CAs have the opportunity to address sustainability issues and make a difference
By CA magazine
7 December 2023
As UK plc scrambles to adapt to new net-zero targets, Kathryn McLeod CA and Helen Morrison CA have grand ambitions to place the carbon footprint discussion centre stage at Heineken UK. They tell Fraser Allen why the drive to reduce emissions presents a huge opportunity for CAs, particularly those just entering the profession
Pick up a tin of baked beans, look at the label and imagine that, alongside the list of ingredients and nutritional information, there’s also an independently verified carbon footprint rating. Then imagine how labels like that might affect purchasing habits. Will you still want that joint of beef? Which brand of tuna is acceptable? And will those Mexican avocados make it into your shopping basket after all?
As finance professionals with a longstanding passion for sustainability, Kathryn McLeod CA and Helen Morrison CA may well be making those personal decisions in the supermarket already. But, if carbon footprint labels do become a thing, they’re both determined that Heineken scores impressively.
As the Sustainability Finance Senior Analyst at Heineken UK, Helen finds herself in a role that simply didn’t exist a few years ago, merging finance and sustainability at the heart of the drinks giant. And although she’s only been in post for three months when we meet at Heineken’s offices on the outskirts of Edinburgh, you’d struggle to find anyone more enthusiastic about the challenges and opportunities ahead.
“It feels like there’s been a huge step change,” says Helen. “Two to three years ago, if you talked to people about sustainability, there wasn’t much engagement. That’s all changed. We’ve had some big events recently where the management team has talked at length about sustainability. I’m really proud of this job. Twelve months ago, I would never have thought I could have an accountancy role that would bring me so much joy.”
Helen was with Heineken for eight years before being recruited for her current role by Kathryn. “You probably can have specialists in sustainability who aren’t passionate about it,” says Kathryn. “But it’s really helpful if you are – and I certainly recognised that in Helen.”
Kathryn combines her role as Head of Finance, Off Trade and Marketing with that of Sustainability Finance Lead. Working with Helen and others, she’s committed to ensuring Heineken embraces sustainability disclosure standards, including disclosures required under UK and European law. There are growing expectations around reporting in this field in general, particularly among larger businesses.
“One of the biggest challenges for any company currently is to know exactly what they’re meant to comply with, because things are changing so rapidly,” says Kathryn. “Requirements vary depending on the location and size of a company and its industry. There’s been a lot of publicity about the two new international standards, IFRS S1 and S2, but they’re not yet mandatory. In addition, as a Netherlands-based group, we also have to think about what’s happening in the EU too.”
“Sustainability reporting is quite a different mindset,” says Helen. “We’ve all got experience of reporting frameworks but this is more about telling external organisations how you’re embedding these thought processes into your strategy, governance and risk management. It’s not something you can do as a paper exercise or an afterthought. It needs to become part of how you manage every aspect of the business, and it needs to be driven from the top downwards.”
Helen’s path to her current role is an unusual one – after studying law at the University of Manchester, she landed a job with the Law Society of Scotland. “I was looking at the way solicitors handled client money and complied with the money laundering regulations by working through ledgers, which I found fascinating,” she says. That curiosity led her to apply to PwC, where she qualified as a CA. This was followed by a role as the onsite finance manager at a food production site in West Lothian before she moved up the road to Heineken to work as a Senior Finance Analyst in support costs.
Nose for numbers
Meanwhile, Kathryn had studied psychology and maths at the University of Glasgow but was attracted by the job security and practical applications of accountancy. After studying to be a CA with Tenon, she moved to EY after qualifying, then joined Heineken around 15 years ago, having initially been seconded to the brewing giant. When the company set up its sustainability cabinet five years ago, Kathryn jumped at the chance to get involved. Keen to develop her knowledge, she then asked to step out of her normal role in supply-chain finance to take an eight-week course in business sustainability management at Cambridge and completed some “deep dives” into sustainability-related issues within the business. When she came back to the day job, she made a point of arranging meetings to share her learnings with senior management.
She found a receptive audience. Heineken has been increasing its focus on this area, with the creation of a new head of sustainability post in early 2021. “That was during the pandemic when all the pubs were closed and we were restructuring to take heads out of the business,” says Kathryn. “So to put resources behind sustainability at that point was quite a big deal.”
As part of its “EverGreen” strategy, launched in 2021, Heineken introduced the “green diamond” model to guide its strategic decisions. Formerly a triangle, comprising growth, profitability and capital efficiency, it was refashioned to include a fourth segment encompassing sustainability and responsibility. It was a major statement of intent, and the realignment continues to filter its way through the business, supported by external sustainability reporting developments.
“One of the opportunities you get with the new reporting frameworks is that they encourage you to take a deeper look at your medium to long-term risks from a climate perspective,” says Helen. “You just have to watch the news to understand the impact that climate can have on any business’s value chain. But if you have that clarity and understanding of your own risks, you can have informed discussions with the board or management team about investment in sustainable technologies and processes to mitigate these risks.”
Kathryn agrees, emphasising the importance of embedding sustainability into decision-making around both capex and innovation. “Any innovation you drive should be more sustainable than what you’re doing today,” she says. “So sustainability must be a key part of the design rather than something you just check at the end. And that goes for every aspect of the business. Sustainability should now be a core element of company account reporting.”
Indeed, Helen believes that organisations that fail to embrace sustainability within their reporting are potentially heading for disaster. “Very few people currently go to the trouble of looking at company accounts, but I think there will soon be a lot more scrutiny from interested parties looking at sustainability. Failure to disclose, or merely paying lip service, could create serious reputational damage.
“The challenge is data. What data do we currently hold, what do we currently track and how robust is it? Fortunately, we’re in the process of kicking off big changes in IT that should give us the opportunity to think about how we can bring some of this data together in new ways. Imagine if we were able to automatically calculate the carbon footprint of a particular item on the shelf – that would be really powerful.”
First steps
Of course, this is all very well for corporate giants, but how can SMEs approach the challenge? “This can be quite intimidating,” admits Helen. “But the first step should simply be to calculate your carbon footprint in terms of your scope one and two emissions – that is, the emissions directly under your organisation’s control. Once you understand the shape of your footprint, you can start to build your roadmap and design KPIs to measure your progress. And for start-ups, you have the advantage of being able to embed these practices from day one.”
Both Helen and Kathryn believe that finance professionals are uniquely well placed to take a lead. “There are a couple of skillsets that play really well to this,” says Helen. “We’re used to running a budget process that spans the entire business and brings people together at the right points in time to make decisions. That skill is really valuable here. So too is the ability to take a step back from the detail and think about the bigger story. As CAs, we’re used to looking at thousands of rows of data and then working out what it means to the business and what message we need to deliver.”
Helen and Kathryn also believe that these new developments are a great opportunity for the new generation of CAs who are learning about sustainability finance as part of their training. “When they qualify and move into industry, they will know more about this than the people they are working for,” says Helen. “They will be in a unique position to advocate for positive change within the business.”
For more resources, visit the ICAS sustainability hub
