What do CFOs and climate change have in common?
Head of Finance, AA Insurance
It’s like a joke without a punchline, really; what do a room full of Chief Financial Officers have in common with climate change? At first glance, not a lot. We generally don’t ‘do’ tree planting during our lunch hour, avidly organise recycling or team trips to clean up waterways and the like.
But we do have an important role and, unsurprisingly, it involves something we’re all passionate about - finance.
In many ways it’s this expertise in dollars and cents, and how to budget and balance the books, that can have one of the biggest impacts on the way a business views climate change and working sustainably.
Let me explain. Late last year, an actual room full of CFOs, from some of the country’s biggest companies, were brought together for a ‘CFO climate risk and value creation workshop’.
Although we didn’t solve the world’s problems in half a day, we did explore how CFOs can take the lead in managing climate risk across our businesses, and “create value through embedding changes into our strategies, systems and processes”. The key is seeing sustainability as an opportunity, as much as it is a risk.
As CFOs we have a key role within a company, to understand the long-term value of making sustainability changes. Not only for personal reasons, like providing our kids, family, and the younger generation in general with the same opportunities we had growing up, but as a business leader in a position of influence, who has the opportunity to educate, drive through change, and help reach new goals.
In November there was a hailstorm event in Timaru, followed by flooding in the South Island in December and February. Across the ditch there have been bushfires as well as hail and flooding in recent months. Climate change, I hear you say. It’s not surprising that reinsurers are keen to understand these events and expectations for the future. For an insurance company this has an impact for both our reinsurance cost and the allowance we need to make for natural hazards, which both have an impact on premiums.
Investing in sustainability is not only a force for good but also makes good business sense in the long term. Companies that fail to embrace this change will increasingly be out of step with their staff, their communities and their customers. Failing to meet these expectations will result in a loss of business with an impact on jobs and the ability for us to deliver affordable insurance to New Zealanders.
I’m fortunate that I can make a difference to the way we do business at AA Insurance and conversations are already happening in the leadership team about responding to climate change without compromising performance.
We’ve made a start on sustainability and embedding Corporate Social Responsibility practices within our policies, processes and systems. It’s key to see this as an overall business responsibility, rather than a separate department or function, with buy-in from the top down.
Because of our values at AA Insurance, we want to do the right thing, so sustainability wasn’t too much of a hard sell. Turns out that doing the right thing means we’re set up for our future, as more and more customers vote with their wallets when it comes to taking their business to sustainable companies. Although working sustainably at AAI is fairly new in the scheme of things, there is enthusiasm and commitment so I’m confident it will become just another thing we do.
I’ll leave you with a couple of pointers from the CFO meeting though. Firstly, figure out what sustainability means to your company, then identify the barriers and challenges that are stopping you from doing something, then just start and keep building on the progress.
About AA Insurance
AA Insurance is an independently operated, New Zealand-based joint venture between the New Zealand Automobile Association (NZAA) and Vero Insurance New Zealand Limited (VINZL). Since 1994 we have demonstrated trusted expertise in home, contents and car insurance in New Zealand, and in 2018 introduced commercial small business insurance. We underwrite our own policies and sell direct to New Zealanders. Our 750+ staff look after 430,000 customers with nearly 850,000 policies.
We proudly partner with Eden Park, support youth charity Blue Light, and have been consistently recognised by: Reader’s Digest Most Trusted Brands (10 consecutive years since 2011) and Quality Service Award for Car Insurance (since 2015), Canstar Blue Most Satisfied Customers (2013-2018), and the Colmar Brunton Corporate Reputation Index (since 2015) that recognises New Zealand’s most successful companies. Last year, AA Insurance was also named Consumer’s 2019 People’s Choice award winner for car, home and contents.
For more information please contact:
Nicole Steven, Botica Butler Raudon Partners, (09) 303 3862, 021 025 31886 or email firstname.lastname@example.org