ServiceNow’s Gina Mastantuono on why CFOs are uniquely positioned to drive the ESG agenda
ServiceNow CFO Gina Mastantuono says that companies that aren’t investing in environmental, social and governance strategies will struggle to see growth in the future.
Chief Financial Officers (CFOs) are uniquely positioned to deliver meaningful change on environmental, social and governance (ESG) strategies across the enterprise, according to ServiceNow CFO Gina Mastantuono. Not only that, but Mastantuono argues that organizations that don’t take their ESG responsibilities seriously will find themselves in financial trouble in the future.
With last year’s COP26 event bringing world leaders together to agree on a plan for tackling the climate crisis, and an increasing number of climate regulations being brought forward, organizations around the world are grappling with how to reach net zero by 2050. Mastantuono leads ServiceNow’s ESG agenda and works with the vendor’s product team too, advising on its ESG reporting and management tools, which the company believes will drive a multiplying effect of change throughout its customer base.
In short, Mastantuono is heavily invested in both delivering ESG change across ServiceNow, but is also very aware that the vendor has an opportunity with its platform to deliver change externally.
I got the chance to sit down with the CFO last week, where she talked through how ServiceNow is thinking about ESG, but also to discuss how CFOs can lead in this area and why companies need to make ESG a priority right now. Mastantuono said:
I truly believe that the role of the CFO has evolved so dramatically over the last five or ten years. No longer is it okay to just be a subject matter expert in finance. We have really got to be able to be an enterprise leader that can help drive the strategy for the company, lead with empathy and compassion, and make sure that employee engagement and employee centricity is at the centre of what we do.
There's only a few roles in the C-suite that really see holistically, top to bottom, across the entire enterprise. And so I think that the best CFOs - and I talk with a lot of them - are really embracing this kind of new normal for what enterprise leadership means and what it means to be a CFO in this day and age.
And sustainability is so cross functional, right? It doesn't sit in one place, which is why it can be really hard to manage, because it's all over the place. Whether you're dealing with supply chain, climate, the social aspects, D&I, the governance piece, it is literally across the organization. So having that bird's eye view across the organization really helps.
I think also, CFOs are very data driven and numbers driven, right? We always say ‘what doesn't get measured, doesn't get managed’. And so I think CFOs are pretty uniquely positioned in that way.
ServiceNow released its latest Global Impact report in April of this year, which measures its ESG progress - and highlights how the company’s executive compensation is tied to certain environmental and diversity goals. The vendor is taking an aggressive approach to climate action, committing to net zero emissions by 2030 - rather than the standard 2050 - and has said that it will deliver customers a carbon neutral cloud in 2022.
Some other highlights from the report include: achieving 100% renewable electricity, delivering a new global diversity, equity and inclusion framework, and making progress in representation for minority groups and women in positions of leadership.
As noted above, Mastantuono leads the ESG agenda as part of her CFO role, where she is also responsible for real estate, workplace services, and procurement - all of which have a key impact on ESG. Mastantuono explained:
If you think about all of the climate disclosures and climate commitments that companies have made, there's no customer that I've talked to that is not focused on scope three emissions, which is all about their supply chain.
Not just what they can impact individually, but how their supply chain interacts. And so owning procurement and understanding processes, procurement risk and vendor risk in this world, I think this also uniquely positions CFOs to really understand where the landscape is going and how to position the company well to get there.
Supply chain is so relevant today, not just for ESG, but just about getting your products to market in an efficient and effective way, given the supply chain issues that we've seen in the market over the last few years. Companies are really focusing on what that means and how to affect change. We need to make sure that we're buying from suppliers who have a roadmap to get to that zero also and hold them accountable.
The role of product
ServiceNow is also taking its learnings about ESG and applying it to its platform, which now offers ESG reporting and measurement functionality. As Mastantuono notes, without understanding the data of how your company is performing, it’s virtually impossible to manage any meaningful change.
ServiceNow’s ESG reporting and measurement tool is how ServiceNow itself collects its ESG data for the impact report, so it understands the role it plays firsthand. Mastantuono said:
Apart from our own internal strategies, it’s all about the platform and how we can force-multiply our impact, by helping our customers in their ESG journeys. And so to that end, when I think about ServiceNow’s ESG strategy, the product piece is a big piece, and we spend as much time on the product side as we do on our internal side, because I truly believe that's where we can have such an incredible impact.
We work with our product teams on understanding the customer's needs for ESG and how we can evolve the product set to manage that.
You can connect the reporting and measurement tool to any system across the enterprise, because as we've talked about before, it's so cross functional. The data is in so many different systems, and it's very manual at times. And so how do you have one place where you can put it all in, measure, track it and report on it? With the new regulations coming out, it’s more important than ever. And it's auditable, it's traceable.
It’s good business
Often people’s reaction to ESG is that they don’t understand why an investment in environment, social or governance strategies will deliver them good returns in business. This is something that Mastantuono is keen to clarify, as she believes it’s critical to the future financial health of a company - including ServiceNow.
The vendor recently conducted a survey of 1,000 C-level business leaders, which found that 73% of financial leaders questioned said that a focus on ESG helped them deliver better results. But why is that the case? Mastantuono explains:
Yes, you have to invest. I’ll give you an example. If you invest in the right D&I initiatives, if you invest in the right social initiatives, employees absolutely love this. They want to work for companies that have real meaning and purpose.
If you think about the cost of attrition, it's enormous. So the investments that you make in these initiatives will pay off in spades. There's so much research that shows that companies with strong ESG programmes have greater profitability, greater revenue growth, greater growth opportunities.
What's happening right now in the B2B world is that when people are shopping for what software provider they want, half of the questionnaire is ESG related.
So if you're not doing this stuff, you're in big trouble. I 100% believe that profits, protecting the planet and sustainability are not mutually exclusive. They are intertwined in a very, very impactful way.
This conversation is at the C-suite. It's in every boardroom. And if you think that you can get away without investing in it, you're going to be left behind in many, many aspects.
It’s clear from talking with Mastantuono how seriously she is taking her ESG responsibilities. And her message about ESG being important to the future success of a company is one that I think more board members should openly be talking about. But underpinning all of this is how data can be used to define strategies and measure impact - something all companies should be thinking about in 2022.