CFOs: How to navigate external pressures

As the CFO remit broadens, many are finding themselves tasked with additional regulatory burdens from climate reporting to managing compliance risk across territories. There's also pressure to keep pace digitally, providing real-time information and transparent reporting, and ensuring the business has the right controls, tools and processes in place to collect and report this information.

Claire Dudley-Scales is used to multitasking in her role as CFO at CP Holdings, a family-owned multinational business operating across seven different divisions. Her remit is to drive financial performance, effect efficient corporate governance, and be involved in technology, and environmental, social governance (ESG) initiatives. 

We asked Claire for her insight on navigating these external pressures.

How have you seen the CFO role and its priorities change in the last five years?

"There’s been a growing focus on areas such as climate, non-financial reporting and providing external information on corporate governance. This is particularly the case in areas such as ESG, and not just in the UK but the global view.

Technology has also been a key driver of change. There’s an expectation of having much more real-time financial information at your fingertips for all areas of the organisation."

What's your perspective on the pros and cons of corporate governance?

"We’re a family business so corporate governance, as a starting point, is really there to protect our shareholders. We do that largely by having some of those shareholders in key roles within the organisation. But we’ve got to extend that and make sure we’re also considering a wider group of stakeholders.

For us, we’re continually trying to evolve our framework and to make sure that we’re not burdening the business on a day-to-day basis. We try to embed controls where we can but this isn’t always easy, especially when you have divisions that are doing multiple different things."

How do changes in the economic and regulatory climate affect your work?

"Current geopolitical challenges are creating uncertainty: the speed with which they change and shift is challenging for most organisations to keep pace with. While regulations have always evolved, more and more the regulations across different territories are changing and they are at different paces of evolution. That’s quite difficult for the business, and for the board, in making sure you're compliant everywhere you operate."

What's your view on upcoming planned legislation aimed at strengthening transparency for more companies?

"The lack of certainty about what those changes are going to be, and the timelines around them, makes it very difficult to plan and to prioritise appropriately. There can be a huge amount of work involved to prepare for such changes [like the Draft Audit Reform and Corporate Governance Bill] . The thing you don’t want to do is end up with a kneejerk reaction to potential legislation, sometimes this changes following consultation and you have to be adept to the revisions. Having said that, the one thing we do know is that there’s always going to be more legislation. And if we look at what the publicly listed businesses are having to do, at some stage as a large privately owned business we’re also going to have to get there. That’s pretty much always the way things have historically worked.

Some very positive things have come out of that corporate governance legislation but there’s also quite a lot of bureaucracy, which may land on businesses that can’t necessarily absorb it. This might end up with people making decisions that wouldn't necessarily be optimal economically. As an example, if you're approaching £750 million turnover [which would push you into the public interest entity (PIE) category], would you decide that you didn’t want to grow, and fall into that category? Perhaps that next step up is so cumbersome [in terms of reporting] that you divest something rather than grow, which might not necessarily be the right economic decision."

How is the increased focus on digital in the finance function and ESG reporting affecting your work and business?

"I think quite a lot of finance teams see being able to use finance platforms and digitisation as a key skill. There's no shortage of people putting their hands up and wanting to get involved in these projects, especially when it improves and enhances their role, and leads them to be able to do more value-added work. Technology is always evolving: AI is just the latest generation of technology and enhancements that will need to be pushed through the enterprise. It’s just speeding up and getting quicker with the variety of platforms and tools that are now available to the finance team.

For us, with ESG reporting, we struggle with standardisation across what are effectively seven different businesses. What you want in a hotel division isn’t necessarily what you need when you are dealing with machinery distribution, for example. What we’ve chosen to do is invest in the reporting layers that sit on top of that so that we can provide information – whether it be ESG information or any other form of financial data that the board wishes to see – in a more appropriate platform or framework. So we’ve committed quite a lot of money going into One stream and that’s going to be quite a long project."

How much do boards understand these projects?

"The board is aware of the challenges, what these projects entail and the benefits they can bring to the business – but there can sometimes be a lack of understanding about how quickly you can get to the end result.

Often, if you set up a project and it’s taking too long, the technology has moved on before you get to the end of the project. Actually, there’s some benefit in going earlier and resourcing people to do the project quickly. Boards are generally supportive of that."

What one thing would make your work more impactful?

"A crystal ball! Which is impossible but the level of regulation and rules in different jurisdictions has become complicated and confusing, it can be hard to work out what to prioritise because of all the changes that are coming down the track. Better visibility of what’s coming would help CFOs with decision making."

The key takeaway from our conversation was that CFOs are being increasingly pulled into wider responsibilities around ESG and technical transformations, while also dealing with compliance complexities in an uncertain global environment. This is making planning and prioritising difficult, and putting pressure on decision making. However, understanding how to navigate these times by working effectively with the board and investing in the right areas helps stay on top of reporting requirements.