Let’s make accountants accountable for better business behaviour

Companies wield too much power to exist just to make money. With multinational corporations making up 69% of the world’s richest entities, they increasingly have more influence than many governments. Consequently, we cannot meet the United Nations’ Sustainable Development Goals (SDGs) – the blueprint for a fairer, better and greener world by 2030 – without the positive force of businesses.

As we hurtle towards climate tipping points and as social inequality worsens, companies need to be as much about purpose as profit. Yet, as the new whitepaper from the World Benchmarking Alliance (WBA) highlights, there is currently no single entity powerful enough to be able to make them do the right thing; corporate power regularly goes unchecked.

To fill this void, we must combine the influence of all those who have the capacity to sway business behaviour, including the accounting profession. In fact, accountants have an integral role to play in closing what the WBA calls the corporate accountability gap.

Accountants must significantly broaden their remit. As things stand, they are too focused on the traditional area of financial numbers. They need to step back and consider the bigger concept of ‘value’ – which does not just concern financial results but also the value created for customers, stakeholders and communities. By switching the focus from ‘profit made for investors’ to ‘value created for all’, accountants can find ways to quantify and evaluate the impact of a businesses.

What does good business behaviour look like?

There is no definitive answer, but there are numerous steps to take. A first step would be for accountants to understand and incorporate standardised sustainability reporting frameworks into their processes. To remain ignorant of them is to not be fulfilling their basic responsibilities as qualified professionals.

The International Sustainability Standards Board (ISSB) recently issued its first two sustainability-related standards which become effective in early 2024, hailing a new era for mandatory sustainability disclosures in capital markets. Creating a common language for disclosing the impact of sustainability-related risks, they provide a clear idea of what companies must report to offer investors globally comparable information. By increasing the prominence of sustainability reporting within financial filings, they could signify a vitally important shift in corporate behaviour.

Such disclosures will help responsible and forward-thinking businesses showcase what is possible – thereby inspiring other companies to raise their ambitions and create cultural system change.

However, these new standards only look at sustainability as it affects investors and capital markets, not a company’s wider impact on the world. While they are a useful checkpoint, they simply do not go far enough. These standards will continue to evolve, but they are not the end game.

What accountants need to do is to understand the gaps and at the same time facilitate the telling of a comprehensive story about their business, including these wider impacts. The combination into a coherent narrative will influence its business model, strategic direction and purpose.

To substantiate this narrative, they need performance measurements. For example, Sainsbury’s backed up its promise not to source fish from overfished areas by using traceability tracking on boats. If there are too many boats in one place, then overfishing might be going on and the supermarket can identify any of its supplier vessels infringing the pledge. This is the sort of innovation needed to measure and validate sustainability performance.

Other practical ways that accountants can help drive better business behaviour include: helping the organisation to comply with existing sustainability standards; preparing for upcoming legislation; reporting on wider value to stakeholders; upgrading auditing processes to include wider value; and providing companies a route to integrated thinking.

This fundamental shift in mindset could be highlighted by renaming the business’ senior accountant the Chief Value Officer – rather than the Finance Director or Chief Financial Officer.

Change on the horizon

There are already promising signs of progress among the profession and an appetite for change is emerging. For example, just days ago, leading accountancy and finance professional bodies came together in an open letter to urge Rishi Sunak to boost international policies and frameworks in a bid to help achieve the SDGs, stating: “We are ready to use our skills and expertise to help reshape business practices and implement the changes needed to drive progress.”

Focussing on the accounting profession, I have been involved with the Accounting Bodies Network within the Accounting for Sustainability organisation which recently celebrated its 15^th anniversary. Its call is for the profession to rethink “the purpose, principles and practice of accounting to respond to this multidimensional crisis, such that as a profession we are equipped to play an active role in the solution”.

Radical change is coming. Corporate action on our urgent sustainability challenges is fundamental to the survival of people and the planet – and someone needs to quantify it. As the people who put in controls and systems to ensure credibility, accountants are the obvious choice. I urge accountants to accept the challenge or suffer the consequences for the profession at their peril.