The Steinhoff Saga Management review - University of Stellenbosch Business School

January – June 2020

finance function leadership in the integrated enterprise

CFO as value creator – finance function leadership in the integrated enterprise

  • By Shari Littan, Kristine Brands, Dr Cornis Van der Lugt and Brad Monterio
  • JULY 2020

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What is the report about?

In the past, corporate social responsibility was often seen as a stand-alone project farmed out to the marketing department. However, stakeholders like customers, employees, policy makers and citizens increasingly call for an integrated approach to sustainable business. Over and above making profit, businesses must also play a role in global issues such as corruption, climate change, deforestation, ocean plastic pollution, and the fair use of human talent, which includes embracing diversity and inclusion, and engaging with employees.

What role should the chief finance officer (CFO) play to help ensure a sustainable business? To find out, the authors of this report interviewed various CFOs and grouped the findings into 10 themes:

  • Governance, champions, and collaboration
  • Sustainability 101: Information sharing on the basics
  • Improving the reporting agenda
  • Improving information quality
  • Decarbonising operations
  • Measuring the value of human capital resources
  • Improving supply chain oversight
  • Risk management: Climate and other material ESG risks
  • Operations, strategy and planning
  • Connecting sustainable business performance measurements to value.

The CFA as value creator

Companies all over the world are taking steps to incorporate sustainable business activities and adopt an integrated approach to their governance, strategy and operations. This evolution is affecting the day-to-day role of the CFO and the finance and accounting professionals in the CFO’s reporting unit (collectively, finance).

The CFO is uniquely qualified to serve as a critical collaborator in sustainable business and integrated enterprise activities. These activities include evaluating project alternatives, implementing new work streams, delivering decision-quality information, assessing performance, and measuring connections to value.

The board and executives establish the company’s purpose and values while the CFO takes a leadership role by instituting structures for collaboration. Finance’s expertise brings a targeted approach to measure and analyse data and improve processes. In this role, finance serves as a true business partner helping the organisation to draw up a strategy, assess risks, and innovate for the long term.

As one interviewee said, “Once the finance people get involved, they are more demanding and don’t simply take numbers at face value. Their involvement helps with the realization that the focus is not just on fluffy stuff.”

It starts with collaboration

When the CFO team and the sustainable business team begin to collaborate, it typically leads to a series of meetings that can be described as “Sustainability 101”. This partnership brings tremendous value, also in terms of mainstreaming external sustainability reporting.

For CFOs to take on leadership responsibilities, they need to gather decision-useful information across different disciplines, including the concepts around sustainable business and fostering an integrated enterprise. Equipped with best practices, they become real value creators in their organisations.

More about the report

  • Littan, S.H., Brands, K.M., Van der Lugt, C.T., & Monterio, B.J. (2020). CFO as value creator— finance function leadership in the integrated enterprise. Institute of Management Accountants, and the Association of Accountants and Financial Professionals in Business.
  • Dr Cornelis van der Lugt is a Senior Lecturer at the University of Stellenbosch Business School.
Download full report

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