant sector in that country. The bank then uses a specific methodology based on its market share to determine its footprint in that investment.

Activating the financial community

Rabobank provides clients with:

1. Financial solutions, new practices and investments addressing their challenges to decarbonize operations

2. Sector knowledge shared with all networks and parties in the F&A value chain

3. Solutions supporting business models that marry economy and ecology through projects like Foodbytes or Acorn

“Acorn empowers smallholder farmers to turn the tide of climate change through advanced agroforestry, tracking technology, and carbon offsetting,” she explained. “It helps smallholder farmers to stop deforesting and reforest by growing trees. They get carbon credits that can be sold to companies that want to offset their emissions.”

The bank has developed a scalable method of measuring, certifying, and monetizing the biomass growth of planted trees and turning that into Carbon Removal Units (CRUs) which are sold to organizations with strong emission reduction commitments. To close the loop, 80% of the income of every sold CRU flows back to the original smallholder.

This approach still requires scale, as the final version of the GHG protocol on carbon removals and offsetting has yet to be published. It is important to note that implementing solutions that value nature without an accompanying methodology can be contradicting in the world of accounting and finance. This means CFO professionals must remain informed and flexible in a world of sustainability where not everything is precise and concrete.

In conclusion, Nonkulovska’s recommendation for financial professionals is to remember that sustainable business is long-term business. By building awareness and developing fluency in the language of sustainability while taking a leading role in management and reporting activities, CFOs have a unique opportunity to steer business towards a future fit model.

Reiterating the message of the video series, nature doesn’t owe humans anything. It can give, and it can take back. Financial professionals can make a big difference when it comes to maintaining the balance for humanity.

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