In last month’s article of The Future Ready CFO, I focused on the finance and accounting “brand,” and how outdated ideas of our industry were hurting our ability to build a pipeline of experienced professionals who could, in time, step into leadership roles, including CFO. The question is how will we do that? And my recommendation is that we bring a greater focus on Environmental, Social and Governance (ESG). Let’s take a closer look.
Repositioning the profession for greater relevance and to attract a younger demographic
One key to increasing the future relevance and influence of our profession is attracting the younger generations, Millennials (those born between 1981 and 1996) and Gen Z (those born between 1997 and 2012).
According to the Society for Human Resource Management (SHRM), “Millennials and Gen Z place significance on Environmental, Social, and Governance (ESG) – a company’s financial efforts towards environmental and social changes and corporate governance. ESG initiatives are crucial for attracting and retaining workers, particularly the younger generations.”
To build further on this, Deloitte’s 2023 global survey of Gen Z and Millennials found that “Climate concerns also play an important part in career decisions. Over half of Gen Zs (55 percent) and Millennials (54 percent) say they research a brand’s environmental impact and policies before accepting a job from them. One in six Gen Zs (17 percent) and Millennials (16 percent) say they have already changed gob or sector due to climate concerns, with a further 25 percent of Gen Z and 23 percent of Millennials saying they plan to do this in the future.”
In short, Gen Z and Millennials are attracted to organizations with a clear purpose, one that extends beyond profits for shareholders, and where they can make a difference, especially in areas related to sustainability and environmental concerns.
Sustainability reporting and value creation can help address the pipeline challenge
Let’s look at this sample job posting:
- The Role: Environmental, Social and Governance (ESG) Controller
- The Location: New York, NY
- The Team: The Corporate Controller’s team is responsible for all aspects of financial reporting including, preparing and reviewing the SEC reporting requirements for S&P Global.
- The Impact: The Corporate Controller’s team is hiring an ESG Controller to design and implement disclosure controls and procedures and provide oversight over ESG disclosures in S&P Global’s SEC filings as well as information in S&P Global’s publicly available ESG reports. The ESG Controller’s responsibilities will be global in scope and require working closely with functions and disciplines across the organization to ensure timely and accurate reporting of ESG disclosures in a standardized and controlled process.
What’s in it for you:
- High exposure among the S&P Global organization will allow you to gain cross functional experience.
- Contribute to and influence decision making related to the ESG disclosure strategy.
- Opportunity to enhance current processes and controls, create efficiencies related to reporting and analysis.
- Develop your technology skills working with ESG and controls management tools.
Is this type of job opening a game changer for the future relevance and influence of the accounting profession (Yes, we’re still having to call it that. For now.)?
My answer is a definitive … “maybe.”
ESG and Sustainable Business Management
Keeping the job posting and goals of the younger generation in mind, let’s pivot to ESG and Sustainable Business Management (SBM).
ESG and SBM are going mainstream around the World with a vast majority of publicly traded companies voluntarily reporting on ESG and sustainability metrics, including climate, biodiversity, human capital and innovation. Governments are increasingly making it mandatory for organizations at the global, state, and even local levels to report their ESG and SBM metrics as illustrated by:
- California recently approved far-reaching climate disclosures for 5,000 public and private companies
- The US SEC is expected to issue its final rule on climate risk, possibly this year
- The European Union has issued its rigorous Corporate Sustainability Reporting Directive (CSRD)
- The newly formed International Sustainability Standards Board (ISSB), under the auspices of the IFRS Foundation, approved its first two inaugural disclosure standards for implementation by national jurisdictions around the world (for comparability and consistency of key performance metrics)
I hypothesize that for our profession to grow in relevance and influence in a fast-paced and transformative business environment, we need to demonstrate relevance beyond tax, audit, reporting and compliance. We must show our role in creating value for the organization and its standing in society, and in doing so, increase inclusion and diversity within the profession.
And now, we have an incredible opportunity to do just that.
ESG and SBM highlight our ability to increase our relevance and influence, attract a younger and more diverse workforce, and rebrand ourselves to show that we have always stood for helping organizations protect and enhance their reputations and their enterprise value creation capability.
We know what to do…Now how do we do it?
Leadership within the profession needs to do a much better job at telling our story while continuously upskilling and reskilling in a fast-paced, transformative, and highly disruptive market environment.
We’re making progress. When I have attended industry forums, including those led by the International Federation of Accountants (IFAC) and its 3 million members around the world, we clearly understand that within our community we preserve and protect organizational reputation and value while enabling organizations to create long term value (strategic planning, data analysis and modelling, enterprise performance management, technology enablement and more). I assert that the CFO team is well positioned to lead, convene and/or facilitate not only the compliance aspects but also the strategic planning and innovation aspects of ESG and SBM.
But outside our community, the critical and expansive role played by the CFO team is not as clear. In forums such as Climate Week in New York City or Davos, or many major global forums on sustainability, the role of the CFO team is mostly described by the traditional controllership roles of audit, assurance, reporting, and compliance.
It’s not wrong, but it’s only a part of the picture, and it’s hardly enough to attract new entrants to our profession, let alone grow in relevance or influence.
Instead, we need to tell a clear, compelling and consistent story of what we do in totality, not just in disparate pieces, and consider rebranding the profession.
There is hope that we will raise our game as a profession in terms of branding, storytelling, and upskilling and reskilling in every vertical from strategic planning to data governance and analytics.
From their broad global purview beyond our profession, the venerable Boston Consulting Group (BCG) wrote a piece entitled “Why CFOs Should Lead the Sustainability Charge.” They state:
“There’s a success factor for climate and sustainability agendas that most companies have overlooked: CFO leadership. CFO’s leadership role in sustainability falls within their growing responsibilities as the custodians of corporate performance. Indeed, sustainability performance has become inseparable from financial performance, making companies’ ability to act on sustainability-related issues a key differentiator in achieving corporate success. Among these activities*, finance functions’ enterprise-wide view of company operations gives them a more objective perspective than other functions have and helps to ensure cross-functional alignment.”
I agree with BCG. *
*Footnote added by blog author. These activities include external reporting, internal carbon pricing, debt financing, measuring and disclosing the carbon footprint, scenario planning, and enterprise-wide decision-making including business cases to manage innovation, transformation, and transition initiatives.
