Recession. What recession? According to Grant Thornton’s “2023 Q1 CFO Survey,” 54% of CFOs said they are “optimistic” or “very optimistic” about the economy. To add to that optimism, 68% projected a rise in net profits for their organization over the next 12 months, with a quarter predicting growth in the 6%-10% range.
While optimism is high, confidence in controlling costs seems to be waning. For the fourth straight quarter, CFOs ranked cost optimization as their top near-term focus. In fact, those who feel confident in their ability to meet organizational goals of controlling costs fell 9% from the previous quarter to just 50%.
Additionally, CFOs are eyeing a range of areas where they can cut costs—with 44% of them identifying vendor and supplier costs as a top area for potential cuts.
Further, material costs saw a double-digit rise as an area for cost cuts compared to six months ago, with 40% of CEOs now identifying material costs as a top target for cuts. Technology spending also experienced a double-digit increase as an area for possible cuts, from 33% in Q2 2022 to 43% this quarter.
Emphasis on ESG and the value of reputation
Grant Thornton’s 2023 Q1 CFO Survey also asked how CFOs are handling environmental, social and governance (ESG) topics, given that the Securities and Exchange Commission is expected to issue its long-awaited climate disclosure requirements in the first half of 2023.
The survey data show that 57% have clearly defined ESG goals and already report progress against ESG key performance indicators, while 27% said ESG disclosures will be one of the biggest challenges their business will face over the next six months. That’s more than double the percentage from the 2022 Q3 survey (13%).
While it may be a stretch to say that ESG is top-of-mind for most companies, ESG nonetheless is a significant factor in strategic discussions for many CFOs. Seventy-three percent of CFOs said they give at least moderate consideration to ESG when making decisions. Of that 73%, more than one-quarter (29%) said ESG is a fundamental consideration in their decisions.
Overall, just 9% of CFOs said they do not consider ESG at all.Meanwhile, regulatory compliance is not the only factor causing CFOs to act on ESG initiatives. They also see substantial benefits from implementing ESG considerations into their operations. One of the biggest benefits is an enhanced reputation.
More than half (56%) of CFOs said improving the reputation of their brand is a benefit of an enhanced ESG program.There is also an increasing perception that ESG is an important topic to a company’s customers.
In the third quarter of 2021, 28% of CFOs cited customers among the stakeholder groups that are motivating them to enhance their ESG programs. That figure rose to 39% in the current survey.
To see more about the survey,CLICK HERE.
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