Can accountants save the world?

aksaroya —  7 November 2012 — 3 Comments

By Robert Bruce, Accounting and Business commentator and journalist

Accountants might not be stereotypical superheroes but if they can channel their enthusiasm for non-financial reporting into one roadmap, they could help rescue the planet.

It is said that it is hard to get accountants up on their feet a ta conference, let alone exhibiting exuberance. At the September conference of the International Integrated Reporting Council (IIRC) all this changed. Peter Bakker, president of the World Business Council For Sustainable Development, and now the deputy chair of the IIRC, called for all accountants present to stand up. They did. Bakker swept a hand around the room. ‘Ladies and gentlemen’ he said. ‘These are the people who are going to save the world’. It was a bold gesture and a galvanising one.

But as the conference heard from one after another of the companies working in the IIRC pilot programme, which captures the experience of implementing integrated reporting, the more it made sense. The finance function is becoming the engine room for a form of reporting which in the world of the IIRC, ‘aims to communicate the “integrated thinking” through which management applies a collective understanding of the full complexity of value creation to investors and other stakeholders’. And the more investors and stakeholders understand the part that things other than the narrow financials play in driving strategy, the more influence the non-financials will have.

A week later the bandwagon arrived in London at the first Non-Financial Reporting conference, hosted by Deloitte and in association with ACCA and the Global Reporting Initiative (GRI). Referring to the Amsterdam conference, Jenny Harrison, UK lead for the carbon and integrated reporting at Deloitte, described it as ‘invigorating’. ‘You felt these people would go back to their organisations and show the markets that this style of reporting can be concise, relevant and about integrating the thinking throughout their organisation,’ she said.

But it is also clear there is a wide range of views, inputs and attitudes from all the interested parties involved in making this process work. And there is the political difficulty in deciding upon a preferred system for putting all this together. Both the work of the GRI and the IIRC came in for criticism for, in case of the GRI, being too complex and resistant to change, and, in the case of the IIRC, being perceived as a bit of a closed shop. Much of this is the inevitable squabbling that happens when more than one model exists.

‘Some scepticism about the value of lengthy and complex GRI-style reports was expressed’, says Roger Adams, director, special assignments at ACCA, ‘but the lack of obvious widespread support for integrated reports seemed to indicate that preparers and users alike need more time with, and exposure to, integrated reports in order to see whether or not the emerging integrated reporting model represents a real step forward in terms of improved corporate reporting. Whichever reporting model is used, it is the issue of what to report and to whom that remains crucial. Reporters can construct complex risk matrices internally, but it is still of utmost importance to engage with the key stakeholder groups in order to understand how their concerns can be turned into meaningful reporting and enhance accountability.;

At the Amsterdam conference, Paul Druckman chief executive of the IIRC, made this a central point. He described the IIRC community as ‘a growing global community of businesses and investors who recognise that corporate reporting is as much about effective communication as it is about compliance with rigid rules’. And this is why integrated reporting has a transformative quality. ‘Corporate reporting,’ he said, ‘ is more than a good communications tool. It influences behaviour, within organisations and by investors, and it underpins the efficiency and productivity of our capital markets. So when governments, regulators and policy-makers talk about creating the conditions for a more responsible and responsive capitalism, rooted in activity that creates and sustains value, this is the business we are in.’

In the end, the Non-Financial Reporting conference, with all its many disparate contributions, suggested that corralling the different strands into a recognisable business-led movement was probably the answer.

“We need to gather all this enthusiasm into one roadmap,’ says Harrison, ‘Regulation is not the answer to improving corporate reporting. What are needed are examples of how this allows you to manage your business better. It needs to be more widespread. The IIRC is doing a great job, but it is the companies taking part in the pilot programme, and indeed those beyond that will make the difference.’

This post first appeared in Accounting and Business UK November 2012.

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3 responses to Can accountants save the world?

  1. 

    Where to start…cart & horse come to mind.

    I shouldn’t be surprised that accountants see the prime way into this is via the reporting end rather than the doing end, after all that’s what we trained to do so why expect more? What adds to this comedy is that the ways in which to report, what to report & who should report have been batted about for at least 20 years with the baton being moved from one set of standard setters to the next with nothing coming out the other end. In other words a shadow of the international governmental summits on climate change where vested interests pull in all directions with nothing to show for all the hot air but a few targets and “see you at the next one” as they dash to catch their flights home.

    I come at this from the SME end, ie the vast majority of businesses in the UK, and from what I can tell most accountants just don’t get it. They don’t see the point, understand the concepts or, most importantly, appreciate the need for something to happen now. What is the point in training them to report something where, not only do they not understand or practice the concepts themselves, but don’t believe they are of worth?

    At the heart of this, for both accountants and their clients is the hard-wired principle that the only route to business success is growth and, if possible, next week. They can not conceive that there is another way that might actually involve efficient inertia or doing less, for long term benefit for all.

    Without guidance or regulation from governments and professional bodies, there are still many large (and even a few small) businesses who “get it” from the doing end and report their policies & practicies in an attempt to influence stakeholders but they set their own targets and, unless they invest a lot of time in research and advice, have no idea whether what they are doing is enough. This movement, from the business end, is encouraging but slow and is also running out of steam.

    I tried to find something on Sustainability on the ACCA website the other day and gave up, I was finally directed to the “research-insights” section of the website and asked “what’s it doing stuck out there?”. I’m still waiting for a reply. I’m sure the relevant people in the ACCA appreciate the importance of this topic but it is not being communicated or translated into helping members to understand and “DO” anything, no high (or even low) profile articles & discussions and certainly no training and guidance that I can see; but I’m sure, when someone decides on the items and numbers to be obtained from clients, we’ll be there to devise a spreadsheet to report them.

    To finish with some praise for the larger firms of accountants who practice and advice on this. PwC has just released its Low Carbon Economy Index (2012) which is short, sharp and to the point and, if nothing else, would give accountants a flavour of what’s in store.

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