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Latest findings from PwC’s Pulse Survey
Following a year of major disruption, CFOs are expressing a brighter outlook for 2021. While the last 12 months were primarily about shoring up balance sheets and making sure employees could work, now CFOs are moving to a more offensive stance, looking at lasting changes from the pandemic as opportunities for growth.
Our latest Pulse survey indicates that CFOs expect significant growth opportunities in key areas around the digital economy, with 46% predicting high growth and 36% moderate growth. They also see high growth in consumer behavior shifts because of the pandemic (34%) and the work-from-home shift (21%). These opportunities appear to outweigh concerns about risks related to increased regulation and trade and tax concerns that come with the new administration.
CFO views on growth mirror their bullish outlook about the economy fueled by progress on the vaccine front as well as encouraging economic data such as gains in the labor market and continuing expansion in manufacturing. Some economists are boosting their growth forecasts for 2021 US gross domestic product to higher than 6%.
Most CFOs (81%) expressed optimism about the US economic recovery, topping the broader C-suite’s positive outlook at 76%. More than three-quarters (76%) are optimistic about the US pandemic response (also higher than that of all executives at 71%). This bullishness is apparent in their revenue outlook with 87% expecting growth over the next 12 months, up from just 25% in September and 28% in October. Only 4% expect revenue to decline — a huge improvement from the 51% who expected a drop in revenue six months ago.
Against the backdrop of the market opportunity, CFOs see three big risks: a more challenging regulatory environment, US-China tensions and global trade and tax policy. Underscoring these concerns, 41% say they’re pessimistic about the US policy and regulatory environment.
Increase in revenue
CFOs’ top priority for the finance function is to establish finance as the business partner across the enterprise. Other priorities include automating processes and reducing cost as a percentage of total revenue. How to do more with less has been a recurring theme for CFOs for years — using automation to help drive better, more efficient outcomes, for example — and the challenges of the pandemic magnified that concern.
As CFOs lead the charge toward growth, they have the opportunity — and are uniquely qualified — to play a more active role around strategy, beyond the tactical applications of the finance function. It’s about agile decision-making, collaboration and better partnering across functions, and focusing on the company’s broader strategic objectives. Driving transformation and the enterprise agenda puts CFOs in a position to help drive change across the organization and shape the post-pandemic business model.
But one risk related to people looms large: a lack of talent and skills shortage. Like most executives surveyed, 93% of CFOs believe the availability of talent with technical skills is critical. In order to drive growth, CFOs need the right people with the right talent and skills — and upskilling, hiring and onboarding people is important across the enterprise. As CFOs focus on talent, they need to make sure to align with the company’s diversity and inclusion (D&I) efforts and goals. Over the next year, 62% of CFOs say their company plans to increase D&I training, and 51% expect an increase in D&I reporting to internal stakeholders.
The pandemic highlighted many ESG issues, from the health and well-being of employees and the social justice movement that erupted last summer to the economic turmoil that resulted in massive job losses and an exhausted workforce. Investors, customers, employees and other stakeholders are paying close attention to how companies address ESG issues and what they’re disclosing.
ESG reporting and metrics have become expected of companies and are a focus for the Biden administration. CFOs recognize the importance of ESG reporting, and they want to get it right. A positive signal is that 69% told us that coordinating ESG data and information across their company is a priority, something that may not have been as high on their radars just a few years ago.
Identifying frameworks, material issues and metrics to focus on was cited by 68% as a priority — which comes as large institutional investors push for ESG disclosures and the SEC announced plans to update its climate disclosure guidance. Communicating to the board and audit committee on progress, implementing technology, processes and controls around reporting, and establishing ownership of ESG reporting were also cited as priorities for finance leaders.
ESG provides a way for CFOs to tell their company’s story about its long-term strategy for value creation and how it’s contributing to society and building trust. D&I, for example, has moved from being solely a human resources issue to a strategic issue that affects the bottom line
182 finance leaders from Fortune 1000 and private companies, along with other C-suite executives, weighed in on their priorities and outlook on the business environment in our latest PwC US Pulse Survey, fielded March 8 to March 12, 2021. Find all of these insights in our PwC US Pulse Survey.
Vaccine rollouts are bringing the end of the pandemic economy into view just as the Biden administration is looking to implement its agenda — fast. Is your company keeping up? Hear the results of our latest PwC Pulse Survey and learn what business leaders are saying about their growth prospects and investment priorities for 2021.