Survey: Majority of CFOs prioritizing ESG investment


Finance leaders confident in economy; still concerned about pandemic, workforce shortages and supply chain disruptions


CHICAGO — According to a new survey by Grant Thornton LLP, 57% of chief financial officers (CFOs) have made it a priority to invest in environmental, social and governance (ESG) efforts since the start of 2020, with 23% saying that ESG investments are much more important for their organizations than they were prior to 2020.


According to the 2021 Q3 CFO Survey, while some companies are waiting for the Securities and Exchange Commission (SEC) to provide its anticipated disclosure regulations for ESG matters, many companies are looking beyond just compliance — 17% of CFOs see ESG as a fundamental driver of financial success and another 69% say that ESG is either a top consideration or equally as important as financial success. Just 14% believe that ESG is a minor consideration or that financial results are the only thing that matters.


“It was transformational when, two years ago, the Business Roundtable changed its statement on the purpose of a corporation from existing principally to serve shareholders to one that benefits all stakeholders, including consumers, employees and communities,” says Jim Burton, partner and leader of ESG & Sustainability services for Grant Thornton. “Today, CFOs and other business leaders increasingly see ESG as a key value driver that’s central to their mission and success.”


When asked about the biggest challenges facing their business, respondents’ concerns about ESG reporting and disclosures jumped from 13% in the second quarter to 27% in the third. When polled about the desired end state of their ESG program, almost half (49%) of senior finance executives say they aim to be consistent with peers and stakeholder expectations, while 42% aspire to be known as market leaders and innovators. Perhaps most telling, nearly 8 out of 10 (78%) CFOs report their companies are integrating ESG expectations into both performance evaluations and compensation.



ESG compliance and reporting a growing concern


The maturity and reach of ESG evaluation and reporting is uneven, however. When asked about the extent to which they evaluate and report on ESG, only 18% of CFOs report across their entire value chain. Thirty-six percent of CFOs say they report on their own operations and immediate upstream/downstream, vendors, suppliers and customers; while 29% confined reporting to their own operations. A surprising 17% say they do not currently report on ESG at all.


“Most of those companies that are not currently reporting plan to start within the next two years,” adds Burton. “A company’s impact on society doesn’t end within the operational boundaries — and that’s now more apparent than ever. When you combine increased regulatory requirements with escalating supply chain, market and public pressure, organizations will have to disclose more to compete.”



ESG further complicates the war for talent


According to the survey, ESG is also adding a new layer of complexity to an already challenging employment landscape. When CFOs were asked which stakeholders are pushing their organization to enhance maturity of their ESG programs, employees (42%) were the most commonly cited group, followed by organizational leadership (39%). When ranking the top ESG issues for their organizations, employee retention and development (35%) was at the top of the list. Diversity, equity and inclusion (30%) followed close behind, while employee health and safety (27%) took third place.


“ESG isn’t just something you worry about with investors, customers and regulators,” says Marjorie Whittaker, an SEC Regulatory Matters and ESG & Sustainability managing director at Grant Thornton. “Employees want to work for employers that share their values, embrace diversity and demonstrate real care for their well-being and advancement. It’s going to be an increasingly important differentiator in recruiting and retention — employees are looking to align their values with their paychecks.”



Talent shortages seen to imperil strategies


But ESG is hardly the only concern for CFOs. A strong majority (70%) of respondents are now worried talent shortages jeopardize their ability to meet short-term strategies — up from 64% in Grant Thornton’s second quarter survey. Concern about controlling overall employee benefits costs also increased to 70%, up from 68% in Q2. Meanwhile, plans to return to a full-time in-office culture dropped to 28% from 33%, while plans for a hybrid employment model jumped to 59% from 50%.


When CFOs were asked about their top workforce priorities for the next 12 months, several talent issues topped the list: 49% indicated that attracting and retaining talent was a top priority; 47% saw managing a hybrid workforce as a top priority; 45% claimed maintaining or improving culture was a top priority; and 44% saw addressing employee work-life balance concerns as a top priority.



Economic optimism and expenses on the rise


When polled about the current state of the U.S. economy over the next six months, a majority (69%) of CFOs say they are optimistic. When asked about issues that could imperil their business, CFOs were most concerned about the continuing pandemic (52%), workforce shortages (51%) and supply chain disruptions (48%). On the positive side, another 48% of CFOs anticipate that infrastructure legislation could aid their business.


CFO responses were also scattered across a variety of choices when asked what steps they plan to take to mitigate negative impacts from business disruptions. Fifty-four percent say they plan to develop new or significantly updated disruption scenarios and action plans, while 39% say they are looking to increase investment to bolster output. Just over a third (37%) of CFOs plan to make immediate changes to operating models, while 35% plan to increase focus on cash flow and liquidity.


“The economy presents some immediate opportunities for growth, but the pandemic has taught CFOs that their existing plans to recognize and deal with potential disruptions were inadequate,” says Enzo Santilli, national managing partner of Transformation at Grant Thornton. “Most organizations are implementing new and broader definitions of risk and acting to bolster their resiliency and agility.”


Grant Thornton’s Q3 CFO Survey also found that CFOs are expecting expenses to rise across the board. In fact, 59% expect cybersecurity expenses to increase, while 55% expect IT and digital transformation expenses to rise. Not surprising, just 34% of CFOs expect real estate expenses to go up.


“CFOs are planning to invest in operations to boost growth,” adds Santilli, “but they are also looking to maintain reserves and keep a close eye on cash flow and liquidity.”


Ultimately, the Q3 survey revealed that CFOs are fairly confident that the economic recovery from the COVID-19 pandemic will continue, but workforce concerns and ESG readiness will continue to dominate CFO time and attention.


To see additional findings from Grant Thornton’s 2021 Q3 CFO Survey, visit



About Grant Thornton LLP

Grant Thornton LLP (Grant Thornton) is one of America’s largest providers of audit and assurance, tax and advisory services — and the U.S. member firm of the Grant Thornton International Ltd global network. We go beyond the expected to make business more personal and build trust into every result. With revenues of $2.4 billion for the fiscal year that ended July 31, 2023, and almost 50 offices nationwide, Grant Thornton is a community of more than 9,000 problem solvers who value relationships and are ready to help organizations of all sizes and industries create more confident futures. Because, for us, how we serve matters as much as what we do. 


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