The CFO of 2024: Focus on sustainability and talent.

CFO Talks: The qualitative part of the report

The presentation of the report in Valencia provided the opportunity to hear what financial officers at Spanish corporates had to say at two round tables moderated by two assistant managing directors of Bankinter: Luis Sáenz de Tejada, head of Sustainability, and Emma Montserrat, head of Corporate Banking.

1. The CFO is a key figure in a corporate, and they are usually under a lot of pressure

Professional financial competence is required but also a strategic vision of the corporate, according to Luis Sáenz de Tejada. As a result of this vision, the CFO plays a vital role in the transversal sustainability strategy within the organisation and with stakeholders. “The CFO has a long-term vision of the corporate, and sustainability is an essential component. Corporates wouldn't exist without it. It's more of a marathon than a sprint. The important thing is that every day you have to take a step towards that marathon. Focus on the long term, but never forgetting that if you don't take steps you won't get there,” said Luis Sanz, investment director at Atitlan Group.

2. Compliance with ESG issues is becoming more important in the Finance area than the transformative role expected of it

According to the CFO Frontline Report, CFOs today feel more like auditors and reporters: they stick with the numbers. But we are heading towards a scenario where real transformations led by the financial officer will be valued. We have to move fast, faster even than what the regulations dictate. More and more, the Finance area is pursuing a strategy that involves coordinating, setting priorities, putting things in order. ”Mapping, listing initiatives, relating those initiatives to internal projects and corporate indicators, then using all that as the starting point. You have to do what you're asked to do, but you have to weave it all together. The order in which you do things is very important,” explained Daniel Soler, CFO of Power Electronics.

3. Better sustainability performance will translate into better financing and access to investments

“The ESG report helps a corporate to achieve a better position, become more competitive and even get better access to financing,” said Daniel Ramos, Green Leader at FI Group. As Emilio Barberá, a senior asset manager at Bankinter, pointed out, “The regulator has had a 360-degree view when regulating sustainability, including financing, from primary to secondary markets. Your competitor pushes you (to sustainability), your main customer, and the financing pushes you as well. Sustainability risks are integrated into asset management and investment decision making.” Agustín Melchor, CFO at Global Omnium, was of the same opinion. He issued the following warning: “Investors are setting ESG criteria and, if you don't meet them, they won't even see you.”

4. Regulation accelerates transformation, but at the same time is creating asymmetries between sectors and markets

European corporates may lose competitiveness compared to countries with a smaller regulatory burden. Even the Inflation Reduction Act (IRA), aimed at reindustrialising the United States, is an example to follow, according to Spanish CFOs. “Americans are much more practical than Europeans, as demonstrated by the Inflation Act, which is effectively a new Marshall plan. Asymmetries can be created between markets. And they can affect the survival of corporates,” warned Francisco Benedito, co-founder and CEO of Climate Trade.

5. Regulation is only just starting

The Corporate Sustainability Reporting Directive (CSRD), the European Taxonomy and the European Sustainability Reporting Standards (ESRS) represent a point of no return for the standardisation of ESG issues, but the regulations are constantly evolving and testing the capacity of the Finance area. “All these regulations are starting to require vast amounts of effort in reporting, information and non-financial audits,” Emma Montserrat pointed out.

6. Some emissions are impossible to reduce

The Paris Agreement and the different mechanisms implemented internationally are aimed at finding solutions for the industrial sectors where decarbonisation represents the greatest challenges. Carbon footprint offsets and emissions markets are a way forward, but we're going to have a hard time between now and 2050. “Some emissions are impossible to reduce, so you have to buy emissions certificates,” said Francisco Benedito. “We work with practically the entire IBEX-35 and without carbon footprint offsets we wouldn't be here today,” admits the co-founder of Climate Trade.

7. Sustainability and its impact on profit

The perception of ESG issues as an expense is a thing of the past. Customers, employees and suppliers, as well as investors, demand and value sustainability. The next step is to quantify its impact on the business. “In time, we will want to measure all these financial and human resources investments in terms of how many new customers they have brought. And it's not an easy ratio to measure. Has there been a return and how much?” asked Julio Artillo, corporate chief financial officer at GrupoTec, who believes that investments in sustainability may only produce a marginal return. If that is the case, it will mean going a step further.