The role of the chief financial officer has evolved rapidly over the last few years due to a range of industry and societal trends. Once relegated to spreadsheets and ‘bean counting,’ the modern CFO is increasingly positioned at the forefront of the business to serve as an advisor and strategize the most opportune allocation of funding, in addition to managing the traditional aspects of the finance function.
They embed into the fabric of business operations to understand goals and challenges. Unlike other disciplines within leadership, this brings with it unique and tangible benefits that can positively affect business productivity and growth. From their perch the CFO has visibility across a business and its functions. From there they can spot areas of overlap as well as opportunity. They can connect organizational dots that individual groups may not be aware of and influence, if not develop outright funding allocation strategies that are fine-tuned for effectiveness.
In my view, the modern CFO works to support at least three basic pillars: business partnership, process simplification, and talent development.
Business partnership is about deliberately staying close to the business to understand its goals and challenges – which is foundational to uniquely position the modern CFO as an advisor that provides strategic guidance and steers business decisions. Unless partnerships are established, new market developments and trends can sail right over our heads and handicap our ability to prioritize investment decisions.
Process simplification, as the name suggests, is an ongoing endeavor that enables the office of the CFO to root out redundancies and waste, and improve overall efficiencies, all of which can contribute to sustained business growth.
Talent development is also a continual endeavor but one that must be refined and fine-tuned along the way to ensure modifications to practices are identified and embraced.
It’s from within this framework that the CFO is increasingly called upon to choreograph the company’s sustainability initiatives with the necessary financial scrutiny. From here, the CFO can thoughtfully divert or invest funds based on our visibility into the whole of the business, considering and weighing both business and financial goals.
This is a relatively new trend, but it’s catching on quickly. According to Protiviti’s recent Global Finance Trends Survey 2023, three out of five organizations cite a “substantial increase in the focus and frequency of their reporting related to Environmental, Social and Governance (ESG) issues.” In the same report, respondents ranked ESG the top finance priority for 2024.
Embracing the new responsibilities of sustainability requires a balancing between traditional transactional and relational roles. It’s fair for most to think of the CFO in transactional terms but there's also a relational aspect to the position that enables the business to power good and do the right thing.
Foundationally, this becomes a governance layer, something that is as germane and intrinsic to the role of the CFO as risk management and cost optimization.
But there’s more to contributing to the management of sustainability than setting aggressive KPIs, monitoring, and reporting. Customer expectations for greater visibility into a company’s overall stance on Sustainability continues to grow. This is yet another area in which the modern CFO can contribute, by putting steps in place to help establish and maintain organizational honesty and avoid complacency.
On this Earth Day, it’s important to remember that while the sustainability space is immense, it’s not impossible. It requires commitment and buy-in from everyone, including disciplines you may not have considered in the past, like the CFO. But working together with business, we can make a positive impact, all while propelling our organizations forward.
Inigo Mazquiaran is Chief Financial Officer, Hitachi Digital.
