Finance
What will the finance team of the future look like – Accountancy Age
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May 2, 2024
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A significant part of the work we do at AICPA & CIMA is about looking at trends within the profession and using them to discern what the future of accounting looks like, so as to best prepare our members to thrive within it.
This is the rationale behind our Future of Finance 2.0 project, of which we have just released the latest iteration. This paper highlights and explores what I think is the most significant long-term trend which is currently reshaping the accounting and finance profession, and it essentially relates to mindset.
In the past, it would be fair to characterise our profession as being quite rigid and rules based. This is not intended to be derogatory, it is simply a reflection of the work we did and the career paths we followed to do it. What we are seeing today, and will see more of in the future, is a shift towards a more expansive mindset, with value-creation at its heart.
Our work will incorporate a wider range of responsibilities, including but not limited to being the stewards of sustainability data and strategy and working with colleagues in all parts of the of organisations we serve to drive efficiency, productivity and sustainable value creation.
Sustainability
Sustainability is one of the key drivers of change within the profession, but it is important to understand that this is not just a response to regulatory changes which require us to present the data. While these are obviously important, it is important to look beyond this, and to apply the value creation mindset I have mentioned, because this is where the opportunities are.
Forward thinking organisations are not approaching this in terms of “we have to report”. They are looking at how their business models can adapt to produce truly sustainable growth, because that is where competitive advantage will be found.
Now clearly, that is not a description of the majority of workplaces at the moment, but you can see evidence of the direction of travel in our survey results. We found that 48% of accounting and finance professionals are currently measuring the impact of sustainable initiatives and only 45% say that they are currently measuring the performance of these initiatives. That is a significant proportion, and the fact that more and more companies are looking at the performance of these initiatives shows you where we are heading.
Business partnering is the way of the future
Another big change our research picked up was the increasing move towards the business partnering model. Something which struck me as very significant was the difference in attitudes towards the future we found among the professionals we surveyed. 60% of them said they identify as finance business partners, and 84% of those are extremely optimistic about the future of the profession. Of the 40% who say they don’t identify as finance business partners, only 15% said they are optimistic about the future of the profession. I think that is a pretty good indication of where our profession is heading, so I strongly recommend you take that into account in your career planning.
To make the most of this trend, the accountants of the future will need the ability to use data and analytics combined with business acumen, so they can improve strategic decision-making and drive business performance within their organisations.
Overall the challenge for the profession which our research identified is the need to adapt to the requirements of sustainable business practice while exploiting the possibilities of new technology. To succeed we will have to adopt a multi-capital perspective of value while learning to work across organisational boundaries. If we can achieve this, we can look forward to a bright future. Demand for data-driven decision-making and sustainable business models is only going to grow, so we can be confident that the need for strategic value creating finance teams will make us a valuable partner in every organisation in the years to come.
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The World Bank is ditching its commitment to steer 45 percent of its spending toward projects with climate benefits, after facing pressure from the Trump administration.
The move, announced Monday following a meeting of the bank’s board of directors last week, marks a victory in President Donald Trump’s effort to purge climate policies from U.S. foreign policy. His administration has described the target as “distortionary” and “nonsensical.”
The bank preserved its broader Climate Change Action Plan — of which the 45 percent target was a key metric — just days before it was set to expire at the end of June. In addition to directing money toward climate projects, the plan provides technical support for helping countries reduce their greenhouse gas pollution and adapt to rising temperatures.
“We will retire the 45% climate co-benefits target,” the World Bank Group said in a statement, noting that it had “done significant work in answering client demand and needs.”
The bank’s work on climate “is and will remain firmly client driven, supporting them in delivering on their own ambitions as set out in their national plans and NDCs,” the statement added, referring to the nationally determined contributions countries submit under the Paris Agreement.
The decision to drop the climate finance target follows months of pressure from the Trump administration. People with knowledge of the negotiations said the U.S. was firm that the target must go despite other countries indicating their support for the bank’s climate goal. The U.S. has sway over the bank’s decisions as its largest shareholder.
Beyond the finance target, the Climate Change Action Plan also provides diagnostic reports on countries’ climate and development goals and aims to align lending with the Paris Agreement, which calls for preventing temperature rise from surpassing 2 degrees Celsius since the Industrial Revolution.
The bank said it would honor a board request to undertake an independent evaluation of the climate plan to determine if it’s helping countries grapple with rising temperatures. The decision effectively extends the plan beyond its expiration at the end of June.
The climate target was supported by many of the bank’s shareholders. It’s also been a prominent signal of the bank’s support for climate action at a time when the impacts of rising temperatures are accelerating.
“This is way, way away from where we should be for a responsible financial architecture,” said one official from a developed country who was directly involved in the negotiations and was granted anonymity to describe internal discussions.
The bank will continue to track and report on the amount of money going to projects with climate co-benefits. It exceeded its own target last year by directing 48 percent of its financing to climate-related projects.
Other climate targets embedded in agreements that govern different arms of the bank will remain, including one for the International Development Association, the bank’s fund for the poorest countries.
Multilateral development banks play a key role in global climate negotiations, where wealthy countries have committed to helping provide $300 billion a year for poorer countries by 2035. That no longer includes the United States, which has left the Paris Agreement and will exit the underlying United Nations Framework Convention on Climate Change early next year.
“Targets send enormous signals about an institution’s direction of travel,” said Clemence Landers, a senior fellow at the Center for Global Development. “At the same time, it’s a sign of the times and the World Bank is doing its level best to not rankle its largest shareholder.”
She believes the bank will continue financing renewable energy projects in countries that want them, despite having dropped its climate target.
“I wouldn’t be shocked if the bank continued to have an extremely robust clean pipeline with or without this target,” said Landers.
The bank says retiring the 45 percent target is part of its shift from a focus on “inputs to outcomes.” It will continue to monitor and report net greenhouse gas emissions across its projects and countries’ ability to withstand climate risks.
“We will continue to report to the Board on progress, including on climate co-benefits, and to contribute to our related joint MDB efforts,” the statement said, referring to its role as a multilateral development bank. “We will explore and discuss ways to better structure our engagement on adaptation, nature and pollution.”
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