CFO Frontline Report 2024: what CFOs are like and how they see themselves.

The issues that concern CFOs the least today are their relationship with the CEO, delinquent receivables and relationships with financial providers, according to the report's Barometer.

The two previous annual CFO Frontline Reports were prepared against a backdrop of great uncertainty, which affected many of the answers. CFOs then were most concerned about inflationary pressures, economic uncertainty and supply chain disruption.

Today's CFOs are taking off their jackets and getting involved in the business

This report finds that CFOs are becoming a “financial extension of the CEO” in today's companies. The CFO's strategic vision, which was noted in the first CFO Frontline Report, is now unquestionable: this opinion was shared by 62% of CFOs three years ago, while 70% now agree with it.

As one of the CFOs who took part in the 2024 report highlighted, the finance department offers a broad perspective of the entire business. And having led the digital transformation in this period, CFOs are also now demonstrating innovation and adaptation to change to an extent that is not so obvious in other areas.

“CFOs who lock themselves in their office and spend all day looking at income and expenses are missing out on something important - being close to the business” - according to another of the CFOs surveyed.

Today's CFOs are very different from last century's CFOs. As one CFO graphically put it, “the skills required of CFOs 20 years ago were: wear a suit, get in your office and deliver the reports today”.

With regard to their assessment of their personal position, the 192 CFOs surveyed in 2024 reported greater professional stability. Two years ago, only 29% of CFO said they were “progressing”. This increased to 42% in 2023 and stands at 38% in 2024. In this third report, 54% of the interviewees declared their position to be “stable” while 8% said they were “treading water”.

The Barometer has also asked about the position of the CFO in the management organisation chart over the last three years. 57% believe the CFO should always be the number two in the organisation, behind the CEO, while 37% place the CFO as number three and only 6% say number four or five.

Finance departments aligned with sustainability

The title of this year's report is “The CFO and the challenge of the sustainable transformation”, with many of the questions and interviews revolving around ESG (environmental, social and good governance) issues.

60% of the CFOs consider their organisation's strategy to be aligned with ESG issues, with 30% believing they are very closely aligned. However, the CFOs do recognisee that regulatory compliance is what is prioritised in their area today. The regulatory tsunami, as it is known in the business world, requires compliance and reporting first, to the detriment of a longer-term vision.

Regulatory pressure is felt particularly keenly in the finance area. The report finds that this regulation occupies and concerns the finance area, while the organisation as a whole regards sustainability as something that is strategic (46%) more than regulatory (34%). And only one in five of the respondents see sustainability as a lever for growing the business. In other words, they have not yet recognised it as an opportunity.

When the CFOs were asked about their role in the sustainability transformation, they did not hide the prioritisation of this from the strategy report but, surprisingly, the sum of the strategic and transformative roles outscored the merely informative role. This is the hierarchy of roles for CFOs with regard to sustainability:

• Informative role (39%)
• Strategic role (29%)
• Transformative role (17%)
• Inclusive role (14%)

Sustainability already affects financing, reporting and risks

According to the Frontline Report, CFOs have got to get to grips with sustainability, irrespective of their personal perceptions. 68% of the finance areas of Spanish companies are already addressing ESG challenges in their day-to-day business, while 32% still do not have them on their agenda.

To what extent are sustainability criteria affecting finance departments? The report summarises the impact of these in three areas:

• Sources of finance and capital: investors are looking for sustainable companies. This is out of conviction and out of interest: acting in a way that benefits society and the environment is trending upwards. As one of the CFOs commented, meeting ESG criteria “has a huge positive impact on financial support from both traditional banks and alternative sources”. The data in the report supports this: 60% of the CFOs consider that sustainability opens up new opportunities for investment and finance.
• Disclosure and reporting requirements: it is not just regulators. Investors and banks are also demanding accurate and transparent information on compliance with social, environmental and good governance criteria. European regulations require this from large listed companies, and these reporting obligations will spread to the rest of the business community shortly. International standards - particularly the European taxonomy and new EU directives on non-financial reporting - are already in place and will become increasingly demanding.
• Evaluation of risks and opportunities: failure to comply with sustainability criteria has a cost for companies. “If you don't comply, you don't get to play in this league”, according to one of the CFOs. Environmental, social and governance issues are becoming increasingly important in risk assessments because they can impact the company's business and reputation. But these issues can also grow the business. As one of the CFOs says, adopting sustainable practices can “help companies anticipate and manage ESG risks, attract and retain talent, and adapt to changing market expectations”.