Javier van Engelen (CFO at Signify) and United Nations Global Compact

30-03-2023: CFOs are the stewards of corporate finance. By coming together, they can advance their collective understanding of why sustainability-linked investments are key to achieving the Sustainable Development Goals (SDGs), and leverage billions of dollars in annual corporate investments to support the sustainability transition. 

UN Global Compact Network Netherlands spoke with Javier van Engelen, CFO at Signify, about the changing role of the CFO. 

‘’If CFOs want to properly address the challenges in sustainable finance, we need to collaborate to lobby for the right measures.’’

What role does a CFO play in this? How does that express itself within Signify?

CFOs have a dual role in many businesses. We are part of a board of management and should act on that responsibility, but we also have the final responsibility for the financial management of the company. CFOs look at the risks for the company and subsequently derive strategies and ways to mitigate these risks. Centering sustainability in our operations means also centering it within our risk assessment and including it in our annual plans and long-term strategies. 

CFOs are also responsible for aligning (non-)financial targets and considering different investment choices. We must make decisions on where the business puts its money, whether in the sphere of innovation, production, or partnerships.

Looking back on these challenges, I think the CFO Principles are a crucial instrument to tackle them. If all businesses and their CFOs commit to the Principles, drafting an impact thesis will become more straightforward, thought leadership on the creation of Corporate Finance reward systems will be advanced, and reporting and communication will become more transparent.

What has moved you to sign the CFO Principles for the SDGs?

As of now, CFOs are often still viewed as a bottleneck. The classical view regarding the CFO is that if the numbers cannot be justified, business cases aren’t viable. Current sustainability issues go way beyond this. CFOs need to be bold, daring, and future-oriented and that’s why I signed the CFO principles for the SDGs. Also, I believe that by collaborating we can swiftly advance on the previously discussed challenges, such as creating structural reward systems and a level playing field in communication and reporting. We should aim at creating a CFO 2.0 or CFO Green. A CFO with fiducial responsibility but an equal responsibility of focusing on directing investments towards sustainable innovations.

Looking at Signify, I work here because I fundamentally believe in what we are doing here. We’re maximizing the capacity and potential of light. We create brighter lives and move towards a better world. That inspired me because it brings technology together with what the planet needs. We innovate so we can move forward, whether it be improving crops with our solutions or decreasing crime rates in busy parks. These innovations are at least partially fueled by Corporate Finance. I believe there is a future where financial officers have a huge role to play, and the CFO Coalition for the SDGs can be a great contribution to this.

Could you explain the way Signify redirects investments to realizing the SDGs? 

To explain this, I will elaborate on our Brighter Lives, Better World Program. The purpose of this program is to unlock the extraordinary potential of light. The program is characterized by ‘doubling the impact’. We have four doubling initiatives. The first one entails climate action and CO2 footprint. We want to go at double the speed of the Paris Accord. We do this by focusing on a lot of internal initiatives but now also by focusing on scope three, so by critically analyzing our suppliers.

The second initiative entails circularity. We focus on a modular build where we can replace only certain elements instead of an entire product. 3D printing plays a crucial role in this. We want to increase this from 16% to 32% in all our products. Again, doubling. 

The third initiative focuses on food availability, safety & security, and health & well-being. All our initiatives in this scope focus on the positive influence of light on the livelihood of people. Think of projects like connected lighting in parks to decrease crime rates, or increase the mental health of people by mimicking outside lighting in offices. We call this last project Nature Connect. We want to bring the revenues from these initiatives where light can positively influence people from 16% to 32%. 

The fourth initiative is called A Great Place To Work. Our focus here is on gender and age diversity. We aim to bring women in leadership positions from 17% to 34% by 2025.

As of now, Signify is the only Dutch company to have signed the CFO Principles. Why is it important that other businesses follow Signify’s initiative and sign the principles?

I see the Netherlands as a progressive country that takes the lead and is home to many frontrunner companies. There’s the potential for so much innovation. However, if we want to properly address the sustainable finance challenges I laid out before, getting Dutch businesses to work together is crucial. Therefore, I urge companies to follow Signify’s example and sign the CFO Principles of the United Nations Global Compact. 

Young professionals today are increasingly aware of the importance of sustainability in the financial sector. This was made clear at the recent SDG Young Leaders Network meet-up about greenwashing in the financial sector, where a new thematic group called Young Sustainable Finance (YSF) was launched. YSF aims to accelerate the Sustainable Development Goals (SDGs) through the power of the financial sector, bring together young professionals in and around the field, and become the leading young professional community in sustainable finance.

Hosted by Houthoff, the meetup welcomed over 50 young professionals, who engaged in constructive (break out) discussions and networking sessions. Jan Willem van Gelder of Profundo, along with several Houthoff colleagues, served as keynote speakers, highlighting that greenwashing is a common practice that needs to be addressed. Greenwashing refers to the deceptive practice of organizations making themselves appear more sustainable than they actually are through tactics such as green crowding, green lighting, green shifting, green labeling, green rinsing, and green hushing.

It was also noted that the Environmental, Social, and Governance (ESG) concept was created due to public pressure on the financial sector since 2000. However, ESG has been criticized for not affecting business as usual, having flawed screening, and not delivering on its promise.

Discussions during breakout sessions included legal and regulatory developments related to greenwashing. For example, it was highlighted that legal action could be taken against companies and countries for misleading sustainability claims. Although NGOs have pursued this in the past, financial institutions may also resort to litigation, in addition to divestment, for broken sustainability promises.

To avoid greenwashing, it is necessary to be serious about sustainability. This can be achieved by simulating change from within, combining commitments to sustainability with critical minds, questioning all ESG/sustainability aspects in the workplace, and making strategic choices to finance the transition to more sustainable business.

What can young professionals do against greenwashing?

Young professionals can use their skills, knowledge, and experience to prevent greenwashing by creating psychological safety to share ideas openly. They can also use platforms like young boards and reverse mentoring, make use of viable business cases for a shift to more sustainable business, and use an energizing and visual way of presentation.

All in all, we look back at a successful event and want to give a special thank you to Nadir Koudsi and Ewoud van der Leek from Houthoff for hosting our event and to Jan Willem for being our keynote speaker.

Would you like to know more about YSF and the SDG Young Leaders Network?

If you want to learn more about Young Sustainable Finance and get involved, visit their website here or reach out directly to youngsustainablefinance@gmail.com.

If you want to learn more about the SDG Young Leaders Network, visit their website here SDG Young Leaders Network – UN Global Compact Network Netherlands or reach out directly to youngleaders@unglobalcompact.nl.

Let’s work together to accelerate the SDGs and make the financial sector more sustainable!