[Podcast] Financial departments facing RSI problems

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

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

But little by little, things are changing. Under the pressure of stakeholders who are increasingly demanding that the company sincerely commit to the transition, financial departments are forced to take an interest in CSR. And this merger changes the situation. 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 finance and CSR expert Gregory Schrobiltgen 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 takes a lot of time, it is interested in extra-financial affairs and breaks the traditional hierarchies of the commercial world, which places profit above everything else. On the contrary, the world of finance shines rather by its short-termism, and by the almost sacred primacy it grants to economic performance.

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

The world of finance therefore begins, slowly, to integrate social and environmental issues, and this is reflected in the world of business by the meeting of functions: we now see the appearance of functions “RSE and financial management”. “Department of Sustainable Finance”.

Towards the standardization of CSR finance methods

Little by little, this trend is leading to a certain homogenization of ESG finance standards. Integrated accounting is beginning to take shape, and the differences in methods and tools to bring together financial and extra-financial issues in a single account are becoming more and more sophisticated.

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

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

Still a long way to go

Despite everything, for financial departments as for CSR departments, these developments remain immense challenges to meet. 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 that represent each of the initiatives, often private, that want to set up their repository. It is therefore difficult to find it.

There is still a long way to go before reaching universally recognized multi-capital valuation and accounting methods, which would allow finance to move towards a real consideration of environmental or social issues. But today, companies, especially the biggest ones, have to work urgently on this subject. Because finance is now under the focus of all criticism and attention, and will no longer be able to escape the invitation of its actors to take into account the ecological and social reality.

In this complex world that lies before us…

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