For years, chief sustainability officers (CSOs) were seen as the architects of corporate climate action. But as sustainability becomes regulated, assured, and financially material, the centre of gravity is shifting – fast.
The real drivers of the climate transition are no longer sitting in the sustainability department. They’re in finance.
Across Australia and globally, chief financial officers (CFOs) are now being tasked with owning climate disclosure, validating emissions data, and determining which decarbonisation projects make financial sense.
As the International Sustainability Standards Board (ISSB) and Australian Sustainability Reporting Standard (AASB) S2 embed climate reporting within financial statements in Australia, sustainability has moved from the realm of storytelling to that of accountability. The result: climate performance is now a finance issue, not just a moral one – and CFOs hold the pen.
Why CFOs are rising to the fore
The reason for this is simple: the climate transition is now a financial transition. Under new regulatory regimes, sustainability information must meet the same rigour as audited financials. Australia’s AASB S2 will require climate-related disclosures that are “reasonable assurance ready,” pushing reporting into the CFO’s domain. The ISSB framework explicitly demands consistency between climate disclosures and financial statements – making the CFO responsible for the integrity of both.
This shift is happening globally. In Europe, the Corporate Sustainability Reporting Directive (CSRD) makes sustainability data subject to audit. In Singapore, the SGX has announced phased assurance of climate data beginning in 2025. Each of these developments reinforces one reality: sustainability is now a compliance and capital allocation issue – and CFOs, not sustainability teams, are best equipped to manage it.
Finance leaders have long managed materiality, assurance, and investor engagement – precisely the disciplines environmental, social and governance (ESG) reporting now demands. As one big-four report notes, CFOs are becoming “the new stewards of sustainability data,” responsible for ensuring that carbon metrics stand up to audit scrutiny in the same way as financial KPIs. That responsibility will only grow as markets penalise unreliable or exaggerated claims.
Signals of the shift – Australia and beyond
In Australia, the pattern is already clear. At BHP, the integration of climate considerations into financial planning and capital allocation is now embedded. The mining and metals company’s 2024 reports show that Scope 1 and 2 emissions are directly linked to operating and capital expenditure decisions, with CFOs and finance teams deeply involved in evaluating decarbonisation investments.
Wesfarmers, the retail-to-fertiliser conglomerate, has taken a similar route. Its finance division co-leads the group’s climate risk reporting process alongside sustainability, ensuring alignment with financial materiality thresholds and investor disclosures.
The trend extends across sectors. Qantas has embedded climate risk into the airline’s financial scenario planning under CFO Rob Marcolina, while AGL Energy has shifted climate risk oversight into its finance and strategy functions. These moves reflect a growing view that credible emissions reduction cannot be managed apart from capital expenditure and investor expectations.
Financial institutions are moving fastest. At NAB, the bank’s CFO Gary Lennon had previously emphasised that credible climate strategy depends on integrating climate metrics into financial management and risk models. NAB’s approach – embedding financed emissions and green lending targets into its core financial reporting – mirrors what we’ll soon see across the Australian Securities Exchange as AASB S2 takes hold.
Globally, the same realignment is under way. Chanel’s CFO Philippe Blondiaux has become a leading voice for finance-driven sustainability, arguing that “sustainability is not a cost centre but a strategic investment.” Despite economic pressures, Chanel maintained its decarbonisation funding through 2023 – a decision led and defended by its finance office.
Technology giants are following suit. Microsoft’s finance team now oversees sustainability reporting, integrating emissions data into enterprise financial systems to prepare for third-party assurance. Apple has tied executive compensation, including CFO Luca Maestri’s, to carbon and environmental performance metrics – embedding climate into financial governance.
These examples reflect a clear inflection point: climate strategy has moved from the communications department to the balance sheet.
The expanding role of the finance function
The CFO’s expanding role goes beyond compliance. Finance leaders are shaping how companies interpret climate risk as financial risk – affecting valuations, cost of capital, and even debt pricing. Banks and investors are increasingly demanding that companies disclose emissions data with “financial-grade accuracy.” That means CFOs are now central to how organisations quantify transition risk, model carbon pricing, and determine the financial viability of renewable projects.
A Deloitte survey of Australian CFOs found that 73 per cent now view climate risk as material to financial performance, up from just 35 per cent two years ago. More than half expect to increase spending on sustainability-related reporting systems and internal controls in the next 12 months. These aren’t marginal adjustments; they represent a structural shift in the DNA of corporate finance.
CFOs are also uniquely positioned to drive collaboration. They sit at the nexus of investor relations, audit, and governance – the very functions that need to align for credible climate disclosure. When finance leads the sustainability agenda, the discussion moves from aspiration to execution: how climate goals are funded, monitored, and delivered.
What it means for professionals
For sustainability professionals, this shift redefines the career landscape. The CFO’s growing influence doesn’t diminish the sustainability function – it elevates its expectations.
Future sustainability leaders will need to speak the language of finance: assurance, materiality, internal controls, and capital expenditure. The soft skills of stakeholder engagement will remain essential, but credibility will increasingly depend on data fluency and audit readiness.
Finance professionals, meanwhile, are being upskilled in sustainability literacy. A new generation of CFOs is learning how to translate carbon and climate metrics into financial risk, cost of capital, and valuation. The result is a hybrid professional class – finance leaders who understand climate science, and sustainability specialists who understand balance sheets.
That convergence is already reshaping graduate programs, job descriptions, and executive training.Universities and business schools are responding too. Courses on “sustainable finance,” “climate accounting,” and “ESG assurance” are now among the fastest-growing postgraduate offerings. As the sustainability function integrates with finance, the future belongs to professionals who can move fluently between both worlds.
What it means for companies
For companies, the rise of the CFO in climate governance is both an opportunity and a challenge. On one hand, it strengthens the integrity of sustainability data and aligns it with investor expectations. On the other, it exposes a gap: many organisations still treat ESG as a communication exercise, while finance teams lack the capability to interpret climate science or scenario modelling.
Bridging that gap requires collaboration. Boards should empower sustainability and finance leaders to work side by side, ensuring climate disclosure isn’t just compliant but decision-useful. Upskilling finance teams in sustainability assurance – and sustainability teams in financial materiality – will be essential.
There’s also a strategic dimension. When CFOs lead on climate, decarbonisation becomes a capital allocation priority, not an afterthought. It embeds climate action in the business model itself – turning sustainability from a cost into a driver of long-term resilience. The companies that master this integration will not only meet disclosure obligations but also outperform peers by anticipating regulation, reducing transition risk, and winning investor confidence.
Australia as a test case
Australia is poised to become a global test bed for this shift. With AASB S2 on the horizon, ASX-listed companies will soon need to produce “financial-grade” climate data – assured, investor-ready, and audit-aligned. That will force finance functions to take ownership of sustainability for the first time.
This is not just a compliance exercise; it’s a cultural inflection point. When CFOs start to own emissions, the tone of climate conversations will change – from ambition to accountability, from pledges to performance. And that may be exactly what the next phase of the climate transition requires.
For global markets watching Australia’s rapid regulatory rollout, the country offers a live demonstration of how finance-led sustainability could look in practice. If done well, it could redefine what credible climate action means in the corporate world – one spreadsheet, audit trail, and balance sheet at a time.
The message is clear: the climate transition won’t just be engineered by scientists or advocated by sustainability teams. It will be modelled, costed, audited, and financed – by CFOs.
Dr Kaushik Sridhar is the founder of Orka Advisory, a sustainability consultancy. He previously worked in sustainability roles at Evolution Mining, Regis Healthcare, KPMG, EY and Unisys.