Debbie Beaven is a portfolio non-executive director with roles at Newbury Building Society, Boundless by CSMA and Salisbury NHS Foundation Trust, and she was previously CFO at Simplyhealth. Here, she makes the case for a “value for money” equation that factors in social value, why reporting should stimulate curiosity, and the vital role of investors in making change.
This interview was conducted as part of research by the Board Intelligence think tank, in partnership with ICAEW, Accounting for Sustainability, and Odgers Berndtson, into the CFO’s role in creating a fairer future. To see more CFO insights click here.
I’m not so sure it has — at least not in my experience. Most CFOs have always had tentacles reaching out into every part of the organisation; they’ve always been strategic business leaders, partners to CEOs and I find it rare for CFOs to be pure accountants.
They have to be able to understand the strategy and the organisation’s constituent parts, and the role they play in delivering that strategy. A good CFO will help connect the dots of performance and impact; getting to the heart of what needs fixing and asking, “What are the opportunities the business should explore?”
What has changed is the CFOs’ ability to harness data. They can leverage technology to understand things that in the past may have involved anecdote, gut feel, and sometimes educated guesswork. For example, consumer behaviour, characteristics, and what influences them have traditionally been tricky to pin down. With the help of data and data scientists, we can take insights to inform pricing, product strategy and how to enhance the delivery of purpose.
“What has changed is the CFOs’ ability to harness data. They can leverage technology to understand things that in the past may have involved anecdote, gut feel, and sometimes educated guesswork.”
For me, I have been inspired by an interesting shift, with CFOs needing to not only focus on financial performance but also include reflections on how the business is achieving its purpose for the benefit of customers and wider society. This reveals what I think is one of the greatest challenges that CFOs face today: how they strike the right balance between delivering on purpose and the bottom line, which for many translates into maximising shareholder value. This is particularly challenging when the expectation of some traditionalists is that the CFO’s role is to focus on the pursuit of the latter.
To navigate this, it can be helpful to describe what I call the “value for money” equation, where financial metrics sit alongside say, purpose metrics, which should include the positive impact on addressing wider societal challenges. When done well, you can build up a more holistic picture of performance and value, which may not necessarily maximise the bottom line.
“When done well, you can build up a more holistic picture of performance and value, which may not necessarily maximise the bottom line.”
I think that networking to learn how others have navigated challenges can be really helpful here. The ESG agenda has exploded in recent years — you could create a huge industry around its reporting alone — but a great first step is to understand what’s relevant and proportionate for your organisation. Then start to think about how you can best present that information in the context of all the other reports that the board will have to read.
Thinking back to a time before ESG when CSR (Corporate Social Responsibility) became a popular theme — those reports were massive, chunky documents that very few people actually read. In my view, it’s imperative that you ensure that the information you present on ESG is relevant and impactful. It needs to either: stimulate curiosity, give assurances, or, ideally, create an appetite for something to change.
Ultimately, all data can be tracked back to its financial impact. Whether it’s productivity and performance metrics or measures for sustainability, it will have either a positive or negative financial consequence, sometimes referred to as the “value drivers”. Therefore, I think you need to look at your metrics from a wider lens to paint a holistic picture; using them to show a value chain, where you can see the impact not only on finances but also the relationships between different metrics.
“Ultimately, all data can be tracked back to its financial impact.”
Understanding how different data points interact and their impact on each other is something that CFOs are pretty well versed in doing, so it makes sense for them to own this, with support from data scientists or analysts.
Where to start! We’ve got a “cost-of-living” crisis, and each industry has its own issues to tackle. In financial services, firms are grappling with the implications of a volatile interest rate environment, while building their compliance to the Consumer Duty regulations; in healthcare, it’s about health inequalities, access, and outcomes in a financially constrained environment; and the charity sector is coming under significant financial pressure to sustain and create income sources, whilst dealing with increasing costs.
Of course, there’s also the impact of climate change and the transition to a Net Zero economy, which, for some, will require a huge amount of investment.
It will also require a lot of cooperation from the business community and a recognition that not every business is in a position to have the same impact. For example, a building society just won’t have the same impact as a big energy provider, which is why action needs to be proportionate; everybody needs to do their best to make a difference, and it’s a simple fact that some will make a bigger difference than others. Those companies that make the biggest difference will be those facing the biggest challenges, but also the ones likely to find the biggest opportunities.
Private shareholders’ expectations are a big influencing factor. There’s been a lot of attention on utilities companies paying out large dividends recently and the narrative has largely centred around them not doing enough to operate sustainably and responsibly, and questioning why they’ve prioritised chasing shareholder approval. Every organisation needs investment to function and without it the business simply can’t move forward. Investors are critical and obviously, they need to feel that there’s a good return on their investment, but I’d like to see more of a connection to the purpose as part of their value equation.
“We’ve got some truly inspiring examples of companies where they’ve said, actually, this wealth isn’t mine and in fact it’s for us to share and do good with.”
I’d love to see some of those expectations moderated; maybe we could see a somewhat lower dividend combined with a higher social impact — that would be great news for everyone, surely? There are some investors and entrepreneurs who view things that way and who have strong sustainable portfolios or purpose-driven objectives. We’ve got some truly inspiring examples of companies where they’ve said, actually, this wealth isn’t mine and in fact it’s for us to share and do good with. Patagonia is a trailblazer, in sharing wealth by giving back.
This interview was conducted by our Director of Think Tank, Scarlett Brown. Interested in furthering the conversation about the changing role of the CFO? Take part in the second phase of our research here.