"How sustainability has impacted my role as a CFO"
This blog was written by Pamela Steer is CFO of the Workplace Safety and Insurance Board and a Member of the A4S Global Advisory Committee.
Last week, I had the pleasure of participating in the launch of the Canadian chapter of the Accounting for Sustainability (A4S) CFO leadership network. This initiative will be an important forum for the financial community in Canada to gather, share best practices and solve challenges together so that we are all working toward more sustainable outcomes. With the Canadian chapter now up and running, I thought it would be the perfect time to share with you why sustainability should be a top priority for every organization and how it has impacted my role as CFO at the Workplace Safety and Insurance Board (WSIB).
By 2011, sustainability at the WSIB had reached a crisis point. The unfunded liability, which represents the shortfall between the money needed to pay the future benefits to workers for all established claims, and the money that is in the accident fund, had reached $14.2B; a considerable sum by any standard. It was very clear that in order to meet the evolving needs of our stakeholders, we were going to have to take serious action to get our financial situation under control.
Our journey to eliminate the unfunded liability has focused on a lot more than the bottom line. We’ve also examined the resiliency of our underlying operations, which is an important factor from a financial perspective when thinking long-term. For example, we’ve made strategic investments to facilitate a safe and smooth return to work for the injured workers we serve. We also invested in incentive programs to promote and encourage healthy and safe workplaces. These investments not only result in healthier and more productive workers but also a healthier and more productive economy - better news for everyone and good business sense! We can already see financial benefits of these strategic investments to our organization.
To keep this focus on operational results top-of-mind, we provide reports that integrate operational and financial metrics. We also look at long-term financial sustainability using a metric we created called the Sufficiency Ratio. This metric allows us to track and report our funding level on a going-concern basis, while also smoothing assets over five years, to reflect the long-term nature of our investments and liabilities. The Sufficiency Ratio is unique to the WSIB, is audited by a third-party and is reported on publicly.
Taking a holistic and long-term approach to finance is crucial. This means considering broader economic outcomes and fiscal resiliency over the long-term. The steps we have taken have allowed us to significantly lower the unfunded liability (ending Q3 2016 at $4.8 billion on a sufficiency basis) and are allowing us to operate on more sustainable footing.
Having an A4S chapter in Canada will allow likeminded CFOs, facing similar challenges, to join forces and come up with new ways to address sustainability in our respective organizations.
