How CFOs can mobilize a company to achieve climate goals
As more companies adopt ambitious climate goals, CFOs are tasked with turning those ambitions into achievable realities by embedding carbon reduction strategies into operations and strategy. In a recent Q&A with Kevin Berryman, President and CFO of Jacobs Engineering, I explained how the finance leader is going about taking climate action in a systematic way, addressing both long-term goals term and the communication and disclosure of vital information to investors.
Jeff Thompson: Jacobs is a 75-year-old company that provides a full range of professional services including consulting, technical, scientific and project delivery services to a wide range of commercial, industrial and government clients worldwide. In 2019, Jacobs launched its PlanBeyond™ sustainability approach, committing the organization to integrating environmental, social and governance (ESG) considerations into its operations, customer solutions and corporate culture. What role did the finance function play in bringing PlanBeyond to fruition? Has your dual role as CFO and President facilitated the launch of such an organization-wide strategy?
Kevin Berryman: PlanBeyond™, our sustainable business approach, is a key part of Jacobs’ transformational business strategy to become a company like no other. Guided by the United States
United Nations Sustainable Development Goals, PlanBeyond™ provides our framework for planning beyond today for a sustainable future.
The framework draws on more than four decades of experience in planning and delivering end-to-end solutions that embrace and advance sustainability and ESG principles. Our annualized ESG revenue for fiscal year 2021 was approximately $6 billion, representing over 45% of company revenue. That said, our goal is for every client project we deliver to contribute to ESG and/or climate response solutions by 2025.
As Executive Sponsor of PlanBeyond™, I helped lead our sustainable business approach when it launched. This initiated a close partnership and collaboration with the firm’s ESG and finance teams – a partnership where we learned from each other on this journey through the rapidly changing ESG landscape.
The organization’s role of the CFO is to help drive change in our organization and our global workforce by operationalizing ESG and sustainability principles in everything we do at Jacobs. To achieve our ambitious 2025 goal, our business systems have been modified to capture key performance indicators of our sustainability commitments.
In partnership with our corporate ESG team, specific KPIs have been selected as they either relate to externally published objectives and/or are materially material to our ESG information. And on a quarterly basis, during our corporate financial and business reviews, our leaders are tasked with reporting on their ESG KPI performance in addition to their financial performance to provide greater awareness, visibility and accountability for achievement. progress against PlanBeyond™ across our business.
Thomson: The SEC has proposed new, more stringent rules for climate risk disclosure that will require management accounting skills to predict and assess the impacts of climate risks and opportunities on future cash flows. What is the finance team’s role in sustainably managing the business that goes beyond mandatory external reporting disclosures for SEC registrants? Has integrating sustainable business issues into corporate reporting proved difficult for your finance department? What skills and competencies do you expect from your team to meet these new needs?
Berryman: Climate Response and ESG are central to Jacobs’ FY 2022-2024 strategy. Our transparency and performance in these areas are key metrics for our investors, employees, customers and partners. And our performance impacts our brand and market valuation, so the rules proposed by the SEC are naturally on the minds of our finance team and board.
Jacobs has made significant progress, meeting our initial climate action goals, achieving carbon neutrality for our operations and business travel in 2020, and embracing 100% low-carbon electricity – all while setting science-based targets Climate Working Group Compliant – Related Financial Disclosures.
On Earth Day 2022, we released our updated Climate Action Plan, becoming the leading consulting firm and one of the leading companies in the world with net zero targets endorsed by the Science Based Targets initiative.
Our ambitious suite of climate commitments includes:
1. Ensure that every client project becomes a climate response opportunity
2. Achieve net zero greenhouse gas emissions across the entire value chain by 2040
3. Maintain carbon neutrality and 100% low carbon electricity for our operations
We also report on a wide range of ESG issues in our annual publications. Our report for fiscal year 2021 is aligned with the Sustainability Accounting Standards Board framework and informed by the standards of the Global Reporting Initiative. Each year we report to the CDP (formerly the Carbon Disclosure Project) and the S&P Global Corporate Sustainability Assessment which is the basis of the S&P Global ESG Score and a key factor for inclusion in the Dow Jones Sustainability Indices.
From a skills and competencies perspective, members of the CFO’s organization must be fully proficient [the] national and international climate, [and] ESG and sustainability reporting and disclosures. And they must have strong analytical, project management and communication skills to respond to clients and investors, as well as proactively engage with ESG raters and graders.
Thompson: A necessary component of sustainability is innovation and the ability to rethink long-established practices in terms of supply chain, operations and business practices. How does finance contribute to a culture of innovation at Jacobs? How do you motivate your team to think more creatively when it comes to providing green infrastructure and building solutions?
Berryman: For the CFO’s organization, it’s about making smart investments in areas that will accelerate growth. To provide direction and enable the success of our strategy for fiscal year 2022-2024, Jacobs management has narrowed it down to three moving accelerators: Climate Response, Consulting & Advisory and Data Solutions which are seen as driving change in the world today, and far into the future. The three accelerators are aligned with the company’s sustainable business approach and the Jacobs brand promise to challenge today and reinvent tomorrow.
As a driver of innovation, we recently launched a Sustainability Innovation Challenge which provides funding to individuals and groups within Jacobs for ideas that have the potential to have the most positive impact in addressing the climate crisis and/or maximizing sustainable outcomes. We know that innovation does not come from a corporate mandate. Instead, we give people at all levels of the organization the courage to approach a problem differently and work together to create results that deliver value to our customers and society as a whole.
These results are captured in Value Plus, our internal process for generating and quantifying ideas that improve the execution and delivery of our projects, and deliver economic, environmental or social return on investment to our clients.