Can CFOs Navigate Ethical Challenges Whilst Upholding Integrity in Financial Leadership?

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In the realm of modern business, ethical leadership is a compass that guides financial decisions, shaping the course of organizations and their impact on the world. Christian Wiegele, the CFO of Perfetti Van Melle’s Asia Pacific division, stands as a testament to this guiding philosophy. In the interview with DigitalCFO Asia, Christian shares his profound insights into ethical leadership as a CFO, illuminating the core principles that drive his decision-making process and underpin his unwavering commitment to integrity and transparency in financial matters.

Defining Ethical Leadership as a CFO: Guiding Principles for Promoting Integrity and Transparency in Financial Matters

The most important principle is to stay laser-focused on ensuring sustainable, profitable growth for the company and its stakeholders, with the keyword being sustainable. 
“This is heavily guided by my personal belief in business as a force for good, where business decisions, including financial matters, are made at the intersection of people, planet, and prosperity, never one at the cost of the other,” says Christian. 

Organisations of all sizes possess a significant degree of influence in shaping the world. As members of executive teams, CFOs bear the responsibility of formulating decisions and offering recommendations that avoid causing harm to any stakeholders, including the environment and society as a whole. When one examines business choices through the perspective of a triple bottom line, encompassing people, planet, and prosperity, this stance evolves into a guiding principle governing ethical business and financial judgments.

A CFO’s Experience and Approach to Upholding Ethical Standards

“Dilemmas are inevitable as we live in a volatile, uncertain, complex, and ambiguous world,” highlights Christian. 

CFOs often confront a dilemma of priorities, wherein every stakeholder within their respective organisations demands simultaneous fulfilment of various needs. The responsibility lies with the finance leaders to strike a balance between immediate and future actions, while maintaining a robust partnership with the leadership team.

To illustrate with a straightforward and pragmatic instance, a scenario arose when a farmer engaged with the company from the Philippines sought a multi-year prepayment to navigate through a challenging phase in their business. While the company’s prepayment policy prescribed a limited duration for such arrangements, negotiations were initiated with the parent company and the majority shareholder to make an exception. This decision stemmed from the recognition that safeguarding the company’s financial well-being must harmonise with the commitment to nurture relationships for sustainable and mutually advantageous growth.

Another case involves the integration of sustainability across all facets of the business. Undertaking a transformation of the business model to encompass the well-being of people, the environment, and overall prosperity—rather than solely focusing on profits—incurs substantial costs that could impact short-term financial outcomes. Nonetheless, the focus remains on the future, acknowledging that present investments and assumed risks will yield enduring and favourable consequences in the long run.

Navigating Ethical Standards: Addressing the Toughest Challenges in Financial Decision-Making as a CFO

Having lived and worked in Asia for over 12 years, Christian shares that one of the biggest ethical challenges that comes to mind is corruption. While multinational companies have stringent anti-bribery policies, and countries have strict laws against corruption, CFOs continuously have to remind themselves to “do things right while doing the right things”.

People’s economic situations sometimes put them in a position of vulnerability, and it is the CFO’s job as finance leaders to make sure that employees avoid taking shortcuts. That could be through education, enforcement of compliance policies, and ensuring that employees are also paid fairly. 

“I have seen over my career spanning various continents and cultures that at the end of the day, long-term thinking will prevail and be the road to success. You might be tempted to take shortcuts. Resist those shortcuts as they will inevitably return to haunt you in the future. One of the best pieces of advice I got from one of my managers was – never do anything that could end up as a headline on the front page of the newspaper,” shares Christian. 

Another challenge emerges in the quantification of impact—be it environmental or social—in order to inform financial decision-making. Defining a collection of impartial criteria and metrics to delineate impact proves consistently challenging, particularly when the organisation operates within nations facing socioeconomic adversities. 

The central inquiry that necessitates consideration is the definition of a viable profitability standard, one that facilitates investment, upholds employee livelihoods, and safeguards the environment. Might there be an opportunity to progress beyond upholding the status quo, steering toward a constructive impact by enhancing infrastructure, healthcare provisions, cultivating fresh value channels for local partners, and rejuvenating the land that sustains the product growth? This, once again, constitutes a delicate equilibrium, yet one undoubtedly within reach.

Integrating Ethical Considerations into Decision-Making Across the Finance Team and the Organization

For Christian, the first step would be articulating a clear vision. A culture of ethics and transparency is about doing the right things and doing them right. Communication and fostering open dialogue are key, where all employees are encouraged to voice their concerns and report unethical behaviour without fear of retaliation.

The second step is walking the talk. Finance leaders must lead by example when it comes to upholding integrity in financial practices, and actions speak louder than words. This involves maintaining transparent reporting protocols to deliver accurate and timely information to all stakeholders, even when the numbers are not looking great. 

“I hold myself accountable for my actions and openly acknowledge any mistakes or errors. This cultivates a culture that embraces learning and improvement, where employees feel comfortable admitting mistakes and can collectively look for solutions as a team,” says Christian. 

Lastly, the establishment of a trusted partnership represents another pivotal facet. CFOs must consistently endeavour to cultivate robust connections, both within the organisation and externally, grounded in trust. The finance team must proactively participate in collaborative endeavors with various organisational units, providing clear and precise financial insights that foster informed decision-making.

In external spheres, the CFOs need to uphold transparent and open lines of communication with diverse stakeholders—ranging from clients and suppliers to investors and regulatory bodies—ensuring the accurate and timely provision of financial information. Adherence to pertinent laws, regulations, and ethical norms is paramount, extending efforts beyond the norm to guarantee interactions steeped in integrity and transparency. By exemplifying dependability, responsibility, and credibility, the individual forges a reputation as a dependable partner consistently guided by ethical principles.

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