According to the recent Global Finance Trends Survey, CFOs are under increasing pressure to implement and report on organization-wide environmental, social and governance (ESG) programs, with 60 percent of finance leaders indicating a substantial increase in the focus and frequency of their reporting related to ESG issues.
Year over year, ESG metrics and measurement have jumped up the priority list, with CFOs and VPs of Finance noting it as their top priority in 2023, compared with it ranking in the 11th position just last year. In fact, 57 percent of publicly held and 40 percent of privately held companies report that measuring and reporting ESG risks and issues has become part of their finance team's role in the last year.
CFOs and other finance leaders are preparing for a global wave of ESG-related regulatory requirements, including the already-enacted Corporate Sustainability Reporting Directive (CSRD) in the European Union (EU) and expected climate impact reporting requirements for U.S. public reporting companies from the U.S. Securities and Exchange Commission (SEC). As the magnitude of these new requirements becomes apparent, finance teams continue to prepare: 52 percent of privately held organizations and 62 percent of publicly held organizations consider themselves ready for new required ESG disclosures.
"While the term 'ESG' has become a hot button issue for some, stakeholder demands and regulatory reporting requirements aren't going away, leading CFOs and finance leaders to adapt as the ESG reporting landscape continues to evolve quickly, with priorities differing vastly across industries and geographies," said Christopher Wright, global leader of Protiviti's Business Performance Improvement solution "Along with the need for finance leaders to meet ESG-related reporting demands globally, our survey also finds the underlying issues that ESG commitments strive to address continue to command the attention of finance leaders and organizations over the next 12 months and beyond."
In the survey of over 900 global finance leaders, including CFOs, vice presidents, directors and managers, conducted in the second and third quarters of 2023, participants ranked their priorities for the coming year. The results indicate the top 10 finance priorities are:
1. ESG metrics and measurement
2. Impact of inflation
3. Financial planning and analysis
4. Profitability reporting and analysis
5. Security and privacy of data
6. Strategic planning
7. Enhanced data analytics
8. National tax changes
9. Cloud-based applications
10. Routine reporting and closing activities
The survey also found that the impact of inflation is weighing heavily on finance teams, a concern rising to second priority from the 6th spot in 2022. Combined with a focus on financial planning and analysis as well as profitability reporting and analysis, finance teams are reinforcing cost optimization measures in response to an uncertain global economy.
Organizations are exploring generative AI to drive productivity and performance to counteract the escalation of challenges for the finance function. Of the finance functions surveyed, 63 percent of publicly held and 39 percent of privately held organizations currently use generative AI. Among organizations employing this technology, almost half (49 percent) are utilizing it for compliance and regulatory reporting, 45 percent are focusing on risk assessment and management and 37 percent are using it for financial forecasting.
"As the number of priorities for finance leaders increases, they are forced to make high-stakes decisions by reacting quickly to a constant stream of evolving regulatory requirements," said Wright. "CFOs and their teams rely on technology and data resources to mitigate these pressures and devise strategic responses to complex challenges."
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