Accountants have been hard at work in this area, with initiatives ranging from ‘triple bottom line reporting’ to ‘social accounting’. But despite all this, only limited practical progress has been made. One reason is that many decisions are taken that have hidden or not fully-considered consequences.
There are countless examples. Farmers are encouraged to apply chemicals to the land even though water companies are then paid to extract them from the water. Money is saved by sourcing centrally even though the unemployment and other support then needed for local suppliers far outweighs the saving.
Because information about longer term and wider costs, and benefits, is not readily available or sufficiently robust to form a basis for decision-making, decisions are made on a short-term and/or a narrow basis.
Our knowledge of the complexities of life and the consequences of our actions is now far greater but the accountancy profession has yet to provide us with a mechanism to allow us to assess and quantify them.
Accounting mechanisms have not kept pace with our requirements for sustainability information. And yet we need that information urgently if we are to avert man-made catastrophes in our over-crowded world.
As a result of persistent concerns about sustainability, I took the initiative to establish an accounting for sustainability group last year to see what could be done to encourage longer-term and broader perspectives in decision-making.
Its report shows there is scope for those who want more rapid progress with sustainability to work with the grain of human nature and stress the financial benefits from choosing the sustainable option.
Your profession is one of the key pillars of our economic stability and prosperity, but to ensure that our descendants can experience something of that stability and prosperity there is a real urgency to adapt accounting procedures to the critical challenge of minimising the damage done to our fragile world.
This is an edited version of a speech given at a dinner to commemorate the ICAEW’s 125th anniversary
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