Date posted: 22/11/2019

How CFOs can create value for their organisations

Lessons from global finance leaders on the future role of the CFO.

In brief

  • Former group CFO Adidas shares his experience of integrating wider perspectives into decision making
  • The CFO of the future will be a creator and persuader
  • More Australian companies are applying principles of integrated reporting

At an exclusive lunch for CAs in Auckland, Palmerston North's greatest export, Robin Stalker, shared how a meeting with HRH the Prince of Wales changed his perspective on the role of finance in sustainability.

Robin, former group CFO adidas and Accounting for Sustainability (A4S) ambassador, began his career as a CA in New Zealand before heading off for two years overseas experience from which he never returned.

Adidas example

Robin describes finance's role as unique within an organisation – the impartial diplomat and preparers of decisions. As group CFO Adidas, he was invited to a function hosted by HRH the Prince of Wales for his A4S initiative.

HRH noted that business put a price on fixed assets but not on pollution and deforestation. He asked that if accountants didn't, who would or could?

That question resonated with him and he implemented integrated performance management at Adidas – where all decisions considered four aspects – financial, customer, employee and environmental. Robin notes that at the time, it wasn't sophisticated, but importantly people understand that success wasn't just about the financials but happy customers, engaged employees and being good corporate citizens.

Accounting for Sustainability

Across the Tasman, A4S chairman Jessica Fries delivered a key note address at the AFR's CFO Live conference in conjunction with the G100.

Jessica shared the World Economic Forum's 2019 Global Risks report, noting the dominance of environmental risks in the matrix, as well as the interconnections of the risks. In particular, she noted the impact of climate change on many of the risks and how it can have financial consequences.

Jessica shared a quote from the CEO of AXA, who had stated that 'a 2 degree world might be insurable, a 4 degree world would certainly not be'. This really brought home the challenges and implications of climate change for business and society.

The CFO of the future

Jessica participated in a panel discussion with Andrew Porter, outgoing president of the G100, Matt Graham PwC Partner and Alison Watkins FCA, CEO Coca Cola Amatil (CCA).

Alison explained that the CFO of the future will be a persuader and builder – focused on shareholder value creation integrated with sustainability. As an example, CCA have put the customer at the heart of their operations and are taking an integrated approach considering the environment and packaging as well as social aspects such as sugar content and portion sizes.

The panel noted that the CFO of the future would still need their core technical skills, getting the numbers right and risks managed – so the board can sleep at night. However, they will need to have a greater focus on communication skills and not just understand the numbers, but what the organisation needs to do as a result of them.

Integrated reporting

CFOlive was also the launch of KPMG's latest research on corporate reporting in Australia. 

The 2019 review found that over 70% of Australia's largest listed organisations and many non-listed are now focusing their reporting on long-term value using at least some of the principles of integrated reporting.

CFO of Dexus, Alison Harrop FCA, shared how Dexus was applying the principles of integrated reporting to the Operating and Financial Review (OFR) to keep the number of different reports to a minimum.

Alison noted that while Dexus was just starting its journey to Integrated Reporting, the Board had been very engaged in the process so far and the principles have enabled the company to tell its story of long term value creation.

Key messages for CFOs

  • Not just about risk but also opportunity
  • Need to consider broader value creation, not just financial
  • Get started – don't let perfect get in the way of starting
  • CFOs are in a unique position – have a seat at the table
  • Collaboration is critical and finance can bring it together

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