As more and more companies adopt ambitious climate goals, CFOs are being tasked with turning such ambitions into feasible realities by embedding carbon reduction strategies into operations and strategy. In a recent Q&A with Kevin Berryman, President and CFO of Jacobs Engineering, I discussed how the finance leader goes about acting on climate in a systematic way, addressing both long-term goals and the reporting and disclosure of vital information to investors.
Jeff Thomson: Jacobs is a 75-year-old firm providing a full spectrum of professional services including consulting, technical, scientific and project delivery to a broad range of commercial, industrial and government clients around the world. In 2019, Jacobs launched its PlanBeyond ™ sustainability approach, committing the organization to integrating environmental, social and governance (ESG) considerations into its operations, client solutions and company culture. What role did the finance function play in making PlanBeyond a reality? Did your dual role of CFO and President make launching an organization-wide strategy of this nature more seamless?
Kevin Berryman: PlanBeyond ™, our sustainable business approach, is a key element of Jacobs’ transformational business strategy to become a company like no other. Guided by the United
Nations Sustainable Development Goals, PlanBeyond ™ provides our framework for planning beyond today for a sustainable future.
The framework is built on more than four decades of experience planning and delivering end-to-end solutions that embrace and advance sustainability and ESG principles. Our FY 2021 annualized ESG revenue was ~ $ 6 billion, which represents more than 45% of the company’s revenue. With that said, our goal is to have every client project we deliver contribute to ESG and / or climate response solutions by 2025.
As the PlanBeyond ™ Executive Sponsor, I helped spearhead our sustainable business approach when it first launched. This initiated a close partnership and collaboration with the corporate ESG and finance teams – one where we have learned from each other on this journey through the rapidly evolving ESG landscape.
The CFO organization’s role is to help foster change across our organization and our global workforce by operationalizing ESG and sustainability principles into everything we do at Jacobs. To meet our ambitious 2025 goal, our business systems have been modified to capture the key performance indicators for our sustainability commitments.
In partnership with our corporate ESG team, specific KPIs were selected because they are either tied to externally published targets and / or are of material importance for our ESG disclosures. And on a quarterly basis, during our company finance and business reviews, our leaders are responsible for reporting their ESG KPI performance in addition to their financial performance to provide greater awareness, visibility, and accountability for delivering progress against PlanBeyond ™ across our business.
Thomson: The SEC has proposed new and more rigorous rules for climate risk disclosure that will require management accounting competencies to forecast and assess impacts of climate risks and opportunities on future cash flows. What is the role of the finance team in sustainable business management that extends beyond mandated external reporting disclosures for SEC registrants? Has the integration of sustainable business issues into corporate reporting proven difficult for your finance department? What skills and competencies do you expect of your team to meet these new needs?
Berryman: Climate Response and ESG are at the center of Jacobs’ FY 2022-2024 strategy. Our transparency and performance in these areas are key metrics for our investors, employees, clients and partners. And our performance impacts our brand and market valuation, so the proposed SEC rules are naturally front of mind for our finance team and our board.
Jacobs has made significant progress, meeting our initial climate action goals, achieving carbon neutrality for our operations and corporate business travel in 2020, and adopting 100% low-carbon electricity – while setting science-based targets in line with the Task Force on Climate- Related Financial Disclosures.
On Earth Day 2022, we released our updated Climate Action Plan, becoming the first consultancy and one of the world’s first companies with net-zero targets approved by the Science Based Targets initiative.
Our ambitious suite of climate commitments include:
1. Ensuring every client project becomes a climate response opportunity
2. Achieving net-zero greenhouse gas emissions across the value chain by 2040
3. Maintaining carbon neutrality status and 100% low-carbon electricity for our operations
We also report on a wide range of ESG issues through our annual disclosures. Our FY 2021 report is aligned to the Sustainability Accounting Standards Board framework and informed by Global Reporting Initiative standards. Annually, we disclose to CDP (formerly the Carbon Disclosure Project) and the S&P Global Corporate Sustainability Assessment which is the basis for the S&P Global ESG Score and a key factor for inclusion in the Dow Jones Sustainability Indices.
From a skills and competencies perspective, members of the CFO organization must be fully conversant in [the] domestic and international climate, [and] ESG and sustainability reporting and disclosures. And they must have strong analytical, project management and communication skills for responding to clients and investors, as well as proactively engaging with ESG raters and rankers.
Thomson: A necessary component of sustainability is innovation and the ability to rethink long-established practices in terms of supply chain, operations and business practices. How does finance contribute to a culture of innovation at Jacobs? How do you motivate your team to think more creatively when it comes to providing green solutions to infrastructure and building?
Berryman: For the CFO organization, it’s about making smart investments in areas that will accelerate growth. To provide focus and enable success around our FY 2022-2024 strategy, Jacobs leadership boiled it down to three needle-moving accelerators: Climate Response, Consulting & Advisory and Data Solutions that are viewed as driving the change in the world today, and far into the future. All three accelerators are aligned to the company’s sustainable business approach and Jacobs’ brand promise of challenging today and reinventing tomorrow.
As a driver for innovation, we recently launched a Sustainability Innovation Challenge that provides funding to individuals and groups within Jacobs for ideas that have the potential to make the most positive impact in addressing the climate crisis and / or maximizing sustainable outcomes. We know that innovation does not happen by corporate mandate. Instead, we empower people at every level of the organization to have the courage to approach a problem differently and work together to create outcomes that deliver value for our clients and society at large.
These outcomes are captured in Value Plus, our internal process to generate and quantify ideas that improve execution and delivery of our projects, and provide an economic, environmental or social return on investment to our clients.