The impact of ESG on finance goes far beyond disclosure management. Going forward, sustainability will be integrated into performance management processes. It will become part of how the CFO looks at the company’s current performance. In other words, performance will not only be viewed from a financial perspective. However, this will only be possible if the company internalises the KPIs linked to ESG, and if it actually complies with them. In this light, ESG is no longer just a mandatory, external reporting perspective, but a strategic mainstay of the organisation.

Along with compliance and disclosure, finance also monitors ESG performance. The current possibilities and resources for performance management mean that finance can play an important part in this. Finance already has this responsibility within the organisation today, and must seize this opportunity to further expand its role. Existing performance management processes can play a significant role in establishing KPIs linked to ESG and the corresponding goals.

It is up to management and the board of directors to find answers to the question of what role sustainability plays in the company. It’s not just about asking whether the company is green. Another crucial question is whether the company will lose or gain value. As a CFO, you need to know the impact of products that will no longer have market value in 10 years’ time on your financial parameters. Sustainability is increasingly valued economically, and finance needs the capacity to use this data to measure the impact on the organisation.

When the economic and political situation makes things seem unclear, treasury gains power. For example, when financing becomes more expensive. But it also gains power in the domain of foreign currencies, hedging the prices of raw materials, and so on. Uncertainty creates many opportunities for treasury. The challenge here is to explain these very complex problems that treasury deals with to the business and clarify what exactly the business implications are. It’s not at all easy to connect with the business controllers so that they understand how they can help strengthen the treasury position of the organisation. In addition, the pressure to digitise is very high, in treasury as it is elsewhere.

Finance will have to simulate more and more future perspectives or scenarios. These may include indexations or predictions for market evolutions and what impact they could have on suppliers and customers. Consequently, people will talk less about annual budgets, and there will be an increasing need within the organisation for continuous scenario planning.

There is a great deal of uncertainty in the world today, which means that organisations have to think constantly about both potential risks and new opportunities. Finance can take the lead in integrating thinking about risk into the organisation. What are the possible consequences of an action and how do we deal with them?

In certain cases, you insure against risks or mitigate them in the organisation. However, the global climate may also push you toward extreme thinking on a strategic, tactical, and operational level. Where does your company stand in geopolitical terms? What will this mean in the long term? What is happening in your immediate surroundings? Companies need to think about the risks they take and, if necessary, include these risks in their strategic or operational planning.

While the finance team likes to work with stability and frames of reference, these will disappear due to uncertainty and the state of continuous change in which we find ourselves. Finance will need to be very flexible, constantly questioning its own frames of reference.

In the past, the monthly reporting was compared to the budget from the previous year. Nowadays, however, finance has to generate reports and provide support to the business much faster. It must also be able to act directly on the challenges that the organisation faces. This has an impact on processes, which need to be less rigid; on tools, which must allow them to act; and on the organisation and the people who work in it. Consequently, a certain number of resources need to be kept aside to cope with unexpected events. That means finance staff need to be comfortable with uncertainty. The adoption cycle for new processes, new expectations and new systems is getting shorter and shorter, and this is directly impacting finance employees.

In recent years, finance departments have been avid adopters of digital solutions, but the internal demand for speed and insights is continuing to rise. These solutions can only be obtained through far-reaching digitisation. And every step forward brings a new question. Just as you do when training your team, you need to invest constantly in renewing your digital and technological backbone. If you skimp on this in the current crisis, the repercussions will be twice as severe in terms of efficiency or performance this year or in the years to come.

When everything is going well, finance is mainly concerned with P&L. When things are not going quite as well, finance loses sleep over the balance sheet. The hunt for cash on the balance sheet is a recurring phenomenon in (more) challenging economic times. If anything is wrong on the balance sheet, fingers soon point in the direction of finance. And that may not be unfair. Clearly there is always a link to the supply chain, but customer management and the resources that are tied up with customers are examples of matters that finance should take to heart.

Talent is scarce on the market. Bearing that in mind, it is essential to give your own people further coaching, including training in digitisation and all the expectations we have mentioned above. There is still a need to encourage people to evolve toward present expectations within the finance team. That also means you have to retain the diversity of talent you need in your organisation. Talent detection has been identified as a challenge for many years, but the transition will continue in 2023 as well. More finance organisations are also looking into other ways of obtaining resources in the talent pool (including outsourcing to contractors). These methods can add significant value.

The current crisis can also bring opportunities for the organisation. Organisations that succeed in retaining good talent now will also be able to build up a substantial advantage in times of crisis. It’s important to find a balance when you’re looking for new resources in a period of crises and indexations.

When crisis strikes, finance all too often lapses into calculations to see what exactly is happening and how it affects the budget. However, it is important to walk around your company and talk to people, so you know what is really going on. A good indicator is how often business controllers stay in their chairs and how much time they really spend walking around the company. Another indicator is how many people from business switch to finance. Will we succeed in improving business skills within finance? As finance departments, we are typically exporters of talent, but in many cases we fail to import talent.

It is essential for finance to talk to business. Much has been invested in this in recent years, but business also needs to be taught to understand finance. Why are financial indicators important in making a decision? Why is a good understanding of costs so crucial, especially nowadays? Finance and business need to understand each other so that they stay on the same page.

Economic hardship doesn’t mean the world is going to end. It is up to finance to realise this, but also to make it clear to the company. Finance has a role within the organisation as a positive challenger. It needs to help create opportunities for the business rather than invariably saying ‘no’. So be optimistic and facilitate business, but go beyond that: contribute positive input as well to help your organisation grow and overcome its challenges.