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How sustainability and technology will transform CFOs into Value Architects

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13 minute read 08 Jan 2025

The role of the CFO is shifting from a “financial scorekeeper” to a Value Architect focused on driving long-term value.

In brief:

    • CFOs are evolving into Value Architects, integrating sustainability and leveraging AI to drive long-term value creation and innovation.
    • In the "Age of And," CFOs must balance short-term performance with long-term value creation, addressing multiple challenges and opportunities simultaneously.
    • AI and technology are enabling CFOs to enhance financial and non-financial reporting, providing deeper insights and fostering sustainable business models.

    The Chief Financial Officer (CFO) role is transforming from a "financial scorekeeper" to a Value Architect. Artificial intelligence (AI) frees the finance function to focus on more strategic activities. Additionally, sustainability imperatives increase the demand for creating and measuring long-term value. In the “Age of And,” an era characterized by fast-increasing complexity and accelerating interlinked disruptions, finance leaders are addressing multiple challenges and opportunities in parallel, simultaneously, supporting short-term performance and long-term value creation. CFOs don’t have the luxury of giving up one responsibility to focus on another but must keep their current priorities and take on new ones.

    The embrace of new priorities drives transformation in the CFO role. As sustainability becomes more integral to business strategy and reporting, CFOs find themselves increasingly called on to drive overall corporate value, both financial and non-financial.

    Disruptive technology enables this transformation. AI, by automating financial processes and augmenting accounting teams, gives CFOs new scope to have impact beyond financial performance, efficient bookkeeping, accounting, analytics, and reporting.

    As a result, the CFO is becoming a Value Architect, a role that promotes sustainable and innovative – yet profitable – business models that capture value for the company, people and the planet. This transformation will accelerate as sustainability and technology imperatives grow.

    The CFOs that embrace this transformation will expand their portfolios, helping position them for a future CEO role. Organizations that move the CFO role in this direction stand to benefit from a larger impact on business development and greater ability to continuously manage all value-driving factors. Conversely, laggards will risk losing strategic oversight of combined financial and non-financial value drivers, diminishing the ability of their organizations to deliver long-term value.

    In this article, we will explore the factors propelling this transformation, define the key characteristics and capabilities of this new role, and share an action agenda for realizing it inside the organization.

    Two trends changing the focus of the CFO

    Two trends underlie the need for CFOs to pursue a role that leads the organization to a comprehensive view of value and fosters long-term creation:

    1. Strengthening sustainability imperatives, reinforced by new regulations and more robust reporting requirements, growing stakeholder expectations for delivery on sustainability targets, and the need to build business resiliency
    2. Automation and augmentation in the finance function, driven by AI, data and analytics, create new opportunities for strategic impact by the CFO

    Strengthening sustainability imperatives

    An array of regulatory and voluntary sustainability reporting standards demands deeper transparency and rigor, including disclosure of not only targets and inbound risks but also outbound impacts and transition plans.

    Regulations such as the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy are triggering change in reporting and management routines. Additionally, while the rules for the Enhancement and Standardization of Climate-Related Disclosures for Investors in the United States have been proposed, they are currently stayed pending appeal and may be subject to change.

    The standards and frameworks promulgated by non-governmental organizations such as the International Sustainability Standards Board (ISSB), the Taskforce on Nature-related Financial Disclosures and the Science Based Targets initiative (SBTi) are bringing global consistency and a higher bar to non-financial targets and reporting.

    These developments are having real impact. EY research shows, for example, that increasing regulatory scrutiny on sustainability reporting is causing 92% of European companies to make either “significant changes to optimize” or “bold changes to transform” their approach. The CFO is at the center of this transformation as the rigor of reporting non-financial data moves toward that of financial reporting.

    “In the ‘Age of And,’ forward-looking CFOs realize that the consolidation of financial and non-financial reporting and the increased discipline required by the new standards offer an opportunity for companies to pursue sustainable growth while also improving corporate value,” says Myles Corson, EY Global and EY Americas Strategy and Markets Leader, Financial Accounting Advisory Services.   

    Maintaining the duality of short-term financial performance and long-term value creation also falls to the CFO. The 2024 Global EY Corporate Reporting Survey reveals that 80% of institutional investors agree that CFOs play a key role in challenging CEOs and executive teams to take the long-term view over quarterly earnings performance. Additionally, the survey finds that the same proportion of institutional investors support strategic investments in sustainability even if they cause quarterly earnings targets to be missed. 

    In the ‘Age of And,’ forward-looking CFOs realize that the consolidation of financial and non-financial reporting and the increased discipline required by the new standards offer an opportunity for companies to pursue sustainable growth while also improving corporate value.

    Myles Corson

    EY Global and EY Americas Strategy and Markets Leader, Financial Accounting Advisory Services

    This illustrates a significant paradigm shift in stakeholders’ expectations. Regulators, civil society and investors are aligning to prioritize long-term value creation, emphasizing environmental, social and governance aspects. For the CFO, this shift will require rethinking the role, to consider, capture and architect value in new ways.

    What investors think
    of institutional investors support their investees' strategic sustainability investments, even if they cause the company to miss quarterly earnings targets.
    What companies think
    of finance leaders support making major sustainability investments, even if they cause the company to miss quarterly earnings targets.
    Source: 2024 Global EY Corporate Reporting Survey 

    Automation and augmentation in the finance function

    The volume of data available to companies grows exponentially. CFOs must be able to analyze and use this data rapidly to generate valuable business insights and meet increasing sustainability reporting requirements. A key challenge, both for business insight and reporting, is the heterogeneous and often unstructured nature of non-financial data.

    Enhanced technical capabilities, particularly the use of AI, will augment the finance function’s ability to meet this data challenge. According to the 2024 EY Corporate Reporting Survey, 87% of finance leaders say that their companies are currently piloting or using AI for data analytics and the integration of nonfinancial data into corporate reporting.

    The impact of AI will be felt most profoundly in accounting and analytics. With the introduction of AI, the amount of time spent on accounting and reporting is expected to decrease significantly as time-consuming tasks become automated. This shift will free up time for the CFO and the finance team to interpret value-driving data and insights holistically to plan, shape and drive the sustainability transformation while remaining a profitable business.

    More importantly, AI will help CFOs arrive at deeper insights and make responsible decisions more quickly in response to the increasing pace, scale and complexity of change. It will help them take bold steps on sustainability with confidence and unlock long-term natural, social and economic value. 

    Companies leading in ESG
    say that “AI offers a significant opportunity for driving long-term value, from creating new business models and revenue streams to transforming how work is done.”
    Companies leading in ESG
    say that “the key challenge of Generative AI is driving transformation and growth while ensuring ethical and societal implications do not undermine confidence in our organization.”
    Source: 2024 EY Europe Long-term Value and Corporate Governance Survey

    How EY can Help

    • EY Sustainability

      Sustainability and environment, social and governance (ESG) services that help protect and create value for business, people, society and the world, from a recognized leader in ESG and sustainability consulting. Explore the depth and breadth of EY services and solutions. Contact EY teams for more information.

      Read more

    Envisioning the transformation of the CFO: from scorekeeper to Value Architect


    Many organizations have viewed the CFO primarily as a “scorekeeper” delivering efficient accounting and financial performance. However, growing sustainability imperatives and the AI augmentation of the finance function bring a transformative shift into view: the CFO as Value Architect. Not every CFO will seize the opportunities opened by this shift, but leaders will. They will see the sustainability transformations as a chance to expand their impact, set themselves up for potential CEO roles and gain a more comprehensive view on the value the company brings to a broader set of stakeholders.

     

    Today, with efficiency boosts from generative AI (GenAI) and data analytics, the CFO is beginning to act as the “business copilot.” In this capacity, the CFO is increasingly integrating sustainability into decision-making, monitoring progress towards environmental, social and governance (ESG) targets, defining measures with estimated capex and opex effort (e.g., for CSRD) and ultimately, infusing the equity story with sustainability.

     

    Soon, the CFO will be in the position to drive consensus across the C-suite to align decisions with the company’s long-term value strategy. In the next step, CFOs will become “value creators” who accelerate the sustainability transformation by enabling sustainable and profitable business models, reconciling short-term cost savings with long-term value. Less than half of CFOs (48%) believe that they are already proactive value creators, while 80% are confident that they have the right skills to become key players in value creation, according to the 2024 EY Global Corporate Reporting Survey, illustrating the opportunity to increase CFO impact.

     

    Looking further ahead in the evolution of the role, the CFO as Value Architect comes into focus. The CFO will capture value for company, people and planet. This will involve integrating financial and ESG reporting in a unified “value reporting” that accounts for both the economic value of the organization and its social and environmental contributions. “Since sustainability is intrinsically linked to value creation, and the CFO plays a key role in financial value creation, it is a natural progression for the CFO to have a more holistic view of value creation,” observes Julie Linn Teigland, EY EMEIA Area Managing Partner. “This shift would place the role of driving resilient business models and thereby creating long-term value for the company at the heart of the future finance function.” 

    Since sustainability is intrinsically linked to value creation, and the CFO plays a key role in financial value creation, it is a natural progression for the CFO to have a more holistic view of value creation.

    Julie Linn Teigland

    EY EMEIA Area Managing Partner

    The integration of financial and non-financial reporting and value capture could address a gap identified by the 2024 EY Global Corporate Reporting Survey: 80% of investors said many companies fail to properly articulate the rationale for long-term investments in sustainability. 

    Three actions to realize the potential of the Value Architect

    Every element of the finance function is disrupted by sustainability. Realizing the potential of the CFO as Value Architect in light of this disruption will require action – just as an architect designs houses, blueprints construction plans and constructs buildings, a Value Architect designs a value story, blueprints a business case, and constructs a new operating model.

    1. Design a value story that is infused with ESG

    From an external and strategic perspective, the CFO’s audience has expanded. Reports in the CFO’s remit are no longer exclusively used by financial market players, but also by a broad group of other stakeholders: customers and suppliers, employees, non-governmental organizations and the broader public.

    Investors say they expect reporting to embrace a multi-stakeholder model where companies demonstrate the impact of decisions on different groups, from customers to communities. In the 2024 EY Global Corporate Reporting Survey, 82% of investors said that organizations need to do more to engage multiple stakeholders, such as governments, consumers, employees and local communities in addition to reporting on ESG issues that are material to investors and analysts. 

    The Value Architect of the future must report financial and non-financial performance to gain and maintain the trust of all stakeholders. In particular, they will be responsible for managing the investor community and addressing investor pressure on ESG performance and sustainable financing options. This includes the integration of sustainability into the CFO roadshows and of ESG in the equity story to raise funds.

    Priority actions:
    • Understand ESG requirements and expectations of investors
    • Infuse the equity story with ESG
    • Develop funding alternatives for the sustainability transformation
    2. Blueprint a business case that integrates financial and non-financial value

    From an internal strategic perspective, finance and ultimately the Value Architect must lead financing of sustainability transformations. Identifying and specifying the business case for the sustainability transformations becomes a core priority, as it will be essential to demonstrate the mid- to long-term value created. ESG and non-financial metrics have to be embedded into the planning process – e.g., strategic plan, mid-term plan, budgeting and forecasting including the management reviews – to ensure sustainability is embedded in performance management and decision-making processes.

    Priority actions:
    • Include ESG measures into capex and opex short and long-term planning
    • Include sustainability criteria in investment decisions, e.g., by implementing an internal price for carbon
    • Actively plan resources to fund the sustainability transformation and include sustainability data on internal reports, such as monthly finance updates
    • Define the business case for sustainability transformation
    3. Construct a new operating model for finance

    From an internal operational perspective, new ESG requirements have an impact on the finance operating model. This impact will affect transactional, reporting, and decision-making processes, as well as operation model dimensions such as technology (e.g., sustainability intelligent platform) and people (e.g., training and upskilling).

    Priority actions:
    • Introduce audit-proof processes for ESG data collection and reporting
    • Add new skills to the team and create a culture that supports experimenting and innovation
    • Understand the implications of upcoming regulations early, find reporting synergies, and move from compliance to adding value

    The future of finance is sustainable

    While the vision of the Value Architect has not yet been fully realized, the CFO role is moving quickly in this direction due to fundamental shifts toward sustainable business models and innovation. CFOs, already integral in ensuring financial stability and generating sustainable value for all stakeholders, can amplify their organizational impact by acting now to realize this transformation. “By prioritizing long-term value creation and infusing it into corporate strategy, the CFOs of today – and Value Architects of the future – will enable their organizations to better meet investor expectations and more transparently and accurately secure long-term shareholder value creation,” emphasizes Myles Corson from the EY organization.  

    Summary

    CFOs are becoming Value Architects who are increasingly responsible for supporting and financing sustainable transformations. They must place sustainability at the core of the equity narrative driving value, not only for the shareholders but also for the broader stakeholder community. Value Architects enable and drive sustainable and innovative, yet profitable business models that protect and drive long-term value. 

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