CFO Survey

Deloitte China CFO Program has issued the 2022 1st China CFO Survey "The Sustainability Imperative for CFOs". The survey was completed in January 2022 with the respondents of CFOs from Chinese mainland, Hong Kong SAR and Macau SAR.

While the majority of respondents believe that sustainability strategies will have a positive impact and most of them have started to implement sustainability-related work, the level of emphasis on sustainable development differs across industries. Traditional industries such as energy, resources and industrials feel the greatest impact from China’s ‘dual carbon’ goals. These national targets also have some impact on financial services and technology, media and telecommunications. With increasing regulatory requirements for climate risk information disclosure, the current responsibility for CFOs centers around the disclosure of financial information related to sustainable development. The expansion of China’s green finance market and the increasing demand for corporate carbon emissions audit is expected to broaden the CFO’s role in the field of sustainable development. The major challenges that CFOs are currently facing in the area of sustainable development are: a lack of accurate data and information to assist decision-making; the absence of a clear and unified carbon emissions-reduction strategy and accountability system; and a shortage of professional talents.

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Key findings

Regional economy and key metrics
Despite the lingering impact of the pandemic and geopolitics at the start of 2022, respondents feel more optimistic about the prospects for China’s economic development than they do about those for other economies. The majority expect their company to achieve growth of more than 5% in revenue (70.6%), net profits (52.9%) and capital expenditures (67.8%). Respondents feel optimistic about their company’s overall business growth prospects for the year ahead.

China CFOs’ views on the current and future (a year from now) status of the following economies (1 means very bad, 5 means very good)		Expectation for the following metrics over the next 12 months

External and internal risks of greatest concern
When compared to the previous year’s survey results, the changes in government policies and regulations are the most concerned external risks, following by the pandemic and post-Covid recovery and inflation. Related to the external risks mentioned, the top two internal risks worrying CFOs are cost pressures due to inflation and the inability to drive growth amid concerns over post pandemic recovery. These are followed by talent acquisition/retention. According to Deloitte's 2021 Q4 North America CFO survey, talent/ labor was one of the top three enterprise priorities, even outweighing financial performance and growth.

The external risks worrying China CFOs		The internal risks worrying China CFOs

Special topic: The sustainability imperative for CFOs

Status of sustainable development
CFOs believe that implementing sustainable development strategies will have a positive impact on the company’s financial performance. Respondents believe that implementing sustainable development will enhance the company’s revenue (59.8%) and profitability (43.1%). Around a quarter of the enterprises polled have completed a climate assessment. While 10.8 % of the companies questioned have also fully reflected the impact in their financial statements, this percentage is lower than both the global average, according to The Audit Committee Frontier: Addressing climate change survey conducted by Deloitte in 2021.

The impact of implementing a sustainable development strategy on financial metrics		Progress on climate assessments and whether the results and commitment have been fully reflected in the financial statements

CFOs’ current involvement and challenges in sustainable development
As regulatory authorities step up information disclosure requirements, the CFOs’ responsibilities in terms of sustainable development mainly involve information disclosure related to climate risks or environmental impact assessment, advancing corporate green investment and financing, and accounting for corporate carbon emissions. To take the lead in advancing sustainability initiatives, CFOs need multi-level support from their organizations. Main challenges include poor data or lack of accurate or complete information for management to make decisions, setting a clear and agreed-upon carbon reduction strategy as well as a mechanism for holding management accountable for seeing it through, and shortage of “climate-literate” talent.
 

China CFOs’ involvement in sustainable development		The biggest challenges CFOs face in terms of implementing sustainability goals

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