Traditionally being green has been seen as increasing costs. The stereotypical financial manager has seen environmentalism and carbon credits as increasing costs over the longer-term and as reducing margins. How should financial managers address these issues now in an age of ultra-high energy costs, new programs for carbon credits and of the triple bottom line?

Firstly it is now becoming clear that switching to different forms of energy may actually reduce energy costs. For example wind-produced electrify is now becoming competitive to some other traditional forms, when compared to the cost of building new traditional plants. Financial managers need to become participants in this debate so that they can advise their managements on cost issues in what is a very complex and rapidly changing area.

However it is also clear that there is a lot of controversy surrounding some environmental issues and particularly on their financial impact. Financial managers need to become aware of these issues so that they can take an informed position on them without being too extreme in any one direction. So awareness of the financial impact of environmental issues is also a key requirement for financial managers.

Secondly, the emergence of a regime of carbon credits is changing cost ratios and economic calculations dramatically. Many managements do not understand the significance of carbon credits and how they can be used in a variety of ways to improve the company’s financial position and valuation. Financial managers need to start becoming aware of these issues so that they can start providing creative input on factors which will soon become even more important strategically to the valuation of their companies and to different strategic an valuation options.

In this context we must remember that, ultimately it is not financial literacy that makes good leaders, even though it is an important factor. What makes good leaders is a high level of business acumen coupled with leadership traits and behaviors. So in moving to become financially green, it is important that you display business acumen as well as financial knowledge and understanding. What will eventually drive the best decisions in this area is creative business acumen which leads to the emergence of new options and choices, which can originate with the financial as well as with the business side of companies.

Third, in order to improve their own professional standing, financial managers need to change their own brand positioning to be perceived by their managements as being capable of creatively contributing to the debate surrounding green issues. The financial managers who are more flexible and creative in this area will generate more long-term career options for themselves, as well as raising more useful strategic options for their companies.

Again, financial managers must demonstrate not just their level of financial knowledge and understanding but also their level of business acumen. This requires attention to internal public relations, an area which financial managers are usually not good at. So financial managers also need to upgrade their skills and capabilities in the area of internal public relations in order to achieve a higher level of visibility and effectiveness.

Financial managers can achieve the level of visibility that they will require to be effective by initiating internal discussion on these issues. This can take the form of preparing position papers on the subject, running seminars and re-orienting the budget process to provide more focus on these factors. More senior managers such as CFOs should also be thinking of adding these issues to the corporate governance process to ensure that they form part of the checklists used in corporate governance.

We would make the following recommendations in this area:

Read critiques by Bjorn Lomborg, the Swedish thinker on financial impacts of environmental issues to sharpen up your thinkingUndertake training in carbon credits approaches and regimes and how to use themEncourage your HR people to run internal seminars on the financial impacts of going greenPrepare a position paper on green impacts on your business.Integrate environmental criteria and issues into the budget process.Undertake business acumen assessments and training to help you deal with the behavioral aspects of financial change as well as the data aspects.Undertake training in communications, marketing and networking so that you can better get your message out and demonstrate your business value, as well as your technical value.