Can Finance Save the World?
This was the title of a book that came to my attention by Bertrand Badré and which I read over the Holidays. As much as it was directed at the global financial system and was a nice refresher of some of the challenges we have to conquer as a society. It also got me thinking, can the #finance team save the world too?
In this bite-sized episode I share some thoughts on 3 areas we can help.
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Link to book: www.amazon.co.uk/Finance-Save-Wor…re/dp/1523094214
Transcript
Andrew: [00:00:00] Hi everyone. And welcome to this week’s Monday memo. And the question popped into my head. Can finance save the world because that was the title of a book that came to my attention by Bertrand Badré who’s ex CFO of the world bank. Okay. And it’s a book I read over the holidays. It’s very much directed at the global financial system, but it was a nice refresher.
[00:00:25] I thought her some of the challenges we have to conquer the society. And it also got me thinking can the finance team save the world too, because there’s some commonalities or some similar areas. When I reading the books out, I thought, yeah, maybe the finance team can do something here as well.
[00:00:44]If you think about it, finance is quite a powerful force for our times. Can it save the world maybe, but also, as we’ve seen in various crises of the last couple of decades, it can also booklet very much as well. But I’m probably more on the domestic or possibilist type side of things that yes, we can leverage finance too.
[00:01:06] Overcome some of our greatest challenges from climate change to trying to build more equitable societies and finance, ultimately like most activities. It’s a, it’s an idea to human activity. It really should be here to serve the common good and. And, more often than not with development is like a Bitcoin and I suppose currencies transaction it’s global in nature.
[00:01:32] So hopefully we should be able to use that global nature of it as a tool for good globally. And I think because we all live on share the same planet. It’s also, if we can get that the international finance system succeeding and service to society. I was like, that’s just a better environment for us all to operate in within our finance teams.
[00:01:56] So there was some good lessons in the book before I deconstruct those in terms of where we can start making an impact in finance. And some of the things Bedros says is that finances could serve and put a poor master. And again, I think he’s right in that one with the global financial recessions exposing the reality of data and the global banks and financial institutions who work perhaps inadequately supervised by their national regulatory systems.
[00:02:25] And that’s a, and that’s something again, I think in our finance team to do quite well is put in place control environments, governance environments, to make sure we’re doing the right things by the business. Badgered, the author also suggests that finances in arena in which progress can be made.
[00:02:44]I agree there as well. If you look in our own organizations, we don’t use manual ledgers anymore, or post general ledgers transactions. We have accounting software. We have robots. That do that for us now. And in a lot of cases, the data behind that resides in a place called a cloud rather than on a physical server.
[00:03:05] Or brackets on the old days of physical desktop in our offices because of the impact of security. We’re much more global in nature. Now we’ve dashboards we’ve. We can refresh faster those dashboards then we’d ever hoped was a really well-designed Excel chart and our spreadsheets and enables us to assess the potential outcomes or where a particular trend might be going leveraging machine learning.
[00:03:28] So we’ve all these tools to help. Finance be an area of progress. Now, I also liked the story that Bertram Badra shares from a conversation with sir Ronald Cohen, who said that the 19th century was like the age of rewards. The 20th century was that a risk reward. And the 21st century, which we’re living through now is the risk of.
[00:03:52]D age of risk reward and impact. And this is where I see the finance team can start saving the world. So to say if we break it down between risk, reward and impact now on some previous Monday memos, I had a series around the industrial revolution, the fourth. Industrial revolution industry 4.0.
[00:04:11] So I won’t recap on that, but particularly with the advent of computer, a machine And confuse our processing power towards the end of the last century, it’s really helped accelerate the racial change that we experienced in finance and accounting. So I encourage you if you want to know more about that checkout those earlier Monday memos, but in terms of where finance teams can save the world, the first one really will be around accounting for risk, particularly risk in the longer term, valuing externalities like the impact or price of carbon or pollution.
[00:04:45] How can we mobilize finance and our resources to invest in decisions that take the right level of risk, not just in the short term, but the longer term we could help our organizations better manage those risks with enhanced controls that are audited regularly to make sure those mitigation practices are working.
[00:05:05] Or we can accept those risks that we want to take, because that’s where our knowledge is. Our, we know those markets very well and we can also perhaps maybe insure risks are, or have others go understand these risks, better, take them on, or accept them on our behalf. That’s why we see growth a lot in specialized services or as a service.
[00:05:25] If you think about it, infrastructure. With the likes of Amazon, or even with office space. If we ever get back to our offices with the companies, like we work, these people can do it a lot better than us and allows us then to focus on managing the key risks in our businesses. So again, I think finance teams, we can help there.
[00:05:45] We can also help on the rewards angle, ensuring that the rewards we’re seeking are sustainable. One of the fundamental principles of accounting which drew me in to the profession was to look at things in terms of going concerns. It’s actually quite a positive way of looking at it.
[00:06:02]It involves looking at the records, we’ve been keeping within our organizations, holding decision-makers to account for those past decisions. And in a way, is where we probably need to move as holding decision-makers to account for. Decisions may be aimed at sustainability. Some of you might heard of these SDGs, the sustainable development goals, this sort of 17 goals that were developed as an accord between nations within the United nations.
[00:06:30] And we’ve had a few gap mentors on the show sharing their thoughts on those. How can we practically go and deliver against them? And. And I think the main mindset shift here is the going concern principle probably shouldn’t just be our organizations should extend outside of our organizations, to our communities and society and so on so that, the business continues well past our efforts with our organizations.
[00:06:58]It’s a great legacy to leave. I want for future generations of those coming up along to enjoy and benefit from. And then I think the third angle going back to, so Ronald Cohen’s points were making sure we’re delivering the right impacts. Use finance teams, Bernie to talk about and summarize finance, accounting, general accounting, shared services teams, the various different ledgers purchase sales.
[00:07:25] FP and a treasury between us all. We’ve got these great assets. Sometimes we overlook, we’re close to decision-makers, we’ve access to data. We, the skills to quantify the impacts of decisions in financial terms. Some of us have a very broad view across our organization, out into our industries as well in the environment.
[00:07:45] And very importantly, We have again, another principle of accounting and finance, objectivity, and independence. This will not only help us grow revenue and unlock profitability in our organizations within the short term, but generate those longer term cash flows that also positively impact on the global challenges we’re facing, including Dressing the poverty, the great poverty. Some people are having inequality, climate change, environmental degradation. So that our organizations have not just the growing revenues and profits and cash flows and so on, but have growing and thriving markets in the long run in which to operate in and sell into and have consumers who can actually access our products.
[00:08:30]So to accelerate this, it might mean today. We start closing those inequalities, even within our own finance teams better leverage our technology, not just to account for things better. But also better leverage talent outside the traditional economic powerhouses. The more that we’ve been using zoom and IMF teams and so on, it rendered the physical location of finance talent, less.
[00:08:54]Relevant, I suppose don’t necessarily need to be near an office. We don’t even need an office presence in some companies, and that might help us enhance diversity in some really great local talent. I have to serve at the pleasure of working needing teams across many continents. And there’s great talent out there.
[00:09:12] , I’m particularly fond of North Africa at the moment. We’ve got a great team out there and not for us to be in decision-making might actually help us do the right things, make the right impacts around those challenges with the STGs as well and help us better access those markets over time.
[00:09:29] I’d like, that’s why we bring guest mentors onto the show. I’m going to share with you the learnings on this journey on whether or not finance can save the world. Things that are they’re doing at a worker and that are not working the hardware lessons to help you avoid some of the pitfalls that they fallen down and get you more towards success, much faster.
[00:09:49] And I think, having such a big aim like this like saving the world, maybe it’s not, but if we can start with our own getting our own individual careers and decisions and an activities and actions into order, then I think we can.
[00:10:05]You have to begin to leverage the knowledge and the guest mentors on the show too,
[00:10:08]to better manage the risk rewards and impacts of what we’re doing. So look, hope you really enjoy this episode. If you did, please share with your friends and colleagues, we really appreciate it with. We really appreciate it when you do, and you can access on all the major platforms, iTunes, Stitcher, SoundCloud, YouTube, Spotify, and Amazon music. [00:10:28]And as always, really appreciate you investing your time with us on the show today. So it’s the next time take care of yourself and let’s keep on building our strength in the numbers.
