Director of the Impact Economy Foundation
One of the central themes discussed during the CFO Forum (May 24) revolved around the role of CFOs in driving sustainable transformations. This topic holds significant relevance as businesses worldwide are currently falling short of achieving the Sustainable Development Goals, climate targets, and biodiversity commitments. The consequences of this shortfall are increasingly evident, particularly through the manifestation of extreme weather events.
During the panel discussion, CFOs appeared somewhat humble when discussing their role in advancing sustainability, often emphasizing their role as storytellers and the importance of empathy. However, it is possible that they may have underestimated the significant role they can play in sustainability transformations, as they possess the power to shape the dominant business language, which revolves around financial value creation.
Through an extensive infrastructure of measurement and reporting, CFOs exercise discipline across various business units with a strong focus on financial value creation. The language of financial value creation is deeply integrated into all facets of the organization, ranging from resource allocation and strategy development to revenue models and investment decisions.
However, the growing array of societal challenges necessitates a fundamental redefinition of value within the boardroom. The traditional focus on creating financial value while externalizing costs related to climate, biodiversity, and social issues is no longer sustainable.
To establish a fundamentally sustainable economy and organization, the definition of value within organizations must be expanded to include social, human, and natural value. By complementing financial accounting with impact accounting, as already practiced by organizations like Alliander and ABN AMRO, an organization’s contribution or impact on social, human, and natural value can be measured and reported. This, in turn, forms the foundation for making impact-driven decisions, such as CapEx choices and strategic decisions based on societal returns rather than solely financial gains.
Given that CFOs play a critical role in defining value within organizations, they have the potential to lead the transition towards impact-driven approaches. For this purpose, Chief Financial Officers should transform into Chief Value Officers (CVOs). A CVO incorporates impact considerations into all decision-making processes and manages the organization based on the concept of True Profit, which represents the genuine benefit the company provides to society. The CVO thereby accelerates the shift towards fundamentally different, regenerative revenue models, investments, and innovations.
To expedite this transition, the Impact Economy Foundation has introduced the CVO
of the Year Award. This initiative recognizes the five most impact-driven CFOs in the Netherlands. An esteemed jury will select the five CVOs of the Year. Impact-driven CFOs can be nominated for this award through the website www.cvovanhetjaar.nl.