The role of the Chief Financial Officer in driving low-carbon transition

The report positions the Chief Financial Officer (CFO) as a pivotal figure in the low-carbon transition, responsible for integrating climate risks and opportunities into a company's financial framework. Based on a survey of 50 respondents from 32 entities, it argues that early adoption of decarbonisation strategies provides a competitive advantage and recommends building robust business cases that quantify the cost of inaction. The document highlights the use of sustainable finance instruments, such as green and sustainability-linked bonds, to mobilise capital and signal commitment. Key challenges identified include the calibration of science-based targets and the difficulty of tackling scope 3 emissions, which often represent the majority of a company's carbon footprint.

• Early and well-planned low-carbon transition strategies can provide commercial, financial, and regulatory competitive advantages for entities across most economic sectors.
• Climate-related investments must be supported by a business case at the company's hurdle rate, utilizing scenarios that emphasize the price and consequences of inaction rather than just business-as-usual assumptions.
• CFOs are essential for embedding climate action into financial frameworks and using sustainable finance products, such as green and sustainability-linked bonds, to engage internal and external stakeholders.
• Investors are increasingly demanding transparency and detailed transition plans, placing the responsibility on CFOs to define, measure, and communicate progress due to their expertise in measurement.
• CFOs can help their companies be recognized as transition leaders and monetize these efforts, as the financial ecosystem is still evolving its understanding of transition plan credibility across different sectors.
• The risk of climate inaction is increasing, with sectors facing high environmental credit risk accounting for USD 4.3 trillion in rated debt as of October 2022, a significant increase from USD 2 trillion in November 2015.
• Scope 3 emissions are a major challenge, often representing over 90% of emissions in sectors like oil and gas, financial services, and agriculture, yet only 22% of firms issuing sustainability-linked bonds (SLBs) included scope 3 targets.
• The sustainable debt market has grown to USD 4.2 trillion, and green bonds can offer a 'greenium'—pricing inside the secondary market yield curve—though this is not the primary motivation for issuers.
• A significant portion of CFOs lack confidence in achieving medium-term (2030) targets at the time of setting them, with 67% admitting to trepidation due to internal and external uncertainties.

APA

Palmucci, F., Hemingway, R., & Laurent, S. (2023). The role of the Chief Financial Officer in driving low-carbon transition. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/The-role-of-the-Chief-Financial-Officer-in-driving-low-carbon-transition.pdf

Chicago

Palmucci, Fabrizio, Rachel Hemingway, and Sabine Laurent. The role of the Chief Financial Officer in driving low-carbon transition. Climate Bonds Initiative, 2023. https://www.climatebonds.net/files/documents/publications/The-role-of-the-Chief-Financial-Officer-in-driving-low-carbon-transition.pdf.

Wikipedia

{{cite report |last1=Palmucci |first1=Fabrizio |last2=Hemingway |first2=Rachel |last3=Laurent |first3=Sabine |title=The role of the Chief Financial Officer in driving low-carbon transition |publisher=Climate Bonds Initiative |date=September 2023 |url=https://www.climatebonds.net/files/documents/publications/The-role-of-the-Chief-Financial-Officer-in-driving-low-carbon-transition.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{palmucci2023role, author = {Palmucci, Fabrizio and Hemingway, Rachel and Laurent, Sabine}, title = {{The role of the Chief Financial Officer in driving low-carbon transition}}, institution = {Climate Bonds Initiative}, year = {2023}, month = sep, url = {https://www.climatebonds.net/files/documents/publications/The-role-of-the-Chief-Financial-Officer-in-driving-low-carbon-transition.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }