“Businesses don’t succeed in societies that fail.” That was the message from ICAEW CEO Alan Vallance in his opening remarks at the recent Chartered Accountants’ Hall event, Beyond Finance: The Changing Role of the CFO. The event explored the ways in which a volatile world is prompting CFOs to look outside the numbers, in their efforts to provide businesses with resilience.

Held on 17 April, the event launched a toolkit for senior finance professionals, What does the CFO’s changing role mean for you? Created by the Board Intelligence thinktank, in partnership with ICAEW, Accounting for Sustainability and executive search firm Odgers Berndtson, the guide is based on the real-world experiences of 150 active CFOs and outlines five levers CFOs can use now to support a fairer future.

Costs and benefits

In his address, Vallance said that the story of value creation and measurement across every type of capital has extended the traditional ‘CFO’ role into something else – such as chief value officer or chief reporting officer. “The very nature of the role is changing – and should change,” he said. 

Vallance stressed that values are interdependent. “Economic success is rooted in a thriving natural environment,” he said, “which provides the feedstock for businesses. At the same time, a healthy, empowered workforce is a productive and innovative one.”

He cited research from Business in the Community and the McKinsey Health Institute that estimated the annual cost of ill health to UK businesses at £150bn. By contrast, it put the returns from improved productivity, attraction and retention somewhere between £120bn and £220bn. “Together, those costs and benefits represent 10% to 15% of GDP,” Vallance noted. “So, an unfair, unjust future is also economically poor.”

The CFO’s role

Explaining the toolkit’s focus, Board Intelligence thinktank Director Dr Scarlett Brown said that the CFO’s reputation as someone who says no – or is passionate only about things that yield steady returns – does not match the description of CFOs she has met in her work. Finance leaders that contributed to the research wanted a full picture of their companies’ performance and recognised their role in sustainable wealth creation.

However, she noted, others still need persuading. “When it comes to taking action, if the CFO isn’t on board, it’s not going to happen,” she said. “If you take seriously something which is perhaps not seen as your remit – such as a non-financial goal – then your stakeholders, not just your shareholders, will too.”

This is at the heart of the toolkit, which urges CFOs to not only ensure non-financial metrics are measured and reported, but that they really matter to the organisation. CFOs are also encouraged to use their spending power and voices to show the future they are committed to creating.

With that in mind, Brown handed over to a panel featuring three CFOs from very different businesses, who are all fully engaged with non-financial metrics.

Upholding values

In the 24 hours prior to the event, Heathrow Airport CFO Javier Echave’s sector had seen the harms of extreme weather up close, as 18 months of rainfall struck the UAE in one day, flooding Dubai International Airport. For Echave, what has changed for CFOs is not their accountability, but that they have “significantly more variables to play with”. He stressed: “We cannot continue to get away from the fact that our businesses do produce externalities. And we are responsible for that.” As such, he said: “We don’t have to invest more. We have to invest better.”

Louise Britnell, CFO of The Co-operative Bank, pointed out that non-financials are “big drivers of long-term decision-making” in her business. “We have lots of feedback from our downstream retail customers and business-banking clients about what they would like to see us champion, advocate and finance,” she said. “It’s vital that we listen to what our customers tell us and uphold ethical concepts.”

Importantly, the bank has a mandate to do so. Britnell explained: “Every quarter we must attest to how we are upholding Co-operative values to ensure we have the right to call ourselves The Co-operative Bank. It’s fundamental to everything we stand for.”

Bearing out Vallance’s point about shifting job titles, Fay Cooke wears two hats as Chief Impact and Financial Officer at dairy company Yeo Valley Production. Fittingly, she views the traditional CFO title as too narrow to convey the finance leader’s role in creating and protecting value. “We need a holistic definition of what we mean by value, and how we make decisions,” she said.

Cooke cited a report from the Food System Economics Commission that assigned financial values to the health, climate and nature crises. “The Commission estimated the annual impact of food and farming on those crises at more than $10trn,” she said. “That exceeds the agrifoods sector’s total, annual GDP contribution, globally. In a holistic sense, the industry is destroying value.”

For Echave, the current challenge is so significant it calls to mind the landmark Bretton Woods Agreement of 1944, which reordered the global financial system. “We are living today in a world where the scorecard against which we measure success is changing,” he said. “The definition of value is much greater, and the scorecard much more complex. The longer it takes us to realise that we have to take action, the more money we’re leaving on the table.”