As an accountant, I was thrilled to read that Peter Bakker, President of World Business Council for Sustainable Development , said, “Accountants would save the world.” This should make any accountant smile. The realist in me knows that it will take a big “village” to save the world, but accountants can play an important role.
At an experts panel discussion in Amsterdam, Marjolein Baghuis stated, “… the conclusion was that accountants can certainly play a role in making companies more sustainable, but the profession is not quite ready to deliver on this promise without further education.” I agree!
Accountants have a long history of providing information to decision makers. They have been in the business of providing information since the 15th century. Really! If you want to read a great book, I recommend The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll. Accountants are big players in the fortunes of companies and nations. With their experience in providing information for decision-making, accountants can provide important sustainability information to companies, governments, and the public.
Sustainability reporting is unfortunately not currently recognized as an important topic in accounting education in the United States. In a curriculum crowded with courses in tax, auditing, financial accounting, and management accounting, training in sustainability reporting is viewed as nice but not necessary.
Why is this?
There are several reasons.
- It is not covered on the major certification exams such as the Certified Public Accountants (CPA) exam and the Certified Management Accountant exam.
- There is no demand for sustainability reporting skills in accounting public practice because there is no legal requirement to do it in the United States.
- Inside companies, accountants are not usually tasked with sustainability accounting and reporting.
- Accountants in small to medium sized public practices do not traditionally offer sustainability services.
- Most small to medium sized accounting firms do not know how to make the business case for sustainability reporting for their own firm or for their clients.
Over the years there have been attempts to include sustainability reporting as part of accountants’ education but with little progress. Other traditional accounting topics take precedence. Without the demand, change will be slow.
Once in practice, however, accountants who desire to learn about sustainability reporting can look to several professional organizations. The American Institute of Certified Public Accountants promotes the benefits of sustainability services and provides information to its members. The International Federation of Accountants (IFAC) offers information and resources. IFAC is actively engaged with the Prince of Wales’ Accounting for Sustainability Project, the International Integrated Reporting Council, the Climate Disclosure Standards Board, and the Global Reporting Initiative (GRI). Accountants can attend GRI certified sustainability reporting training courses offered by GRI Training Partners such as the ISOS Group.
How will demand for sustainability reporting be created? Here are some possibilities.
Mandatory reporting – Nothings creates a demand for services like a legal requirement. Examples abound – auditing, tax, Sarbanes-Oxley Act compliance.
Demand by financial institutions – As part of the evaluation of companies, lending institutions could require a sustainability report. This report would enable banks to do an expanded risk assessment. This would include a company’s environmental and social risks, which are directly tied to their economic risks.
Demand by local governments – Local governments might consider requiring sustainability reports from companies within the city limits. This would be beneficial to cities in assessing a company’s economic, environmental, and social risks. By complying, organizations would be demonstrating their good citizenship and assessing their own risks.
What do you think?