Almost all Chief Financial Officers (CFOs) say that they will invest more in sustainability this year as they begin to recognise the business case behind such initiatives, according to new research from global management consultancy Kearney.

The latest report, Staying the Course: Chief Financial Officers and the Green Transition, delivered in collaboration with climate action media platform We Don’t Have Time, found that 92% of CFOs report an increasing appetite for sustainability investments, with more than half saying they will significantly increase sustainability spending.

Added to that, the survey found that 69% of financial executives expect a higher ROI on their sustainability initiatives compared with more conventional investments, while 94% reported that they incorporate sustainability considerations into their overall investment decisions.

The data shows that nearly two-thirds of CFOs (60%) said they plan to allocate more than 2.1% of their revenue to sustainability this year, which Kearney said indicates that sustainability has moved from a ‘nice to have’ to a foundational element of modern business.

Among their priorities, CFOs ranked increasing the use of sustainable materials, driving forward sustainable innovation, reducing waste, and focusing on ESG regulations and ratings as their top concerns.

However, the research, which surveyed 500 CFOs across the world including in the UK and US, revealed varying motivations, with 61% of CFOs still viewing these sustainable investments through a cost-focused lens, rather than considering the long-term value they may generate.

On a positive note, 65% of CFOs are now measuring the cost of inaction, signalling an increasing awareness of the long-term risks posted by climate change and regulatory penalties.

Measuring the cost of inaction is particularly prevalent in the US, where 75% of CFOs have established such metrics, although the practice is somewhat less in the UK (58%) and India (58%), a lower figure which might be troubling given India’s position as one of the world’s foremost emitters of climate changing greenhouse gas.

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“The perspective of CFOs is often overlooked in the corporate sustainability debate, yet their role is crucial,” said Beth Bovis, global sustainability lead and partner at Kearney.

“As those in control of financial levers, CFOs are uniquely positioned to have a long-term impact on business strategy. And our study highlights that they’re already taking steps in this direction.

“ESG reporting is increasingly falling under the CFO’s responsibilities. But beyond simply ensuring regulatory compliance, CFOs can lead the charge in driving investments that not only reduce emissions but also deliver tangible commercial value for the business.”