The CFO is in a privileged position to understand the nuances of a company and guide it towards sustainable, long-term success, according to ICAEW’s report, The Role of the CFO and the Board in Driving Growth, which asks industry leaders for their input. 

To move beyond short-termism in an era of fast technological change and geopolitical uncertainty, the report outlines how CFOs can apply their skills in challenging times.

CFOs balance instinct with analysis

Technological developments and world events demand fast decisions. Formal analysis can take too long, causing companies to miss critical opportunities and lose agility.

Instead, good judgement can be as powerful as analysing reams of data, as SmarTone CFO Danny Ho explains. “As a traditional finance professional, you’re trained to be conservative, but by the time you’ve done a formal analysis, the window of opportunity for a decision may be gone. One of the key lessons from my years in the corporate world is to make judgement calls without full information.” 

To achieve this agility, the report recommends CFOs get to know the business and its people well, leveraging combined expertise.

Jake Storey, CFO of Harwich Haven Authority, says that CFOs should be “in the business”. “I have a very good team and together we have a lot of industry knowledge and experience. It’s easier to say, ‘well, that doesn’t look right’ and go and investigate, because we’re not in the weeds.”

Getting comfortable with risk

The report focuses on how CFOs can help a company make balanced decisions, finding a path between big goals and calculated risks.

Former CFO at RWS, Candida Davies, explains how a CFO can be a counterweight to the CEO: “A CEO is usually ambitious and visionary, which is essential for driving bold initiatives and meaningful change. In contrast, CFOs tend to spend more time looking to balance risks. That combination generally results in a more robust and implementable strategy.”

Long-termist CFOs should ensure the right people, technology and cash reserves are in place so calculated risks can be taken, especially when determining AI use cases. Joel Ripley, CFO of Schroders Personal Wealth, says that while most boards know AI technology is important, they may be unsure about use cases.

“Nowadays, we’re having to create business cases for taking bets, where we’re making an investment, but have no idea what the payoff looks like,” says Ripley.

Ripley says CFOs need to communicate to the board the long-term value of developing “AI muscles”, while making the risks clear: “A bet is a bet – no amount of tweaking assumptions on a spreadsheet is going to change that. It will either come off or it won’t.”

Rethinking reporting and storytelling

The report describes impactful CFOs as “chief storytellers” who can distil complex data into compelling narratives that non-finance people can understand.

Using different means of communication can be especially effective for CFOs. The report gives the example of highly detailed weekly reporting, which some organisations have adopted to quickly identify issues before they become serious problems. Additionally, informal channels are recommended instead of relying solely on formal reporting methods, in order to reach a wider internal audience.

Adnams CEO Jenny Hanlon encourages informal input through ‘Jot to Jenny’ conversations, where anyone in the business can raise ideas with her directly. This method can be adapted by CFOs for constructive company-wide dialogue. Hanlon’s team regularly discusses trends and strategy in ad hoc conversations: “Long-term decisions are made in the short term all the time. It’s important that when something pops up, you can just talk about it.”  

Integrating sustainability into strategy

Sustainability should be treated as a strategic necessity rather than just a compliance cost, the report found. For CFOs, this means viewing sustainability as an investment against future regulatory costs and a chance for new opportunities.

The report recommends CFOs build a business case for sustainability investment by starting with “low-hanging fruit”, such as LED lighting, to demonstrate the financial mandate for more complex, long-term investment.

“The beauty of changes like that is they give you the mandate to pursue more challenging sustainability changes with longer payback periods,” says Tim Doubleday, CFO of Burger King.

CFOs can then push for robust, industry-wide data standards to ensure transparent reporting and prevent “greenwashing”. In this context, ambitious sustainability targets can be set with CFOs being present along the way to provide ongoing evaluation and recommend adjustments.