In a ‘chaotic’ world, CFOs can lead the way – and go from chief financial officer to ‘chief value officer’, according to the CEO of Standard Chartered Bank in Uganda.
Sanjay Rughani FCCA, who also serves as chair of IFAC's professional accountants in business advisory group, added that there has never been a better time in the world to be a CFO.
‘In a world that has a lot of challenges – the pandemic, war, supply chain disruption, big transformations around climate and digital issues – the world is looking for a trusted partner,’ he said. ‘This is a fantastic time for CFOs to lead the way – a good opportunity to go from chief financial officer to chief value officer.
‘See how powerful we accountants are? We can really change the world completely.’
Volatility and uncertainty
But in order to drive sustainable value creation, Sanjiv Mehta, CEO of Hindustan Unilever, urged accountancy professionals to adopt an integrated mindset.
‘We live in a world where volatility and uncertainty have become commonplace,’ Mehta said. ‘The pandemic has shown the fragility of our ecosystem, and its rippling effect across the world: loss of lives and economic hardship.’
An estimated 70 million people have been pushed into extreme poverty, he added, while ‘years of abuse and unsustainable consumption have ravaged nature, and adversely impacted climate, leading to depletion of biodiversity and a higher risk of zoonotic diseases.’
‘Climate change is by far the biggest concern looming over humanity, and the cost of inaction will exceed the cost of action.’
Businesses and corporations evolve in tandem with the expectations of society, Mehta noted. In the current environment, ‘a purpose-led, future-led business model is a key differentiator that will drive superior performance by delivering consistent, competitive, profitable and responsible growth.’
'Taking an integrated approach to business strategy is fundamentally altering the role of the finance team'
Value of sustainability
Sustainability, Mehta added, includes the health of the planet, as well as improving people’s health, confidence and wellbeing, and contributing to a more socially inclusive world. He said the evolution of the business world, and taking an integrated approach to business strategy, is ‘fundamentally altering the role of the CFO and the finance and accounting teams – who are the chief value architects for any organisation, playing a pivotal role in building sustainable businesses’.
CFOs must help the business recognise the opportunities and the risks associated with sustainability, Mehta continued, and be able to craft a sustainable business model that not only helps achieve better financial returns, but also generate positive value for the planet and society. ‘The finance role in sustainability broadly boils down to two key elements: creating value, and protecting value,’ he added.
CFOs who champion sustainable business practices and help build an integrated strategic approach across the value chain, Mehta said, will help drive better business outcomes and ultimately drive superior financial performance.
'The finance team should set quantitative performance indicators and hold the relevant teams accountable'
Accountants to orchestrate
‘ESG initiatives cannot be run by a central team. All people and functions such as the supply chain, marketing, procurement – all of them have to be involved in developing a sustainability plan. Finance teams have a great opportunity in orchestrating this organisation-wide process.’
‘Finance teams can also play a key role in linking sustainable business performance measurements to value, and bringing accountability to sustainability – like any other business plan, the finance team should set tangible and quantitative performance indicators and hold the relevant teams accountable for delivering results.
Finance can also help in ‘seeking collaboration across the value chain, forming coalitions with industry peers to find new innovative solutions’, and in communicating the story of sustainability to stakeholders. As Rughani put it: ‘Ultimately, you have to communicate in human language – not in IFRS, not in GST; but in human language.’
This, Rughani added, is ‘the best time for CFOs to start thinking about business from a perspective of planet, people, prosperity, and then profits. That's how you drive business going forward. There is a need for finance professionals to connect information, people and processes.’
‘The challenge for CFOs – when considering ESG and sustainability, and adopting an integrated mindset – is: where do you start? Start from strategy. Think about your KPIs, and the story you’re telling. And, then, finally, reporting.’
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