Beyond the Balance Sheet : the rapidly evolving role of CFOs in building resilient, sustainable enterprises by Milinda Hewagama

Saturday, 04 November 2023 05:54

Beyond the Balance Sheet the rapidly evolving role of CFOs in building resilient sustainable enterprises by Milinda Hewagama

Businesscafe - Amid Sri Lanka’s unprecedented economic crisis, boosting the country’s export potential has become our most urgent national imperative.

As an organisation that generated US$ 651 million in foreign currency earnings, and accounted for 5.5% of Sri Lanka’s total exports in 2022-23, the Hayleys Group’s success story in producing value-added exports for customers in over 70 markets across the globe demonstrates the immense potential for local firms to create a global market presence.

However, establishing a footprint in an export market is not an easy feat in the current landscape.


To succeed, companies need to be agile, smart and have a good understanding of demand dynamics to ensure that limited resources are optimised to unlock growth opportunities.


Meanwhile, emerging technologies are making it easier for enterprises of all sizes to gain greater visibility and control over their balance sheets.


As a result, the Sri Lankan CFO has an increasingly dynamic and critical role to play in effectively allocating resources across the organisation and managing rapidly evolving risk landscapes to enable local businesses to build global market positions.

For the modern CFO, evolution is not a luxury - it is an absolute essential

The role of a modern CFO has evolved drastically.


Even just a decade ago, they were typically siloed and limited to simply maintaining financial records, ensuring accurate reporting, and overseeing transactions.


By contrast, in today’s dynamic business environment CFOs have transformed beyond conventional financial management and profit generation to a broader, more holistic role.

Emphasis has now shifted towards value creation, reflecting a broader perspective that encompasses strategic, operational, multi-stakeholder considerations.

Traditional boundaries are dissolving, giving rise to a role that spans smart decision-making, talent recruitment and development, administrative functions, risk management, and technological integration.


CFOs must now collaborate closely with cross-functional teams to identify growth opportunities, optimise resource allocation, and align investments with the organisation's overall purpose and strategic aspirations.

This transition underscores the CFO's pivotal role in fostering triple bottom line value creation by not only maximising short-term gains but also cultivating enduring value through innovation, risk management, and strategic foresight, ultimately ensuring the company's resilience and competitiveness in a rapidly changing world.


In short, we cannot simply state the numbers, we also need to evaluate their meaning, understand the connectivity between operational, ESG and financial indicators of our organisations.

Employees at the forefront

In this environment, prioritization of Human Capital Management becomes another emerging imperative for CFOs.


Increasingly, we are also called on to use our role and resources to further support employee well-being, career and skill development, ensuring that our employees are always kept at the forefront.

Despite budgetary and macroeconomic pressures, we must always ensure that the fundamental values of compassion and basic care take precedence.


This thinking has always been part of the Hayleys ethos, which calls on each of us to value our employees and colleagues, and foster a culture of caring and togetherness.


A thriving workforce leads to a thriving business, and a true leader understands that success is deeply intertwined with the welfare of the people who contribute their time, skills and dedication – their greatest asset.

A roadmap for meaningful progress

A robust ESG strategy can reshape corporate decision-making by proactively identifying, measuring and mitigating emerging risks and opportunities through timely and transparent reporting.


By developing comprehensive ESG roadmaps with phased targets, companies can also collectively drive efforts towards creating a more sustainable world, while building a more resilient business and sharpening their competitive edge.

Conversely, the inability or reluctance to embrace these principles can negatively impact business resilience, brand and reputation and ultimately financial performance, highlighting the fundamental need to embed ESG across all operations, processes and organisational thinking.


We believe that for economies like Sri Lanka, this integration will catalyse a nationwide positioning as an ethical, sustainable, and climate-friendly player on the global stage.

In 2022, these dynamics culminated in the launch of the Hayleys Lifecode – our blueprint for driving meaningful progress on ESG targets across the entire Group.

The roadmap propels impactful actions, such as reducing dependence on fossil fuels through augmenting renewable energy utilisation to reduce operational costs and carbon footprints.


To this effect, we’ve committed towards 90% renewable and sustainable energy applications aligned with our goal for a 30% absolute reduction in Scope 1 and 2 emissions by 2030, together with a host of other relevant environmental targets.


Such practices resonate with environmentally conscious consumers and entice global export buyers.

We are aware of the role we can play in encouraging good practices across our value chains and have committed to implementing social and environmental screening covering a minimum of 40% of our suppliers by 2030.


These efforts foster positive impacts within our supply chains and strengthen relationships, supporting supply chain sustainability and security.


On Governance, we are proactively embedding ESG risk identification and management into the Group’s overall risk management framework, ensuring that these emerging risks are effectively addressed across our operations.

Bringing ESG within the purview of the CFO links the financial performance of the Hayleys Group with our legacy of sustainable innovation over the long-term.


We deploy the same data-driven rigour and discipline that we maintain in our financial reporting to measure, monitor and mitigate our environmental and social impacts, and empower lives across Sri Lanka who are either directly or indirectly connected to our operations.

Navigating Complexity in a Rapidly Changing Landscape

While the CFO’s role has expanded, the technological tools that we have in our arsenal too have radically enhanced our ability to navigate this increasingly complex landscape.


For Hayleys, the implementation of a state-of-the-art, Group-wide, Enterprise Resource Planning (ERP) system and other digital tools have enabled unprecedented accuracy, visibility, and agility in strategic decision-making processes.


The internally developed Hayleys sustainability information system - the Hayleys CUBE enables the aggregation, tracking and real-time monitoring of relevant social and environmental data across all the Group’s companies and operating locations.

We see tremendous opportunities for Sri Lankan enterprises to capitalise on developments such as Machine Learning and narrow Artificial Intelligence-augmented tools and capabilities, in order to improve on data-driven strategic decision making and unlock unprecedented efficiency and agility.

For Hayleys, success lies in driving synchronised progress across all these fronts, in order to capture global markets, and spark an export-led economic revival through the harnessing of sustainable innovation.

(The Writer is the Chief Financial Officer of the Hayleys Group and a Board Member of the United Nations Global Compact Network Sri Lanka)

Last modified on Saturday, 04 November 2023 06:17