Rethinking the value equation: How CFOs can catalyze value creation for a broader group of stakeholders

Introduction

CFOs typically play a central role in value creation. With an average CFO tenure of five years¹, and in a business environment where the S&P 500 is doubling every seven years, on average,² finance leaders are tasked with driving toward doubling their company’s value in a handful of years. And with the concept of value creation generally shifting toward the inclusion of more stakeholders’ interests and perspectives, that challenge may not be getting simpler anytime soon.

Key regulators, leading investors, and influential customer groups have begun calling for more extensive reporting on broader stakeholder considerations.³ In response, some executives have begun making commitments to focus their organizations on creating value not just for shareholders, but also for a broader range of stakeholders, including employees; customers and the public; and even the environment itself. Nearly 200 U.S. CEOs have signed the Business Roundtable’s “Statement on the Purpose of a Corporation,”⁴ and almost 400 CEOs have signed Corporate Sustainability and Responsibility (CSR) Europe’s “CEOs Call to Action.”⁵

CFOs now face the challenge of driving long-term value creation within a multi-stakeholder context. This means not only understanding the value equation for each stakeholder group, but also managing interdependencies and tradeoffs in ways that result in adequate, equitable, and sustainable returns for each stakeholder group.

In this issue of CFO Insights, we seek to facilitate CFOs’ efforts by providing an updated view of value creation from multiple stakeholders’ perspectives. Deloitte’s original Enterprise Value Map™ (EVM), developed in the early 2000s, presented a playbook for CFOs to consider key levers for increasing shareholder value. The new Sustainable Value Map™ (SVM) widens the aperture to extend to a broader set of stakeholders. This article will demonstrate how it can be applied in catalyzing important changes through capital budgeting and performance management.

Endnotes

¹ “On the Horizon: Global CFO Survey Report,” FTI Consulting, February 2023.
² “Average Stock Market Return,” Forbes Advisor, February 16, 2023.
³ See “Sustainability as BlackRock’s New Standard for Investing,” BlackRock, January 2022 (investors); “SEC Announces Enforcement Task Force Focused on Climate and ESG Issues,” U.S. Securities and Exchange Commission, March 4, 2021 and ISSB delivers proposals that create comprehensive global baseline of sustainability disclosures, March 31, 2022 (regulators); and “World Economic Forum and UN Sign Strategic Partnership Framework,” World Economic Forum, June 13, 2019.
⁴ “Business Roundtable Marks Second Anniversary of Statement on the Purpose of a Corporation,” August 19, 2021.
⁵ CEOs Call to Action, CSR Europe, December 10, 2019.

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