Good business decisions start with reliable information. Qualified accountants provide this information to decision makers in both the public and private sectors, bringing trust, integrity and transparency by measuring, disclosing and certifying corporate information. We can only move toward a sustainable economy if the corporate impact on society and the environment is reliably assessed – without that, the right strategies cannot be developed.
The environment has been an afterthought for most companies, far behind delivering results to shareholders. Markets have ignored environmental and social costs in pursuit of profit. Raw material reserves are rapidly decreasing, and businesses are regularly suffering financial—and physical—damage from extreme weather events.
At the same time, a growing economy has helped to reduce poverty. Businesses working together can be very effective in reaching common goals. Accountants are part of this solution because they can help companies assess their current impacts and make the changes to create value in the long term. They can harness the power of the market to make the necessary shift to a sustainable economy.
Financial performance alone is no longer enough to assess how a company is doing. Many organisations already measure their environmental and social impacts to support their actions and decisions. However, too often this is seen as a box-ticking or compliance exercise.
Assessing non-financial information (NFI) must be based on a solid methodology and professional judgment. Products and services must undergo life-cycle impact assessments, such as farm-to-fork, to see what damage is being incurred where. This process needs to be evaluated and made more sustainable, developing ethical supply chains and extending the use of products.
We also need to measure the same things in the same ways. This means moving towards global reporting standards for sustainability, as has been successfully done for financial reporting with the IFRS. Accountants are in the business of measuring and they already have long-standing experience with applying global frameworks to harmonise how these measurements are undertaken.
Transparency builds trust. New technologies have enabled the disclosure of more data than ever before. Companies are no longer the only ones who can communicate about their data. Businesses should understand that it is more cost-efficient to disclose information themselves, rather than having it revealed by others.
Disclosing NFI measurements enhances a company’s transparency and makes the basis for good decision-making by internal and external stakeholders. It helps management to make better strategic decisions that reduce impact on the environment. It also offers consumers and prospective employees a full picture of the business that they are dealing with.
Disclosing NFI requires expanding corporate reporting to include environmental and social factors. Going beyond historical financial data, corporate reports should include environmental and social information over the short, medium and long term. The information needs to be integrated so that business decisions are taken on a holistic basis, with all aspects and impacts considered.
Qualified accountants have solid experience in corporate reporting and are currently devising the most effective method to incorporate sustainability data, to give a comprehensive view of a company’s activities.
Of course, both financial and non-financial information needs to be reliable and trustworthy to enable investors and other stakeholders make the right decisions. Accountants are the independent expert opinion needed to verify the accuracy of the process used to collect and analyse the data.
Once companies have a clear view on where they stand, they can begin to make the decisions to ensure a more sustainable economy. Progress depends on the right skills and bringing trust, integrity and transparency to this process. This is why accountants have a key role to play in helping boards embed sustainability in their organisations.
Eleni Kanelli is head of advocacy and Vita Ramanauskaite is senior policy advisor at Accountancy Europe.