Rio welcomes Thomas Pruden as Associate Director, Financial Services

Thomas recently joined Rio AI as Associate Director - Financial Services. Based in London, he brings a deep understanding of sustainability practices, essential for crafting sustainable financial strategies. Previously at Deloitte, Thomas led initiatives around the EU Taxonomy Regulation, developed the 'Taxonomy Map' framework and supported clients with sustainability disclosures under various directives such as CSRD and SFDR. His extensive advisory experience includes working with frameworks like the GHGP, PCAF, TCFD, and SBTi. 

We caught up with Thomas to ask him about the integration of sustainability into financial practices. 

How do you see the relationship between sustainability and financial performance evolving? 

There is a growing importance of sustainability factors integration into financial performance. Investor pressure for climate action is rising in tandem with stricter regulations mandating transparent and credible sustainability reporting. There is an increased focus on sustainability matters that will lead to a stronger correlation between sustainability practices and financial success. 

What are the key benefits of integrating sustainability into corporate financial strategies? 

The integration of sustainability into financial strategies will unlock a multitude of benefits. This approach fosters proactive risk management by encouraging companies to identify and address environmental and social risks across their supply chains and beyond. This also promotes a stakeholder-centric perspective, ensuring that financial decisions consider the long-term interests of all parties involved. 

What challenges do companies face when merging sustainability into their financial practices? 

Perhaps the biggest challenge that companies are facing when integrating sustainability into financial strategies is the absence of a universally accepted standard for measuring and reporting sustainability credentials and risks. While standard-setters, for example the International Sustainability Standards Board (ISSB) and regulators such as the EU Commission, the UK FCA and US SEC are working towards alleviating this issue, the fact remains that a globally harmonised definition of sustainability is still under development. This lack of standardisation hampers the incentive and trust to invest in new sustainable investment opportunities. 

How important is stakeholder engagement in shaping a company’s sustainability agenda? 

It is critical as stakeholder expectations are a key driver of a company’s sustainability ethos, as evidenced by frameworks of double materiality under the CSRD regulation. These approaches rely heavily on stakeholder input to identify environmental and social issues that are both significant to the company and of concern to stakeholders. Without credible transparency, a company’s sustainability agenda cannot progress. Sustainability disclosures, often included in annual reporting, serve as a crucial communication channel with stakeholders and society at large. 

What innovations in finance do you find most promising for advancing sustainability? 

The most promising advancements in finance for sustainability lie at the intersection of technology and data. We are moving away from cumbersome reliance on manual data collection and spreadsheets – methods that can be prone to errors and hinder informed decision-making, potentially leading to involuntary greenwashing. The future lies in technology solutions with automated data collection and analysis powered by artificial intelligence. These new technologies have the potential to streamline data collection, reduce manual work and ultimately free up resources for strategic decision-making. 

How can businesses effectively measure the ROI of their sustainability investments? 

To measure the ROI of sustainability investments, businesses can consider several factors, notably the financial benefits associated with quantifying the cost savings from energy efficiency upgrades, reduced waste, or lower resource consumption. The perceived RIO can also be assessed by tracking changes in market value and green capital raised through a brand value associated with strong sustainability practices. Lastly, improved resilience to sustainability risk and greater employee engagement, morale and talent retention can be considered helpful indicators in measuring RIO on sustainability investments. 

What are your views on the future of sustainable finance? 

The future of sustainable finance is bright, driven by necessity and opportunity. While political uncertainty will create challenges, it also underscores the urgency of the transition. Sustainable finance represents a multi-facilitated opportunity – sustainable solutions can break reliance on volatile energy sources, increased R&D investments will fuel the development of new green technology, businesses that adapt to climate change will thrive through better resilience, the green transition will generate new employment opportunities across various sectors, and a heightened societal awakening of environmental risks fosters a proactive approach to solutions. The financial sector sits at the crossroads, it will be the engine to this transformation. As echoed by the EU’s Green New Deal, public and private capital will be crucial for funding these initiatives. 

How critical is it for companies to adapt their financial frameworks to include sustainability metrics?  

Adapting financial frameworks to integrate sustainability is no longer optional, it’s essential. Governments are increasingly mandating ESG reporting, making sustainability a compliance issue. Sustainability conscious investors are demanding greater transparency on company’s sustainability performance. Consumers are increasingly choosing brands that prioritise sustainability issues. Companies that fail to adapt risk falling behind; laggard companies may face reputational damage, regulatory penalties through fines, and missed opportunities. Early adopters of sustainable practices can gain a competitive edge and succeed in an evolving marketplace. 

  In your experience, how can platforms like Rio AI aid in the financial integration of sustainability practices?  

 Sustainability reporting platforms are poised to revolutionise the financial integration of sustainability practices. Financial institutions still face major hurdles in inaccurate, incomplete, and untimely sustainability data that hinders effective decision-making about clients and projects. Platforms like Rio AI offer a powerful narrative by automating data collection, streamlining internal processes, improving data accessibility, and fostering transparency in financial transactions and investments.  

  What advice would you give to financial leaders looking to embed sustainability deeper into their operations?  

Financial leaders looking to champion sustainability should view sustainability not as a burden, but as an opportunity to differentiate their company. Curiosity and open dialogue should be embraced to foster a culture of learning and collaboration. Engagement with investors, employees, customers, and the supply chain will be key to understand their priorities and concerns. Sustainability is a defining issue of our time – financial leaders have the opportunity to be a voice for positive change, advocating for solutions that inspire others to act.