May 19, 2020

What do CFOs need to prioritise?

South Africa
CFO
event
Opinion
Polycarp Kazaresam
3 min
What do CFOs need to prioritise?

Prioritising value creation alongside companies' financial aspect is one of the prominent discussion points Professor Mervyn King will underline at the 46th World Congress for CFOs at the CTICC, Cape Town next week.

King will be one of almost 70 local and international speakers who will address matters affecting CFO communities at the Congress from 9 to 11 November. 

“The corporate world is undergoing three major shifts: from silo to integrated reporting; from financial capital to inclusive capital, and from short-term profit to sustainable development. This is reflected globally by the United Nations and several multinational enterprises agreeing to the Sustainable Development Goals earlier this year, which focus on three key areas namely economic, social and environmental,” explains King.

King elaborates that there are six capitals impacting any business: financial, human, intellectual, manufactured, natural and social capitals. None of these capitals operate in a vacuum, and the King IV report take all of these aspects into account to guide the CFO to not only look at financial statements and profit for shareholders, but that the business is creating value  from all of these six sources of value creation.

“Looking at the business’s strategy on this basis, the CFO must ensure that the company will be seen to be a responsible corporate citizen with its stakeholders having trust and confidence in it, a good reputation and is operating legitimately. The CFO must ensure that the board of the company discharges its duty of accountability by reporting in clear, concise and understandable language. This means that the CFO, working together with the CEO and other senior managers, should extract the material financial information from reports and put it in clear language in the integrated report, not in International Financial Reporting Standards (IFRS) speak,” explains King.

One of the world’s biggest asset owners, BlackRock, indicated that before investing their ultimate beneficiary’s money it needs to know the long-term narrative of a company to see whether that company will create value in a sustainable manner long-term.

“The plague of short-term profit, or as Hilary Clinton has called it in her presidential campaign, “the tyranny of quarterly profits” is yesterday’s focus whereas today the focus is on sustainable development. In this regard King IV will take account of the three critical aspects, and how the company makes its money on all three aspects,” says King.

The King IV Report is outcomes based.  To try and achieve quality governance the outcomes are ethical culture and effective leadership; adequate and effective control; value creation in a sustainable manner; trust and confidence in the company; good reputation and legitimacy of operations. 

“The role of the CFO in terms of Corporate Governance should not be underestimated. For example, earlier this year four major banks severed their ties with the Gupta aligned Oakbay Investments due to allegations of integrity. This shows that even the perception of poor governance can do great reputational damage to a company, which results in financial losses. Therefore, the forthcoming King IV report is an important topic at the 46th World CFO Congress that will be hosted in Cape Town from 9 to 11 November 2016,” says Nicolaas van Wyk, SA Institute for Business Accountants' (SAIBA) CEO and IAFEI Board member.
 

African Business Review’s November issue is now live.

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Jun 11, 2021

G7 Summit guide: What it is and what leaders hope to achieve

G7
Sustainability
G7Summit
EU
3 min
Business Chief delves into what the G7 is and represents and what its 2021 summit hopes to achieve, in terms of sustainability and global trade

Unless you’ve had your head buried in the sand, you’ll have seen the term ‘G7’ plastered all over the Internet this week. We’re going to give you the skinny on exactly what the G7 is and what its purpose on this planet is ─ and whether it’s a good or a bad collaboration. 

 

Who are the G7?

The Group of Seven, or ‘G7’, may sound like a collective of pirate lords from a certain Disney smash-hit, but in reality, it’s a group of the world’s seven largest “advanced” economies ─ the powerhouses of the world, if you like. 

The merry band comprises:

  • Canada
  • France
  • Germany
  • Italy
  • Japan
  • The United Kingdom
  • The United States

Historically, Russia was a member of the then-called ‘G8’ but found itself excluded after their ever-so-slightly illegal takeover of Crimea back in 2014.

 

Since 1977, the European Union has also been involved in some capacity with the G7 Summit. The Union is not recognised as an official member, but gradually, as with all Europe-linked affairs, the Union has integrated itself into the conversation and is now included in all political discussions on the annual summit agenda. 

 

When was the ‘G’ formed?

Back in 1975, when the world was reeling from its very first oil shock and the subsequent financial fallout that came with it, the heads of state and government from six of the leading industrial countries had a face-to-face meeting at the Chateau de Rambouillet to discuss the global economy, its trajectory, and what they could do to address the economic turmoil that reared its ugly head throughout the 70s. 

 

Why does the G7 exist?

At this very first summit ─ the ‘G6’ summit ─, the leaders adopted a 15-point communiqué, the Declaration of Rambouillet, and agreed to continuously meet once a year moving forward to address the problems of the day, with a rotating Presidency. One year later, Canada was welcomed into the fold, and the ‘G6’ became seven and has remained so ever since ─ Russia’s inclusion and exclusion not counted. 

 

The group, as previously mentioned, was born in the looming shadow of a financial crisis, but its purpose is more significant than just economics. When leaders from the group meet, they discuss and exchange ideas on a broad range of issues, including injustice around the world, geopolitical matters, security, and sustainability. 

 

It’s worth noting that, while the G7 may be made up of mighty nations, the bloc is an informal one. So, although it is considered an important annual event, declarations made during the summit are not legally binding. That said, they are still very influential and worth taking note of because it indicates the ambitions and outlines the initiatives of these particularly prominent leading nations. 

 

Where is the 2021 G7 summit?

This year, the summit will be held in the United Kingdom deep in the southwest of England, with Prime Minister Boris Johnson hosting his contemporaries in the quaint Cornish resort of Carbis Bay near St Ives in Cornwall. 
 

What will be discussed this year? 

After almost two years of remote communication, this will be the first in-person G7 summit since the novel Coronavirus first took hold of the globe, and Britain wants “leaders to seize the opportunity to build back better from coronavirus, uniting to make the future fairer, greener, and more prosperous.”

 

The three-day summit, running from Friday to Sunday, will see the seven leaders discussing a whole host of shared challenges, ranging from the pandemic and vaccine development and distribution to the ongoing global fight against climate change through the implementation of sustainable norms and values. 

 

According to the UK government, the attendees will also be taking a look at “ensuring that people everywhere can benefit from open trade, technological change, and scientific discovery.” 

 

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