Sustainability in business requires integrity of your processes and accounts. Your organisation needs to create long term plans, forecasts and strategic management of your finances, while still managing monthly reporting and budgetary control. In addition, it must ensure transparency with audited financial results and regulatory reporting.
Intertek’s new Corporate Sustainability Financial certification standard ensures your organisation links its financial processes to its overall sustainability objectives. In this episode of Assurance in Action, Hanny Widjaja, Global Commercial Director, Business Assurance and Food Services, discusses how finances fit into an organisation’s sustainability plan, what companies need to consider about their financial processes, and how the new Intertek standard addresses your organisation’s financial plan.
Social Media: LinkedIn | Twitter
Links: Corporate Sustainability Risk Management Certification | Operational Sustainability
Follow us on- Intertek's Assurance In Action || Twitter || LinkedIn.
Sustainability in business requires integrity of your processes and accounts. Your organisation needs to create long term plans, forecasts and strategic management of your finances, while still managing monthly reporting and budgetary control. In addition, it must ensure transparency with audited financial results and regulatory reporting.
Intertek’s new Corporate Sustainability Financial certification standard ensures your organisation links its financial processes to its overall sustainability objectives. In this episode of Assurance in Action, Hanny Widjaja, Global Commercial Director, Business Assurance and Food Services, discusses how finances fit into an organisation’s sustainability plan, what companies need to consider about their financial processes, and how the new Intertek standard addresses your organisation’s financial plan.
Social Media: LinkedIn | Twitter
Links: Corporate Sustainability Risk Management Certification | Operational Sustainability
Follow us on- Intertek's Assurance In Action || Twitter || LinkedIn.
Welcome you are listening to total sustainability and progress into techs podcast for organizations looking to create a more sustainable future. Our episode today will cover sustainability and finance. Um, joining me today is Hani[inaudible], who is the commercial director for, uh, business assurance and food services. Um, Hani, how are you doing today?
Speaker 2:Good. Good. Thank you. Thanks for having me on your podcast.
Speaker 1:Great, great. So, uh, let's start with a bit about you. So, uh, what do you do with Intertek and what's your background?
Speaker 2:Um, so, uh, I've been working for insect for over 13 years now. So my background actually, I'm a qualified chartered accountant. Um, so, so far I've been in various roles within the tech. Uh, so currently I'm in the part of the global commercial team of business assurance, misses line and foot services. So yeah, just a little bit about me. So I, I do have a little bit of a finance background.
Speaker 1:Great. So, uh, how does finance relate to sustainability?
Speaker 2:So, um, well, uh, luckily as part of the global business team, uh, I've been fortunate, uh, to get involved in a few sustainability related project for our multinational as well as regional clients. Um, well everyone knows that sustainability has long been for at least four years, uh, closely link with the environmental protections, uh, waste management and reductions. Uh, but in recent years, the scope of the sustainable practice, uh, has changed drastically, uh, company can't no longer, uh, can no longer claim to be sustainable by simply reduce, reuse and recycle. Um, a lot of people say that business sustainability is essential to the longterm burst parity of global companies. Uh, today's smart business leaders knows that they are operating in a fishbowl, uh, where everything they do is pretty much on display. Um, uh, and social media actually enable news and information to travel around the world in seconds. Um, traditional finance, uh, focus on, uh, financial returns, um, as everybody knows a completely separate from both society and the environment, uh, in contrast, sustainable finance, uh, really considers financial social and environmental returns in, uh, as a combined, uh, scope. Uh, one of the main tasks of the financial system is to allocate funding to its most productive use, but the recent shift to sustainability scope means changing our ideas about what is productive. Uh, finance can play really, uh, an important role here in allocating finance, uh, investments to sustainable companies and, uh, projects. And hence, uh, it can accelerate the transition, uh, transition to a low carbon circular economy. Uh, finance can also assist in strategic decisions on the trade-off between sustainable goals. Also, uh, investors can exert influence over companies. They invest in. Uh, so a lot of investors can steer a company towards sustainable business practices. Uh, finally finance is, uh, good at pricing risk for evaluation purposes and can also help to deal with inherent uncertainties about environmental issues, such as the impact of carbon emissions on climate change. Great.
Speaker 1:So what should organizations keep in mind when addressing financial sustainability?
Speaker 2:Um, firstly, they need to consider and put in place a long-term plan that delivers sustainable returns taking into account, uh, key risk, uh, also investment requirements and macro competitive trends. Uh, the capital allocation must take also into account their sustainability objectives that have been identified as part of the strategic plan as well. Um, another important element is that the sustainability objectives and the associated costs invocation have been identified as part of the annual budget that is clearly broken down into a sufficient level that, uh, to enable analysis at the operational level.
Speaker 1:So what types of issues are commonly found in a financial systems audit,
Speaker 2:Uh, for those companies that managed to overcome the challenge of coming up with a long-term sustainability plan and, uh, maybe they're able to capture most of the risk and investment requirements they need to ensure all key assumption news are clearly documented and it should be supported by credible source data, either externally very viable or internally generated by expert in their relevant field. Uh, this is probably one of the large barriers that companies face look, your cough, uh, this, uh, you know, sustainability project. Another key principle of financial system, uh, audit is reporting a company needs to be able to produce monthly data related to key sustainability objectives and reviews performance as part of the normal reporting cycle. This is pretty important. Uh, there should be a quality process as well to ensure that metrics are being correctly, measured and reported. Uh, they should be include tying in back the data to the core finance and operating systems. So basically the companies, uh, KPI
Speaker 1:And what types of organizations are more susceptible to issues surrounding financial sustainability.
Speaker 2:Um, I personally believe financial institution have an important role to play in using their capabilities to promote economic and social development in a sustainable way that can both, uh, further the development of sustainable finance and sustainability more general. Um, some of you probably heard that the international finance corporation IFC, uh, they estimates, uh, about 23 trillion us dollars of climate related sustainable finance opportunities in the emerging markets up to 2030. So why is the, uh, finance, uh, sustainable finance is fundamental, um, many investment and managers and corporates increasingly accept that the consideration of ESG ESG is the environmental social and government factors, uh, does not affect investment returns, but in fact, it can deliver risk and performance benefits. Um, Boston consulting groups, uh, reports actually shows that, uh, non-financial performance captured by ESG metrics is statistically significant in predicting the valuation multiples of companies in varieties of industry. Um, other evidence that confirms the significant financial benefits of ESG factors, um, IFC analysis, uh, over 600 companies in their portfolio. They found that those with a good environmental and social performance, uh, they really up perform other companies by about 2.1% in terms of return of equity, um, companies that focus on ESG issues, they're more highly valued and they can perform better because they have a lower costs of capital due to their superior risk profile. Uh, they're more fitable and, uh, they will outperform should any unexpected events, uh, occur. Um, this is according to MSEI report. So in short, uh, even if one company they want to ignore any ethical imperatives for companies to commit to ESG and investors to consider ESG factors, they appear to be a clear financial report rewards from adopting ESG as a best practice. This is why I believe, uh, banks or financial institution. They are really have a powerful tool. Uh, I E financing to promote change. Uh, they can blacklist industries that contribute to climate change, uh, such as the, uh, coal fire, a fire power, or the agro industry involved in the forest stations or sectors where there are human rights violations, for example, uh, and they can support microfinance, renewable power, but it finance, which uses development finance to leverage private cycle funds and other financing that promote sustainability. So, um, I guess the support in resolving a world's environmental and social challenges, uh, I really think that sustainability should be at the forefront to all finance.
Speaker 1:So what does Intertek address in regards to, uh, financial sustainability, uh, with their new, uh, total sustainability service,
Speaker 2:Uh, for the financial element of intersect sustainability program? Uh, the main focus is the integrity of process and accounts. Uh, we cover the fundamental principle of finance, uh, financial scope with the aim, um, mainly to support organization in linking their sustainability objectives with their day-to-day operation performance indicator. This is quite, uh, important and ensuring that, uh, the effective measurement and accountability are in place accordingly. Um, so, uh, in order to survive and grow organization required to report not only on their financial performance, but also their non-financial performance. So this is why, again, I'll bring in the ESG, um, and why ignoring the ESG and climate change can risk, you know, uh, the company and it's no longer an option. Um, so we at insurtech, we understand that this evolving pressures around, uh, these challenges, hence our financial, uh, part of the sustainability scope can really support organization to respond by identifying the opportunities, uh, and also ensuring the broader value impacts risk and outcomes are properly measured and reporting.
Speaker 3:Thank you. Thank
Speaker 1:You for listening to total sustainability in progress. If you would like to learn more about sustainability in finance, please visit our website at intertek.com/sustainability and follow us on our social media channels. Uh, links for these will be in the description of this podcast.