The Central Role of Financial Departments in ESG Reporting
© optionfinance.fr, Chloé Consigny
Since a 2017 ordinance, large companies have been required to publish an extra-financial performance statement (EPR). Although often managed by the departments in charge of sustainable development, this exercise fully mobilizes the finance departments. This will help bring the two departments closer together and, at the same time, broaden the career prospects of their members.
The announcement has made the rounds on the LinkedIn social network and recruitment platforms. Last month, the Decathlon Group was looking for its future editor of the Extra-Financial Performance Statement, known as the “EFRP”. Made mandatory in 2017 for large companies, this document, which replaced the CSR report, must in particular list the environmental and social risks associated with their activity, but also the actions implemented to limit them. Among the tasks that will fall to the new recruit of the sports products distribution chain: defining the editorial charter, identifying the information that must be included in the DPEF, writing the report and leading the review committees. The position is directly attached to the reporting team, within the sustainable development team. In addition to good writing skills, the advertisement states that “current or recent experience in a similar position in non-financial reporting is required to apply”.
A strategic document for the general management
A search that is similar to that of the “five-legged sheep”, as Rahel Damamme, stakeholder engagement & sustainability prospective manager at Decathlon, concedes. “For this position, we are looking for an editorial and communication profile with a perfect command of project management. This person must also have a strong appetite for technical subjects related to extra-financial reporting. “At Decathlon, this position is a renewal, as the company created a first CSR writer position back in 2014. Over the years, the subject of extra-financial reporting has grown and become strategic for the company,” says Rahel Damamme.
More specifically, the EPR must include a description of the main risks inherent to the activity and the corresponding policies applied, with results and performance indicators (art. R. 225-105 of the French Commercial Code). The writer must therefore formalize the company’s business model, while identifying the risks to which it is exposed. This is a multi-tasking position for which communicators are often preferred to financial profiles or auditors. “Someone with only financial skills would not be able to meet all the requirements for drafting an EPR,” says Bertrand Desmier, CSR expert and partner at Tennaxia. As a result, writing skills seem to take precedence over all others. Strong writing skills are imperative,” insists Isabelle Mouret de Lotz, a consultant in sustainable finance recruitment at the specialized firm Birdéo. Indeed, you have to know how to synthesize information and find striking headlines. The slightest error in communication can have dramatic consequences for the company! “
Proven interpersonal skills
Beyond these editorial imperatives, several skills are sought after. First of all, a very good general knowledge of the sector in which the company operates,” continues Isabelle Mouret de Lotz: the candidate must be aware of the regulations and their evolution. Finally, the writer must also be able to create links within the company. He or she must be in constant dialogue with all the company’s departments in order to find the right information. “Thus, at Decathlon, the search is for someone with significant experience in corporate communication (around ten years) and familiar with the requirements of reporting. In my opinion, it is more complicated for a very technical person to become more competent in communication,” says Rahel Damamme. It is much easier for a communicator who has a perfect command of his or her subject to increase his or her knowledge of non-financial reporting. In the entity I manage, a financial profile would be better suited to take responsibility for the processes related to the reliability of indicators and relations with the independent third-party organization that audits us every year. “
In fact, the links between the various departments are now more and more numerous. Legislation requires companies with a turnover of more than 100 million euros and more than 500 employees to have their EPR certified by an independent third-party organization (ITO). Upstream, the experts in figures work on the data transmitted to the CSR departments. The CSR director and the financial director are increasingly working together on the EPFD, which has become a cross-functional issue due to changes in legislation,” explains Bertrand Desmier. Over time, finance departments have been led to consider CSR departments as much more strategic. I can see that each entity has been enriched by contact with the other: the financial departments have integrated CSR data, while the extra-financial specialists aim to correlate financial capital with social and environmental capital. “
Innovations suggested by finance departments
This is also true for Decathlon. “Two years ago, Domingos Antunes, Director of Treasury and Financing at Decathlon SA, came to see us to talk about his impact credit project. Since then, we have made significant progress with the finance department,” adds Rahel Damamme. This rapprochement is certain to bring some experts to hope for total cross-functionality of subjects in the future. “In ten to fifteen years, I dream that there will no longer be any sustainable development department in companies, but that each department will take up these issues at its own level,” continues Isabelle Mouret de Lotz. While waiting for this big change, the financial departments seem to retain the upper hand over the sustainable development departments. Indeed, they are generally the ones who provide the data for the extra-financial report and who are responsible for the innovations to be added to the report.