- Accountants have a critical role to play in developing resilient businesses
- Environmental and societal risks are identified as having the most impact on businesses
- The World Congress of Accountants 2018 will cover topics including climate risk, SDGs and Integrated Reporting
“Accountants will save the world”, noted Peter Bakker, President of the World Business Council for Sustainable Development (WBCSD), at the United Nations Conference on Sustainable Development, Rio+20 in 2012.
A distinguished business leader, Mr Bakker made the comment because in the lead up to the conference, business executives were saying that they had the technology and science needed to address sustainability issues and risks . However, they were frustrated that there wasn’t more action. Bakker felt the accounting mechanisms were the missing link in the chain. He stated in a subsequent Harvard Business Review article that: “To get all businesses involved in solving the world’s toughest problems, we must change the accounting rules.”
“Accountants have a critical role to play in the development of the resilient business models that organisations need to succeed in the future”
Accountants engaged in sustainability
The WBCSD is a major partner in the Natural Capital Coalition, which is hosted by the Institute of Chartered Accountants in England and Wales (ICAEW). The Natural Capital Coalition is a unique global multi-stakeholder collaboration that brings together leading global initiatives and organizations to harmonize approaches to natural capital.
But taking leadership on sustainability topics is not just about accounting for the earth’s natural resources or corporate responsibility at the expense of profit. It is also about risk management and it makes good business sense.
The World Economic Forum (WEF) Global Risk report 2018 has several significant environmental and societal risks listed on the basis of their likelihood and impact. Extreme weather events, natural disasters, water crises and the failure of climate change mitigation and adaptation feature in the top 5 for impact. Climate risk is gaining global attention following the Paris Climate Change Agreement and the release in June 2017 of the Financial Stability Board’s (FSB) Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. These disclosures are focused on increasing transparency on the impact climate related risks will have on the stability of global financial markets.
But this is not just about risk management either, although it is certainly driving a lot of change. As HRH The Prince of Wales has said: "It is not necessarily a choice between making money on the one hand and ‘doing the right thing’ on the other. On the contrary, once it is recognized that ‘business as usual’ is unsustainable it follows naturally that those organizations which start to develop resilient business models will be the ones that succeed."
The role of accountants and integrated reporting
Accountants have a critical role to play in the development of the resilient business models that organisations need to succeed. Accountants know how to manage risk, develop appropriate controls, use information in decision making and report results. However, in the future these will not be solely applied to financial information but to a broader range of metrics and qualitative information.
Integrated Reporting presents a framework for reporting that shows broadly how a business creates value over time. It provides a longer term perspective and links performance to the organisation’s strategy. The UN Sustainable Development Goals (SDGs) provide a great framework for organisations to demonstrate how their strategy contributes to the wider prosperity of the nations where they operate. The SDGs were determined after one of the largest global consultations undertaken and therefore could be presumed to represent the public interest. The interest of the public is at the core of everything the accounting professionachieves .
Join us at WCOA2018, where you’ll hear how accountants are going to save the world.Read more