Good morning. I’m back from the Fortune Impact Initiative in Atlanta where I picked up a wealth of information about impacting investing and sustainability—and about how these efforts have increasingly come to rely on CFOs.
I moderated a panel session featuring Steve Ellis, managing partner at TPG’s Rise Funds, the global impact investing platform of global private equity firm TPG, Inc., and Kentaro Kawamori CEO, and cofounder of Persefoni, a TPG Rise portfolio company. Ellis describes impact investing as finding companies that, by virtue of what they do to make money, are creating net positive, social, and environmental good.
He discovered these qualities in Persefoni, an AI-powered climate management and carbon reporting platform founded in 2020, with Xerox, Aramark, Revlon, and TPG among its customers. Kawamori, along with cofounders Jason Offerman and Kim Stroh, examined traditional environmental disclosures, created in the office of state and local regulators, or even by the Environmental Protection Agency.
The executives foresaw disclosures becoming a financially material topic, both for investors like Ellis, for example, or on the corporate side, Kawamori said. So the task was to create a platform that could take a large range of diverse enterprise data and then publish it in a standardized format that could meet regulatory scrutiny.
If you look at the previous cycles of sustainability, it was really centered around corporate social responsibility, and driven by marketing and reputation, Kawamori said. “Now it’s really become a financially material topic, sitting very often in the office of the CFO as well,” he said.
This past spring, the U.S. Securities and Exchange Commission (SEC) adopted the final climate disclosure rules for public companies, which require financial reporting on the effects of climate-related risks. Although the SEC is battling legal challenges to the disclosure rules, they are expected to take effect eventually in one form or another.
But Ellis points out that many companies aren’t just waiting for the SEC rules to go into effect. “What we’re beginning to see now is sort of an organic tipping point where companies are doing it on their own,” he said.
Corporations realize that they’re going to need to be accountable for their carbon footprint, so they need to have an accounting system to understand where they’re at in terms of Scope 1, 2, and 3 greenhouse gas emissions, Ellis said.
And regarding a carbon footprint, there needs to be change management at some companies to “stop just responding to the stick, which is regulation, and start responding to the carrot, which is all the extraordinary benefits and value creation,” Ellis said.
An audience member during our panel session asked Ellis and Kawamori how he could address the board to create a VC mindset about sustainability rather than just reacting to regulatory mandates.
You need to be “crystal clear” about how this aligns with your broader business objectives, Ellis said. It’s also necessary to create a linkage between doing what’s right from a sustainability standpoint, with what’s right for the important stakeholders in your business, he said. And you also don’t want to be working against the grain of the organization, he added. “Let’s take that focus on commercial success and profit motive and use it to our advantage to accelerate the change,” Ellis said.
Building a business off of regulation alone is very risky, Kawamori said. Right now, investors, customers and even employees are demanding companies to account for their carbon footprint, he said. “Steve and I are very aligned on the vision of Persefoni, as investor and entrepreneur, and our business is going to benefit massively from regulation, but it hasn’t needed it yet,” Kawamori said.
Have a good weekend.
Sheryl Estrada
[email protected]
The following sections of CFO Daily were curated by Greg McKenna
Leaderboard
Some notable moves this week:
Nadine Ahn was named deputy CFO at Canaccord Genuity Group Inc. (TSX: CF) and will transition into the CFO role in 2025. Ahn, formerly CFO at Royal Bank of Canada (RBC), and a longtime executive at the bank, was terminated from her position in April for allegedly having an undisclosed close personal relationship with a subordinate, RBC claims.
Cameron Pforr was named CFO of M-tron Industries, Inc. (NYSE American: MPTI), a designer and manufacturer of highly engineered electronic components, effective Oct. 3. As CFO, Pforr will be responsible for the company’s growth strategy and management of the finance and investor relations functions.
James “Jim” Mikolaichik was named CFO and treasurer at United Parks & Resorts Inc. (NYSE: PRKS), a theme park and entertainment company, effective Nov. 11. Mikolaichik brings over 30 years of global financial and strategic planning experience.
Terry Kohler was named CFO at Optinose (Nasdaq: OPTN), a pharmaceutical company. Kohler was most recently the CFO for Verrica Pharmaceuticals, a dermatology therapeutics company. He has over 20 years of experience as a biotech finance leader.
Brian Scott will resign from restaurant company Jack in the Box (Nasdaq: JACK), known for its namesake hamburger chain and Mexican-American chain Del Taco, effective Nov. 20. He is leaving to accept a new position outside the restaurant industry, the company said. Dawn Hooper, a 24-year veteran of Jack in the Box, will assume the role of principal financial officer and interim CFO, a position she has held previously.
William J. Skrobacz will step down from his role as vice president and CFO of NewMarket (NYSE: NEU), a global conglomerate in the petroleum and aerospace industries, effective Dec. 31. He intends to retire in 2025 after joining NewMarket over 13 years ago, the company said. He will be succeeded by Timothy K. Fitzgerald, who joined the company roughly 10 years ago and was appointed treasurer and finance director in January.
Marcus Sanford was named CFO at PrizePicks, a daily fantasy sports operator. Most recently, Sanford was CFO of Blizzard Entertainment, where he oversaw both finance and operations teams while continuing to serve as deputy CFO to the parent company Activision Blizzard.
George Burdette was named CFO of Verde Clean Fuels, Inc. (NASDAQ: VGAS). Prior to joining the company, Burdette served as CFO of Arbor Renewable Gas, and CFO of Itafos, a publicly traded, global phosphate fertilizer producer.
Big Deal
Nearly all C-suite executives say the current tax environment is more challenging to predict and plan for than ever before, according to a new report from KPMG. The firm polled 500 CFOs, CEOs, and chief tax officers at companies with $1 billion or more in revenue, 88% of whom believe that Gen AI will be critical to helping their organizations navigate the implementation of the so-called “global minimum tax.”
Pillar Two of the OECD’s Global Tax Deal, which took effect starting in January 2024, requires enterprises to pay a minimum tax rate of 15% on income earned in every country in which they operate. Eighty-six percent of those surveyed said compliance with the new regime would be costly for their companies. Meanwhile, 71% of respondents said the end of numerous provisions within the 2017 Tax Cuts and Jobs Act—representing $4 trillion in scheduled tax increases—will significantly impact their business.
With artificial intelligence seen as a crucial piece to the puzzle, it’s unsurprising that 98% of those polled said they planned on investing in AI or Gen AI capabilities for their tax function in the next 12 months. In terms of acquiring talent for the tax department, 53% of executives said they would rather hire tech experts who could learn tax, compared to 47% who said they would prefer a tax expert who could learn technology. In the previous three years, respondents had tended to say the opposite.
Going deeper
Here are a few Fortune weekend reads:
“Wells Fargo expects Boeing to sell up to to $15 billion in new stock to cover for workers’ strike losses,” by Sydney Lake
“Sustainable meat companies say their biggest challenge is attracting investors: ‘People are clutching their money more than they did before,’” by Emma Burleigh
“America’s long overdue pivot on immigration: Regaining control of the borders—and boosting H-1B visas,” by Gary Shapiro
“Capitalism hasn’t forgotten the construction industry. Its reluctance to rely on technology is for good reason,” by Dan Tishman and Peter Lehrer
Overheard
“The brewing proxy fight between activist Starboard Value and pharmaceutical giant Pfizer has already taken a hostile turn.”
—Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, and Steven Tian, research director at the institute, write in a Fortune opinion piece. Sonnenfeld and Tian say that the criticisms of activist Starboard Value against Pfizer are “simply not factual, no matter how many times they may be repeated.” The researchers discuss their analysis.
