Making finance sustainable

Professor Bob Berry returned to our breakfast programme this week with another thought-provoking look into the world of finance, in a session that was co-hosted by Vicki Hutchinson, Chair of the Notts, Derby and Lincoln network of ACCA. This time he considered the concept of sustainable finance, and the conflicting forces within it.

Bob started by exploring definitions of both finance and sustainability, to determine how they might go together. He proposed that standard explanations of finance play down context, which can lead to poor decision making. Furthermore, many companies working in the area of “sustainability” may not pay full regard to ensuring the businesses can sustain themselves.

A case study illustrated these issues. Glasgow City Council’s 25-year contract to recycle and treat its residual waste in a newly-built facility led to a chain of three sub-contracted companies, all of which were new to the “energy from waste” industry. One entered administration after cash flow problems, causing issues for the second company, which was ultimately fired from the contract by the third. Meanwhile, Glasgow’s long-term commitment left little flexibility to adapt.

Bob rounded off by extracting lessons from this case study. These included how short-term financial management is critical, that financial analysis should be applied to both “tactical” and “strategic” sustainability initiatives, and that business owners should seriously consider the benefits as well as the costs of flexibility.

As with previous visits, Bob’s presentation was very well received by our business audience, with praise for the “insight and information with proven academic and industrial strategy”. We thank Bob for his insights, and look forward to our next breakfast event in April, on the subject of Business Attractiveness.

For more information and to register for our next breakfast event, click here.