- Sustainable finance management is top challenge for nine out of ten respondents for 2023 and beyond
- Shortage of personnel puts sustainability goals at risk
- No general best practice for transformation projects
Despite challenging conditions, a clear majority of CFOs of large companies expect positive business development in 2023, as the current CFO study by management consultants Horváth shows. 79 percent of the interviewed top managers predict a good financial performance. Liquidity is also rated positively by 84 percent. The perspective on investments in new business is somewhat more subdued, with only 52 percent optimistic. There are also clear signs that the pressure on finance departments is increasing and risks are continuing to build up. It is slowly dawning on those in charge that organic growth and long-term value creation - the top strategic goals of companies - are increasingly dependent on good performance in the area of sustainability. At 88 percent, sustainable business is cited as the most significant challenge for 2023 and beyond, ahead of skills shortages and cyber risks (both 83 percent). But of all things, progress in this success-critical topic is on the back burner for organizational reasons.
Lack of resources torpedoes plans for sustainable finance
Two-thirds of CFOs say their department is suffering from staffing problems. Just as many see a high workload as well as an enormous stress level among employees. Hardly fewer (59 percent) are also pessimistic about being able to solve capacity problems in their department in the coming months. 83 percent expect the problem to worsen overall, along with negative consequences for the companies. Because fewer staff are available for day-to-day business, more complex special projects and tasks are in danger to be disregarded or de-prioritizing. For example, a quarter of CFOs already do not (or no longer) believe that they can achieve the companies' sustainability goals. Only ten percent are confident to succeed. Likewise, a quarter currently see themselves as simply unable to integrate sustainability into corporate management at all.
"Solutions and models for integrating sustainable goals into corporate management can, if set up correctly, reduce the workload," says Achim Wenning, study director and partner at Horváth. "In any case, no finance organization will be able to avoid this company-relevant and company-wide task in itself, so CFOs should face this challenge sooner rather than later, most efficiently with professional support."
Three possible transformation approaches – but no general best practice
Transformations are aimed at corporate growth and value creation. As the CFO study shows, one in ten jobs is already tied up in change processes – and demand is rising. Finance departments are facing a tour de force when it comes to transforming their departments or companies, regardless of which approach they choose. The most popular approach is the holistic "evolution approach" (37 percent), which takes processes, organizations, IT and employees as its starting point and implements the transformation in smaller steps. Secondly, the "use case focus" is adapted (29 percent), in which digital improvement ideas (e.g., in process execution or data use) are placed at the center and implemented one after the other. The "revolutionary approach" (27 percent), on the other hand, provides for the holistic derivation of all necessary transformation initiatives from a visionary target picture. The least frequently used method ("technology driven") prioritizes only the further development of the IT landscape and data models. Only seven percent of CFOs prioritize this approach, which is strictly focused on systems and technology.
"There is no one right path to transformation. It is therefore important to develop the appropriate roadmap individually for the respective organization. However, most CFOs prefer quick and pragmatic solutions to be able to drive multiple initiatives in parallel at the same time," says Wenning.
About the Study
For the current Horváth CFO Study, a total of 80 CFOs were surveyed across industries and countries, from companies with a majority of over 1,000 employees and 250 million euros in annual sales. The survey was completed in March 2023.
