S&P Global CFO: Financial stewards still need to be prudent in 2023
In this article, Ewout Steenbergen, CFO of S&P Global, reviews the execution journey after the company completed its merger with IHS Markit in 2022, and looks ahead to 2023: despite ongoing macroeconomic uncertainty, there may be opportunities for accelerated growth in the second half of the year. He proposes that CFOs should adhere to 'future-proofing' investments, tell the story of corporate purpose, and embrace digital tools such as artificial intelligence and machine learning, thereby laying the foundation for 2023 and beyond.
Editor's note: Ewout Steenbergen is Executive Vice President and Chief Financial Officer of S&P Global, headquartered in New York. The company provides credit ratings, indices, data, and research and analysis services. This article reflects the author's personal views only.
Although the term "unprecedented" has become almost a cliché, there is no denying that the global economy has experienced historic and truly unprecedented turbulence over the past few years. The COVID-19 pandemic, inflation, and the war in Europe have continued to buffet markets, forcing us to adapt to a new normal at the household, workplace, and community levels. From a corporate perspective, CFOs have been called upon to significantly adjust strategies, proactively develop and implement scenario planning, and seek a rebalancing between efficiency demands and investments in long-term growth.
On a personal level, in addition to navigating macroeconomic uncertainty, the company I work for completed a historic merger with IHS Markit. At the start of the year, we had a broader business footprint, new colleagues, and new divisions. While it was exciting to witness everything coming together, 2022 quickly became a year of "execution"—putting into practice the vision we had previously drawn up. Combined with various other factors, this made the year even more historic.
Looking at the broader landscape, 2023 will be a year of transition: sustained economic uncertainty is expected to give way to potential accelerating growth in the second half of the year. For CFOs, this means we must continue to "watch every penny" while also continuing to invest in the business so that we can seize future growth opportunities when the market turns.
Earlier this month, I attended theInvestor Dayevent in New York, where I engaged with more than 100 major global investors and gained insight into how the industry is thinking about the road ahead. Although attendees shared widespread concerns about the macroeconomic environment, there was also a palpable sense of urgency to seize opportunities. Based on these conversations and observations, I believe the coming year will revolve around three major themes:
The importance of "future-proofing"
CFOs are often seen as cost cutters, especially during periods of budget tightening. But I prefer to define our role as "making the right investments at the right time"—ensuring through innovation that corporate actions support long-term growth. We allocate capital to the areas where it can be most effective, ideally systematically reinvesting in organic growth. Although this is not easy, we must look beyond the next quarter's earnings and consider outcomes 2, 5, or even 10 years down the road. Our actions must align with the broader growth strategy, and we must clearly communicate that logic at every step.
The bigger picture of corporate purpose
Beyond the numbers on spreadsheets, investors also want to understand the broader impact of their investments. In all my conversations, investors are increasingly eager to know whether their investments align with their values. As a provider of data and analytics services, this comes as no surprise. At S&P Global, we have been at the center of a growing demand for information—information about how companies operate, how products and services are used in the market, how employees feel about the workplace, and what drives specific actions. The questions are no longer limited to "who, what, when, and where," but rather "how" and "why." As financial leaders, we need to critically think about the rationale behind every action from the perspective of organizational health and sustainability. The story cannot be only about saving costs and improving margins; it must be rooted in building resilience and purpose.
Embracing digitalization in finance
Technology integration has always been a driver of tremendous change within enterprises. For CFOs willing to embrace technology, cloud and digitalization have been central to improving the customer purchasing experience, creating paperless environments and streamlining internal processes, and supporting corporate responsibility practices. The next wave of technology—artificial intelligence and machine learning—has already arrived. I have personally advocated for accelerating the adoption of these advances and have seen the results firsthand. Used properly, AI and machine learning can keep CFOs agile, enable easy iteration, improve product accuracy, and respond quickly to market cycles and customer needs through dynamic scenario planning.
Looking ahead to 2023
What we view as challenges today may actually become opportunities in the future. During tightening periods, we are forced to reassess and re-examine, which spurs us to develop new approaches to tackle challenges. Whether it is challenging ourselves and our teams to deploy technological innovation, or telling a bigger story rooted in purpose, we are creating new best practices—helping our companies build greater resilience for the future.
With these thoughts in mind as I look toward the new year, I am optimistic. The opportunities for innovation, expansion, and drawing on the lessons of 2022 are considerable. Although the macroeconomic environment is uncertain, as CFOs we can "future-proof," refresh our existing ways of operating, and lay the groundwork for growth beyond 2023.