CFOs broadening focus of their role beyond numbers
While inflation and rising interest rates are likely the main priority for most chief financial officers longerterm their focus is changing.
Covid-19 brought with it some big challenges for finance chiefs. But it also created an opportunity for businesses to expand the CFO role along with enhanced reporting requirements, says Nicola Taylor, cofounder of Tax Traders, sponsor of this year’s Deloitte top 200 CFO of the year award.
The category finalists this year are Jo Allan from Foodstuffs North Island, Phillippa Harford from Infratil and Fonterra’s Marc Rivers.
Taylor says for many CFOs survival has been the focus of the past three years, often working from home and in isolation as Covid lockdowns put new and unexpected pressures on business models. “It could be tempting, understandable even, for CFOs and finance professionals to hold tightly to what they have or what they’ve built and to continue with this survival mindset.
“However, what we’re seeing now in our post-Covid world, is CFOs moving beyond this and into a mindset which has a much more expansive view of business, and the good business can create, not just for ourselves but for those around us.
“They are asking how they can use the resources and talents of their business to solve complex problems, impact those struggling and ensure that our land is also moving from survival to flourishing.
However, according to the Deloitte 2022 CFO sustainability survey, there has been a slight increase in the percentage of CFOs who identify sustainability is either a core part of their role or that they have oversight of it. Some 30 per cent of respondents said it was a core part of their role (up from 26 per cent in 2021) and 45 per cent said while not a core role, they did have oversight — up from 39 per cent.
“A marginal decrease in CFO confidence to drive sustainability versus 2021 implies there is still room to learn,” the survey noted. “This is unsurprising. In a rapidly changing environment, upskilling and learning is continuous.”
The survey pointed to key barriers to driving sustainability from the finance area, namely a global economy currently characterised by rising costs, labour market shortages, supply chain disruptions and changing legislative requirements (including sustainability-related legislation). Amid a wide range of demands on the business — sustainability is just one, one respondent noted.
Tax Traders’ Taylor says most institutional investors and company boards now accept that certain environmental, social and governance (ESG) risks and opportunities can positively affect the economic performance of businesses.
“Gone are the days when companies with strong ESG practices would be discounted by investors on the basis that businesses had to choose between profit or purpose. Since the mid-2010s strong ESG performers have instead traded at a premium.”
Taylor says there is a clear economic rationale for integrating non-financial and intangible aspects of a business’s performance into leadership, core strategy and business practices. “For this reason, CFOs are transcending the traditional dualistic approach of shareholder and stakeholder considerations and are integrating these considerations in their leadership, focus, allocation of funds and resources and reporting.”
The Deloitte Top 200 Awards were established in 1990 and are held annually to recognise and applaud outstanding individual and management team performances among New Zealand’s largest companies and trading organisations. Last year’s winner of the chair award was William Meek of Mercury.
All the Deloitte Top 200 winners will be revealed at a gala event on December 8. The event will be livestreamed on the NZ Herald website.