Meet the Singapore CFSO who counts beans and greens

SINGAPORE – Integrating sustainability with finance could be a game-changer for corporate performance as the two functions have become more inter-independent and are mutually beneficial with the rise of ESG.

CFOs and sustainability chiefs may disagree, but the reality is companies are starting to combine the two roles.

Already, finance leads the sustainability agenda at 20% of companies, according to Boston Consulting Group’s CFO Excellence Index. And these firms scored on average 9 points higher in the index’s climate and sustainability performance benchmarking than companies that have other functions lead the agenda.

The index covers a broad set of industries globally and not hospitality specifically.

In the global hotel industry, it is clear that hotel chains, especially the larger ones, have moved to appoint chief sustainability officers ever since ESG rose to prominence over the last few years. Others place the function under operations, human resource, procurement, investor relations or public relations. But a c-suite hospitality executive that wears a hat combining finance and sustainability is still a rarity.

The voice and authority of a CFO helps in messaging the importance of sustie [short form for sustainability] at the leadership level. This creates an overarching emphasis and priority for sustainability. It drives the agenda at most of our management meetings. In the past, sustainability was a subset of many agendas.

Siew Kim Beh

That makes Siew Kim Beh, chief financial and sustainability officer (CFSO), Lodging, at CapitaLand Investment, an exception. The Singapore-based company’s lodging business, The Ascott, currently has more than 600 open properties globally under several brands, including the eponymous Ascott, Citadines, Oakwood and Somerset.

“From my experience, indeed the role is an anomaly, in a good way. A CFO with glamour, and a mandate and passion for sustainability – I’ve not seen that anywhere and greatly welcome and respect it,” said Randy Durband, CEO, Global Sustainable Tourism Council (GSTC).

Lethal combination

Slightly more than a year into the role, Beh believes that finance and sustainability are a “lethal combination.”

“CFOs are involved in most business decision making and therefore work with more of the leaders in the organization,” she said. “The voice and authority of a CFO helps in messaging the importance of sustie [short form for sustainability] at the leadership level. This creates an overarching emphasis and priority for sustainability. It drives the agenda at most of our management meetings. In the past, sustainability was a subset of many agendas.”

Beh isn't advocating that every organization should have a CFSO but for her, once she was put onto the green drive, it became a cause, not cost.

“The issue is most organizations still think sustainability is a cost. I wear a different lens to this,” she said. “When all your different stakeholders expect you as an organization and service provider to be sustainable, to me, that’s a business consideration, meaning, if I don’t do anything about it, then inevitably my revenue and my top line will be affected. Then it becomes a loss of business and a cost to me.”

Before the role she was CEO of CapitaLand Ascott Trust for more than five years, working with the capital and debt markets. Financiers, lenders and investors began asking her what she’s doing about sustainability for her portfolio. When she was moved to the lodging business as part of a regular leadership renewal process, CapitaLand Investment CEO, Lodging, Kevin Goh, noted her enthusiasm for sustainability; the rest is history.

Other CFOs may feel less inclined towards sustainability, which may be a barrier to combined positions such as a CFSO. But Beh said, “I was not the ‘green person’ per se, to be honest. I was driven by the fact it’s important for the business. So, I started learning about sustainability, embracing it and getting others to do so. Then I realized that, hey, I’m making an impact for our planet and future generations, and it became a cause.

“I know that for some people or departments doing sustainability, it feels like additional work. But our people started texting me or telling me they really enjoy doing it and that is very satisfying for me,” she said.

ROI of a CFSO

The sustainability function at Ascott was previously absorbed by the global operations team. Now, there’s a formal structure, starting with a Sustainable Leadership Council co-led by the CEO and CSFO. The council determines sustainability strategies and goals and is supported by an Ascott Sustainability Department which drives implementation.

Ascott Maranouchi Tokyo lobby

At each of the 40-plus countries where Ascott has a footprint, and at every property level, there’s a Sustainability Working Committee and a Sustainability Champion.

So, has there been an increase in sustainability budget since she took on the role?

“I wouldn’t say we are spending more, but we are doing a lot more. There’s a lot of low hanging fruits, such as eliminating single use plastic or reducing waste and energy; it does not always have to be capex,” she said. “It is getting our people to think: what sustainable initiatives can they do at property level without causing them any more money? When you set targets for them, they become creative. People generally want to be engaged and to be contributing.”

A bi-monthly sustainability online meeting sees 700 employees on average logging in. “It shows how interested they are in learning from one another. It motivates them and they even become competitive about it,” exclaimed Beh.

It’s unavoidable that capex is needed for other initiatives, big ones such as achieving green building certification for owned properties, or smaller ones such as installing sensors that switch off all electricity when guests leave the room. But she said given factors such as improved technology and lower costs, payback has been bigger and faster.

“Electricity costs were 30% less in one of our properties in the U.K. which recently installed the sensors,” she said.

Getting owners on board

Ascott aims to be asset light, doubling management fee revenues to more than S$500 million in the next five years, which means the challenge of persuading owners to be green looms ahead.

We’re also putting a clause on new contracts requiring owners to abide by our green certification requirements – we have the expertise to guide them on how to do it. Of course, it’s always a conversation and is subject to negotiation, but we have the buy-in from our development people to work with owners on this. It’s also a process of educating owners that green buildings also command a premium on the real estate.

Siew Kim Beh

“This is a reason why we implement sustainability initiatives at our assets first. We could show owners how those efforts can help reduce their operational costs, for instance,” Beh said. “We’re also putting a clause on new contracts requiring owners to abide by our green certification requirements – we have the expertise to guide them on how to do it. Of course, it’s always a conversation and is subject to negotiation, but we have the buy-in from our development people to work with owners on this. It’s also a process of educating owners that green buildings also command a premium on the real estate.”

Ascott aims to achieve net zero emissions by 2050. Last year’s highlights include a 12% to 13% reduction in carbon emissions intensity and energy intensity, and a 7% drop over 2019 in water intensity. However, these results were also due to reduced activity at some properties during COVID-19.

Ascott also received GSTC Recognized Standard status. Nearly 35% of its owned properties were green-building certified, putting it on target to reach 100% by 2030.

Go further?

The CFSO role could be the start, or a good example, of linking executive pay to not just financial performance but sustainability goals.

Mario Hardy, managing director of Gibraltar-based Map2Ventures, a private fund focusing on impact investing in FinTech, GreenTech and AI sectors, observed that a gap has opened between pay and purpose in most c-suites.

“Most top teams are incentivized against short-term financial performance, which differs from organizational purpose statements that typically reflect aspirational long-term financial and non-financial goals,” Hardy said.

Hardy is fully supportive of linking executive pay to both financial and sustainability goals.

“As with any goals, they should be clearly defined with tangible and measurable targets; they should also be short-, medium- and long-term,” he said. “If we want humanity and our planet to survive, we all have to contribute to make this world a better place to live for future generations. That means tourism businesses also need to play their part.”