CFOs Expect Robust Growth Over the Next Year, Look to Meet Challenges

Finance leaders say they’re bullish on their companies, and want to improve environmental, social, and governance (ESG) reporting and diversity and inclusion efforts, according to PwC’s latest Pulse Survey.

As CFOs look ahead to the remainder of 2021 and beyond, a new survey finds them increasingly optimistic about their organization’s economic prospects. 

They are interested in the growth of the digital economy, lasting shifts in consumer behavior, and the prevalence of work-from-home arrangements. Finance leaders are also looking to grow their influence within their companies and are keen to learn how to navigate staffing challenges.

CFOs are bullish on their companies: 87% forecast growth over the next 12 months.

A PwC Pulse Survey of 182 finance leaders from Fortune 1000 and private companies, along with other C-suite executives, finds many CFOs pivoting from a defensive posture to expecting a boost from shifts spurred by the COVID-19 pandemic. 

Mostly Sunny Outlook

As the pandemic accelerated trends on a large scale and enterprises sought to adapt to ever-changing realities over the past year, CFOs are looking to increase their influence within their company—and doing so more efficiently. 

CFOs’ top priority for the finance function in 2021 is to establish finance as the business partner across the enterprise (47%). While driving deeper collaboration among functional business partners isn’t a new goal for finance, the pandemic has been a catalyst to expand the level and access of these partnerships. CFOs’ second-highest priority is automating processes using intelligent automation (41%). 

In the meantime, economic optimism is high. Nearly half (46%) of respondents polled in March 2021 anticipate high growth from the rise of the digital economy, while 36% predict moderate growth. They also expect high growth from pandemic-related changes in consumer behavior (34%) and the work-from-home trend (21%). When it comes to their views of the U.S. economic recovery, a whopping 81% of CFOs express optimism, a higher percentage than other C-suite leaders (76%) polled. 

CFOs are also hopeful about their own company’s performance, with 87% of them forecasting growth over the next 12 months—a significant leap from positive poll responses in September (25%) and October (28%). Now, the pessimists are in the minority, with only 4% expecting lower revenue, down from more than half (51%) who held that outlook six months ago.

Yet the optimistic sentiment is tempered by an increasingly challenging regulatory environment (31%), tensions between Washington and Beijing (27%), and global trade and tax policy (26%). Nearly a quarter of respondents (23%) identify inflation as a high risk.

93% of CFOs say the availability of talented job candidates is critical to their organizations.

Finance Leaders Driving Change

Finance leaders are thinking about more than just balance sheets, with top priorities including such considerations as advancing goals for diversity and inclusion (D&I), increasing investment in compliance functions, and revising enterprise risk management practices.

With an eye on the future, CFOs are thinking about hiring, developing, and diversifying their workforce—even as 93% identified the availability of talented job candidates as critical. More than 60% of CFOs say their organization plans to boost D&I training, and 51% anticipate an increase in reporting D&I data to internal stakeholders.

While the economic impacts of the past year had a high profile, the pandemic also took its toll on employees’ well-being, emphasized the importance of mental health, and brought to the forefront environmental, social, and governance (ESG) issues. Against a backdrop of the U.S. recovering from the crisis, 69% of CFOs identify better reporting of ESG issues among their top two priorities—recognizing that those factors and related disclosures will continue to receive more attention from investors, customers, employees, and other stakeholders in the future.

The evolving business considerations around ESG factors have also created the need for a way to measure and manage them. Most CFOs acknowledge the challenge, with 68% saying that identifying frameworks, material issues, and metrics to focus on are a priority. The shift comes as large institutional investors and the Securities and Exchange Commission have sought to improve disclosures from companies.

Looking at internal processes, CFOs also cite the following as priorities: communicating to the board and audit committees on progress (63%); implementing technology, processes, and controls around reporting (63%); and establishing ownership of ESG reporting (62%).

CFOs say producing investor-grade ESG information (60%) and demonstrating value to stakeholders through ESG reporting (60%) are among their top concerns, while identifying appropriate talent to build and maintain their company’s ESG reporting programs is cited by 58% of respondents.

Finance leaders are confident in the U.S. economic recovery and more so in their own organization’s prospects for the coming year, but they are also aware that the road map requires organizational adjustments in a variety of areas. Uniquely positioned to provide enterprise leadership, CFOs have recognized the growing importance of working across departments, utilizing technology to improve efficiency, establishing and developing nonfinancial metrics, and hiring and retaining talented employees.

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