How sustainability and technology will transform CFOs into Value Architects

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. 

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.

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. 

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.