CFOs need to embrace environmental and social responsibilities, and foster ethical behaviour to ensure companies are well-positioned for long-term success, contributing to building a more sustainable and equitable economy
As businesses around the world continue to grapple with the challenges of a rapidly changing economic landscape, senior financial professionals and CFOs are increasingly being called upon to play a critical role in redefining corporate behaviours for long-term success.
At the heart of this challenge lies the need to balance short-term financial performance with long-term growth and profitability.
This requires a fundamental shift in corporate behaviours, away from the ‘short-termism’ that has characterised much of corporate decision-making in recent decades, and towards a more sustainable and equitable approach that considers the interests of all stakeholders.
To achieve this goal, CFOs must focus on three key principles: aligning financial decisions with long-term goals, embracing environmental and social responsibilities, and fostering a culture of ethical behaviour.
One of the most important ways in which CFOs can help redefine corporate behaviours is by aligning financial decisions with long-term goals. This means focusing on investments that will drive long-term growth and profitability, rather than short-term gains.
For example, rather than cutting costs across the board, CFOs can identify areas where investments can drive efficiency and innovation. Rather than prioritising quarterly results, CFOs can develop longer-term financial plans that consider market trends and emerging opportunities.
Technology giant Microsoft has developed a long-term financial plan that includes investing in artificial intelligence (AI) research and development. As part of the plan, the company has developed several AI-powered products, such as Cortana, its virtual assistant, and HoloLens, its mixed reality headset. These products are aimed at improving productivity, enhancing user experience, and driving revenue growth.
Microsoft has also partnered with research institutions to advance AI research and development. Recently, the company has partnered with OpenAI – the company behind ChatGPT – a research organisation focused on developing safe AI technologies.
Another way CFOs can help redefine corporate behaviours is to embrace environmental and social responsibilities. This means recognising that businesses have a responsibility to contribute to society and protect the environment, in addition to generating profits.
Consumer goods giant Unilever has developed a long-term financial plan that includes investing in sustainable product lines.
As part of the plan, the company has committed to sourcing 100% of its agricultural raw materials sustainably by the end of this year. This includes sourcing from suppliers who follow sustainable practices and implementing policies to support smallholder farmers.
Unilever has also developed sustainable product lines, such as the “Love Beauty and Planet” line of beauty products. These products are made with natural and sustainable ingredients and packaged in 100% recycled materials.
CFOs can help by incorporating environmental and social factors into financial decision-making. For example, they can evaluate the long-term risks and opportunities associated with climate change, social inequality, and other issues.
They can also work with other departments to develop strategies that address these issues while also driving long-term growth.
CFOs can help foster a culture of ethical behaviour within their companies. This means setting the tone from the top and ensuring that employees at all levels of the organisation understand the importance of ethical behaviour.
CFOs can help by developing and enforcing ethical policies and procedures, and by ensuring that employees are trained on these policies. They can also work with other departments to develop strategies that promote transparency, accountability, and integrity.
Patagonia’s CFO Hillary Dessouky, led the company’s efforts to implement a living wage program for its supply chain workers and to reduce its carbon footprint.
Brett Biggs, the CFO of Walmart, has also been involved in the business’ efforts to promote ethical behaviour and prevent misconduct. For example, he has led the company’s efforts to enhance its anti-corruption program and to improve its supply chain sustainability.
As CFOs continue to navigate the complex and rapidly changing economic landscape, the need to redefine corporate behaviours for long-term success has never been greater.
By aligning financial decisions with long-term goals, embracing environmental and social responsibilities, and fostering a culture of ethical behaviour, CFOs can help ensure that their companies are well-positioned for long-term success.
In doing so, they can help build a more sustainable and equitable economy that benefits all stakeholders.