FCLTGlobal, a non-profit organization that develops research and tools that encourage long-term investing, late last year released a report that explores the role of chief financial officers (CFO) in long-term financial behaviors and strategies within their companies. The report, Building Long-term Value: A Blueprint for CFOs, focuses on highlights key pressures and obstacles that CFOs encounter, considers the CFO’s unique role as a fulcrum for long-term behavior, and assesses the CFO’s intrinsic long-term focus.
The report is the end result of several working groups of FCLTGlobal’s members, as well as more than 60 direct interviews with global CFOs and other experts. Among the main conclusions drawn from these contributions are four recommended long-term actions readily available to CFOs that can drive long-term behaviors:
• Prioritizing relevant information with varying audiences—including investors, the board, and the internal organization—and using that information to drive discussion on long-term actions.
• Producing forecasts with longer time horizons (3-5 years), and distinguishing forecasts from annual budget.
• Quantifying risks and intangibles in a way that promotes proactive decision-making, rather than focusing risk management solely on avoiding negative conditions.
• Aligning capital allocation with a long-term strategy, which requires a stronger connection between business unit investments and the company’s long-horizon objectives.
“In speaking with chief financial officers from around the world, we found that while CFOs experience considerable pressure to perform in the near term, they have the power to reorient the direction of their company’s trajectory through their influence on capital allocation and strategic decisions,” said Sarah K. Williamson, FCLTGlobal’s CEO.
In addition to the data and real-world examples cited in the report, FCLTGlobal also has created a CFO’s Long-term Checklist for Self-Assessment to tangibly gauge CFOs’ performance in key areas. The tool helps participants score themselves on a series of questions related to the actions listed above.
To read the full report and learn more about the long-term tools available to CFOs, visit fcltglobal.org/cfo.
FCLTGlobal is a non-profit organization that develops research and tools that encourage long-term investing. Our Membership is comprised of global asset owners, asset managers, and companies that play a leading role in rebalancing capital markets for sustainable growth. Please visit fcltglobal.org for more information.
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