The annual Global Finance Trends Survey, conducted by global consulting firm Protiviti, finds that the pressure to implement and report on organisation-wide ESG (environmental, social and governance) programmes has intensified for Chief Financial Officers (CFOs), with 60% 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 Vice Presidents (VPs) of Finance noting it as their top priority in 2023, compared with its 14th position in 2022 (Table 1). In fact, 57% of publicly held and 40% of privately held companies report that measuring and reporting on ESG risks and issues has become part of their finance team’s role in the last year.
CFOs and finance leaders are preparing a global wave of ESG-related regulatory requirements, including the Corporate Sustainability Reporting Directive in the European Union, which came into force on 5 January 2023, and expected climate impact reporting requirements for US public reporting companies from the US Securities and Exchange Commission. As the magnitude of these new requirements becomes apparent, finance teams continue to prepare: among those surveyed, 52% of privately held organisations and 62% of publicly held organisations consider themselves ready for new required ESG disclosures.
Participants in the Protiviti survey, which was conducted in the second and third quarters of 2023, shared their top finance priorities for the coming year (Table 1).
Table 1 Top 10 finance priorities
The impact of inflation is weighing more heavily on finance teams. Combined with a focus on financial planning and analysis as well as profitability reporting and analysis, finance teams are reinforcing cost optimisation measures in response to an uncertain global economy.
Organisations are exploring generative artificial intelligence (AI) to drive productivity and performance to counteract the escalation of challenges for the finance function. Of the finance functions surveyed, 63% of publicly held and 39% of privately held organisations currently use generative AI. Among organisations employing this technology, almost half (49%) are utilising it for compliance and regulatory reporting, 45% are focusing on risk assessment and management, and 37% 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,” says Christopher Wright, global leader of Protiviti’s Business Performance Improvement solution and sponsor of the firm’s ESG client services steering committee. “CFOs and their teams rely on technology and data resources to mitigate these pressures and devise strategic responses to complex challenges.”
Singapore and sustainability reporting
In Singapore, mandatory climate reporting has been introduced in a phased approach for specific industry sectors. Listed companies in the Financial; Agriculture, Food and Forest Products; and Energy sector must conduct climate reporting for the financial year commencing 1 January 2023, and publish their sustainability report in 2024. The Materials and Buildings, and Transportation sector companies will have to do so a year later.
© 2024 Institute of Singapore Chartered Accountants
