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Integrating ESG considerations into financial strategies
The role of the financial controller is increasingly intertwined with ESG principles. As these considerations become more central to corporate strategy and risk assessment, controllers should incorporate them into the financial planning and reporting processes. This must be aligned with sustainability goals and should be communicated to the stakeholders.
“It's exciting to see companies now hiring ESG controllers, putting the controllership at the forefront of this critical strategic initiative. With assurance being required over reporting, controllers are in a key position to lead the way for the company. This is a significant change from the past when statutory reporting or similar regulatory reporting would not have been the top priority of many corporate controllerships,” says Denardo.
Knowledge of non-financial reporting frameworks, such as those established by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), is becoming essential. These frameworks guide the measurement and reporting of a company's sustainability performance, areas for which controllers are now responsible.
As businesses operate in a more interconnected world, financial controllers need to navigate a labyrinth of international regulations and reporting standards. The challenge is ensuring compliance with diverse regulations across markets and maintaining a harmonized approach to financial management that adheres to global standards and local regulations. Controllers should exercise due diligence and maintain an informed global perspective to safeguard the company's cross-border operations.
“The controllership function should adopt a globally local operating model, utilizing centralization to drive value while facilitating locally supported compliance, resilience and risk management. This should be a new operating model for controllers that balances shared services and business partnering functions while keeping compliance functions centralized. To effectively evolve, the controller's role must incorporate approaches that leverage technology and data for simplification and harmonization while maintaining a supportive local presence for compliance and risk management,” says Singh.
In an era where data breaches can decimate a company's finances and reputation, financial controllers are the custodians of financial data security. The confidentiality of financial information is paramount and the controller's responsibility extends to ensuring robust data governance and cybersecurity measures are in place. “The risk management, the agility and the scale of change happening in the market is significantly bigger and faster compared to several years ago,” says Denardo.
The volume and velocity of financial data in the digital age make maintaining accuracy in financial reporting more complex than ever. Controllers must ensure that financial statements are error-free and provide an accurate and fair view of the company's financial situation. With the pace of change in technology and regulation, financial controllers should commit to continuous learning and skill development. They need to anticipate future trends and challenges, adapting their practices and knowledge base to remain effective and relevant.