A new agenda for Canadian CFOs as we enter the Biden era
Business leaders are preparing for a fresh wave of change as Joe Biden prepares to become the US President in January 2021. Biden has proposed a number of changes, ranging from taxes to trade to environmental measures, that Canadian businesses will be paying close attention to. Canada’s chief financial officers have an important role to play in helping organizations navigate these changes, particularly given the disruption they’re already experiencing this year.
What are some of the key considerations on the horizon as we enter the Biden era?
1. Taxes:
Biden has proposed a number of business and individual tax increases (PDF)Opens in a new window (file size: 0.86 MB) to promote job growth and address concerns over inequality. While the possibility of Republican control of the Senate casts some doubt on whether Biden will be able to implement his proposals, CFOs should be actively planning for different scenarios and will need to move compliance higher up on their agenda.
Aside from potential tax legislative changes in the United States, we’re seeing countries around the world looking to shore up their tax base. This global fiscal reality, combined with the increased public interest around tax transparency, requires all multinational companies to prioritize developing a robust tax reporting strategy.
2. Trade:
While Biden is a globalist and has signalled greater willingness to act multilaterally, the focus on economic recovery means trade policies aren’t likely to change quickly. The US government will continue to push companies to bring back supply chains to the United States. While Biden’s administration will likely have a more nuanced approach to China, his economic recovery plan includes tax incentives and penalties intended to encourage investment in the United States.
For Canadian companies, this will be a good time to take a fresh look at their supply chain strategies. Many will be looking to diversify their global footprints while assessing US tax incentives and other impacts of changes to their supply chains. CFOs will need to be at the table with insights to help their organizations optimize their strategies for US policy changes.
3. ESG:
Besides a pledge to rejoin the Paris Agreement and plans to tackle climate change, Biden is likely to prioritize a range of environmental, social and governance (ESG) matters. We expect a rising focus on diversity and inclusion as ESG issues, with Biden using executive orders and regulations to urge companies to address key workforce practices.
In this environment, companies will face increasing demands for information about how they operate and whether they’re meeting stakeholder needs. This will require companies to prioritize financial reporting and data quality as they look to improve transparency by disclosing more than the minimum and providing proper oversight and controls to enhance the reliability of their metrics. Given the finance function’s focus on reporting, CFOs have an important role to play in helping their organizations present their ESG story, including the growth potential from identifying and managing these issues. Some are turning to digital tools to help in this area. According to a recent surveyOpens in a new window from our PwC US colleagues, 38% of CFOs plan to invest in technology for data collection and automation to help with ESG disclosures.
A shifting business landscape
While Biden may face challenges in implementing some of his proposals if Republicans control the Senate, we can be more confident about seeing a shift in tone, particularly when it comes to offering a more predictable environment.
This should give businesses greater confidence to invest in key areas, like digital transformation. For CFOs looking to help their organizations navigate the changes to come, there’s no better place to focus on than the finance function. We’ve seen how some organizations paused their finance transformation initiatives at the beginning of the pandemic, but many have started them up again. With Biden likely to bring more stability, now is a good time for organizations to look at the finance function’s role in shaping the future.
What does that look like in the context of a new policy environment? Primarily, it’s about increasing the finance function’s ability to produce data fast enough and with the depth required to make decisions in a shifting business landscape. Whether they’re dealing with increased tax compliance requirements, reassessing supply chain strategies or trying to increase their ESG reporting capabilities, CFOs have a fresh opportunity to deliver insights to help their businesses succeed. To do that, they need to free up capacity to generate these insights by automating time-consuming processes and upgrading to technologies that offer better close management, forecasting and reporting capabilities.
Shaping your future
To get a sense of what’s possible, I encourage you to read about what some Canadian businesses have done on finance transformation. To discuss your needs and your questions about the challenges and opportunities ahead, please contact me any time.
Authors
CPA
National Assurance Markets Lead, Future of Finance Leader, Partner, Oakville, PwC Canada
+1 905 815 6432
