The notion that the CFOs remit is limited to bean counting and operational efficiency has well an truly been consigned to history. As shown in Accenture’s 2014 report ‘The CFO as a Corporate Strategist; stating that after steering their companies through the worst economic crisis in generations, the influence of the modern CFO has spread to become a catalyst for change and can take a critical role in business transformation. The report illustrated how the modern CFO influences much more in an organisation than just the financials and it has become common for the modern CFO to deal with strategy, new technologies, talent and organisational transformation.
One new area in which the modern CFO is emerging as a champion is within the sustainability of organisations. Economic, social and environmental issues are now right at the forefront of a CFO’s long term growth strategy. This means that the CFO is now more responsible for the resources of an organisation and ensuring that the organisation is strong for decades to come.
“All organizations are dependent upon financial performance; financial performance depends on various factors such as sustainability.” – CFO, United Kingdom
A modern CFO’s skills, influence and access to tools empowers them to be the perfect leader to push a sustainability agenda. Deloitte’s Sustainability and the CFO report identified 10 key findings when they surveyed 250 CFOs. A brief overview of their findings is listed below:
- Sustainability is seen as a key driver of financial performance - Almost half (49%) of CFOs surveyed by Deloitte saw a significant link between sustainability performance and financial performance.
- Organisations are transforming in response to the sustainability imperative - 34% of CFOs said they are in the process of implementing an organisational transformation relating to energy, environment, and sustainability. Whilst 22% said they plan on doing so within the next 2 years.
- Sustainability is becoming operationalised - While plurality of CFOs still noted that sustainability authority rested with their CEOs (44%), this figure represents a significant decrease from a survey 1 year earlier of 56% of CFOs stating the CEO was responsible.
- CFO involvement with sustainability is deepening - Two-thirds (66%) said they were “always” or “frequently” involved in driving execution of sustainability strategy in their organisations. More than half (53%) said their involvement had increased over the last year. More than three-fifths (61%) said they expected their involvement to increase over the next two years.
- Sustainability aspects of tax and financial reporting have gained significant mindshare among CFOs in 2012, perhaps reflecting regulatory developments - As integrated reporting gains momentum, and the impacts of changing green credits and incentives measures are felt by companies worldwide, CFOs have responded by moving sustainability aspects of tax and financial reporting up their agendas.
- Energy Management still topped the list of issues considered “very challenging” - Whilst the percentage was down from 38% the year before 30% of CFOs still found energy management “very challenging”. Similarly, while 35% of CFOs in 2011 found IT systems for sustainability “very challenging” only 23% had the same perception in 2012.
- Gaining ground on the investment front: videoconferencing equipment, data centre improvements, and electric vehicles - This finding resonates with the public dialogue around reducing the sustainability impact of company travel (which would be addressed by video conferencing and electric vehicles) as well as increasing public critique of energy use from data centres.
- On the risk front, energy and commodity price volatility and availability remain top of mind. CFOs also continue to be concerned with assessing sustainability compliance risk – and are increasingly concerned with assessing sustainability supply chain risk - In 2012, much as in 2011, CFOs were most concerned about risks deriving from energy prices (22% rating this a “very significant risk” compared to 19% in 2011). In both 2011 and 2012, nearly three-fourths of CFOs planned to assess sustainability compliance risk (74%). Interestingly, as supply chain pressures mount worldwide, 65% plan to assess sustainability supply chain risk, compared to 56% in 2011.
- Superior sustainability information is still somewhat elusive for CFOs - Only 12% of CFOs believed they had “excellent” sustainability information. 37% rated their information “good,” with an equal percentage calling it only “adequate.” 14% said they had either inadequate or no sustainability information at all.
- Which CFO audience has become increasingly concerned with sustainability in 2012? Employees - 39% of CFOs believed it was “very important” to communicate about sustainability to employees, versus 23% the year before.
From Deloitte’s survey it is clear that sustainability is high on the agenda in all offices of finance, but, what technology is available to help the CFO and her team make sustainable business advances? I’ve detailed my choices of technology that must be in the mind of any CFO with sustainability on their agenda:
Software to account and report on environmental operations:
Software is now readily available for organisations to be able to track their emissions and other environmental data, and, even work against set targets. Systems like Oracle’s Environmental Accounting and Reporting are capable of being fully integrated into ERP systems to provide seamless recording of environmental data. This type of system allows organisations to meet regulatory standards as well as setting organisational KPI’s to improve both environmental and financial performance.
There is a lovely tie between white clouds in clear blue skies and a sustainable agenda. Cloud in the technical term gives the CFO real flexibility allowing organisations to respond to mark volatility, restructuring, acquisitions and even to dip a toe into higher-risk markets.
Cloud technology means that the hardware of an organisations software systems are owned and run by someone else. This means that the massive amount of electricity that hardware needs to run is processed elsewhere in what is likely to be a much more efficient operation. This decreases the environmental impact that an organisation makes to the environment.
Big Data making a big impact on reducing environmental impact of orgs:
The depth in which organisations are now able to gather information about their operations allows them to unlock savings throughout their business. These savings can come from supply chain savings to a restaurant chain by better demand forecasting, through to logistical savings for a telecoms provider by better understanding of daily work loads.
Cutting mileage of vehicles, and cutting waste of food are just two examples of thousands of ways switched on organisations are cutting their costs and improving their impact on environments.
Mobile technology is revolutionising the productivity of modern workforces. An example of this would be a modern construction services company who’s job it is to repair pot holes on roads, before mobile technology they would have had to rely on paper slips from their HQ as a job list for the day. Today the same organisation gets live data through to their mobile devices to update them on their outstanding tasks. They can update HQ of their progress with the tasks and even document photographic evidence of the completed tasks. This allows HQ to process invoices for payment on the repairs and also update the mobile work force of any new jobs that may arise throughout the day.
By comparison without this mobile technology the mobile work force would have to return to HQ on several occasions in order to process completed jobs and collect new ones. There are thousands of examples like this where mobile technology has allowed organisations to improve the productivity of their workforces and also increase sustainability by cutting unnecessary journeys.
In summary we’ve seen from recognised industry commentators how the CFO is now more influential in their organisation than ever before. We also know that there are several modern technologies that can empower the modern CFO to grab a sustainability agenda by the neck and drive it forward.
How long before the F in CFO no longer represents ‘finance’ – Chief Future Officer?… Maybe!