Key Impact Points:
- CFOs are integrating sustainability and AI to drive both financial and non-financial value creation, addressing growing regulatory and stakeholder demands.
- Regulatory frameworks like the EU CSRD and advancements in AI are reshaping CFO roles, enabling them to lead sustainable business transformations.
- The CFO’s evolution into a Value Architect positions them as key drivers of long-term value creation and potential future CEOs.
A Shift to Value Architects
The Chief Financial Officer’s (CFO) role is undergoing a profound transformation, moving beyond financial stewardship to becoming a Value Architect. This shift is fueled by sustainability imperatives and the rapid adoption of artificial intelligence (AI).
In today’s “Age of And,” CFOs must balance short-term financial performance with the creation of long-term value. “CFOs don’t have the luxury of giving up one responsibility to focus on another but must keep their current priorities and take on new ones,” explains Myles Corson, EY Global and EY Americas Strategy and Markets Leader, Financial Accounting Advisory Services.
Sustainability as a Core Priority
Strengthening sustainability imperatives is central to this transformation. CFOs are now tasked with integrating sustainability into corporate strategies and reporting frameworks. Regulatory changes, such as the EU Corporate Sustainability Reporting Directive (CSRD) and the ISSB standards, are driving this shift.
EY research shows that 92% of European companies are making significant or transformative changes in response to increased scrutiny on sustainability reporting. This increased focus on transparency requires CFOs to treat non-financial data with the same rigor as financial data.
“In the ‘Age of And,’ forward-looking CFOs realize that the consolidation of financial and non-financial reporting and the increased discipline required by the new standards offer an opportunity for companies to pursue sustainable growth while also improving corporate value,” adds Corson.
The EY Global Corporate Reporting Survey highlights that 80% of institutional investors support strategic investments in sustainability, even if these cause companies to miss quarterly earnings targets. This marks a significant shift in expectations, with stakeholders prioritizing long-term value creation over short-term performance.
Leveraging AI for Strategic Impact
AI and automation are reshaping the finance function, enabling CFOs to enhance reporting and generate valuable insights. According to the EY Corporate Reporting Survey, 87% of finance leaders are piloting or using AI for data analytics and integrating non-financial data into corporate reporting.
AI’s impact extends beyond efficiency gains. It frees CFOs to focus on strategic decisions, such as embedding sustainability into corporate strategies and creating innovative, sustainable business models.
“AI will help CFOs take bold steps on sustainability with confidence and unlock long-term natural, social, and economic value,” highlights the report.
Related Article: How CFOs Can Help Meet Corporate ESG Goals
Building the Value Architect Role
The transition to a Value Architect involves three key actions:
1. Designing a Value Story with ESG Integration
CFOs must align financial and ESG narratives to address the growing demands of diverse stakeholders. “The Value Architect of the future must report financial and non-financial performance to gain and maintain the trust of all stakeholders,” states Corson.
Priority actions:
- Incorporate ESG into equity stories and investor roadshows.
- Develop funding alternatives for sustainability transformations.
2. Blueprinting a Business Case for Sustainability
CFOs need to integrate ESG measures into financial planning processes, ensuring that sustainability metrics are embedded into budgeting and forecasting.
Priority actions:
- Define business cases for sustainability investments.
- Include ESG measures in capex and opex planning.
3. Constructing a New Finance Operating Model
The integration of ESG reporting requires new skills, technologies, and processes within the finance function.
Priority actions:
- Introduce audit-proof ESG data collection processes.
- Upskill teams to meet new reporting requirements.
The Future of Finance
As sustainability and technology reshape the CFO role, those who embrace the Value Architect transformation will not only enhance their organizations’ resilience but also position themselves as future CEOs.
Julie Linn Teigland, EY EMEIA Area Managing Partner, notes, “Since sustainability is intrinsically linked to value creation, and the CFO plays a key role in financial value creation, it is a natural progression for the CFO to have a more holistic view of value creation.”
“By prioritizing long-term value creation and infusing it into corporate strategy, the CFOs of today – and Value Architects of the future – will enable their organizations to better meet investor expectations and more transparently and accurately secure long-term shareholder value creation,” emphasizes Corson.
CFOs who take on this expanded role will drive innovation, sustainability, and profitability, ensuring their organizations are prepared to meet the challenges and opportunities of a rapidly changing world.
