Technology paving way for organisations to manage ESG initiatives

According to a new survey of more than 6,600 senior executives, 60% of British business leaders state that they don’t have an environmental, social, and corporate governance (ESG) strategy with key targets for their organisation in place. 

With ESG an important responsibility for businesses to invest in, and a topic that is currently experiencing an increase in search volume, business software firm, Advanced, suggests that technology will pave the way for businesses to better manage these strategies and ESG objectives.  

Insights from the company’s new survey support this, indicating that businesses are already starting to invest in technology to help manage their ESG priorities, with many showing great progress:  

  • 47% of business leaders are using cloud-based systems to support their organisation's ESG initiatives. 
  • 46% have invested in technology to help reduce waste as a business. 
  • 45% already use carbon footprint monitoring and/or impact measurement technology. 
  • 34% are utilising technology for sustainable supplier management.

This implies that organisations do understand that they must have rigorous procedures for measuring, monitoring and reporting on their carbon footprint in place. With AI’s 2023 boom, it is interesting to note that while 42% of business leaders state that their organisations are investing in sustainability, 54% are investing in AI. These two could actually work hand-in-hand, with the possibility of AI, in itself, becoming a driver and enabler of lower emissions and reduced carbon footprint for businesses. 

Commenting on this, Advanced CEO, Simon Walsh, said: “Powerful technologies including automation and AI can help organisations implement ESG procedures. 

“Technology has already enabled remote and hybrid working, resulting in fewer commuter hours and reduced fuel consumption for work-related travel, and is helping domestic and business premises manage their energy use more efficiently. AI algorithms can enhance these technologies further, driving down use and cost, and helping reduce carbon emissions.” 

It is only a matter of time before such procedures become mandated by the government. Sadly, this is also at the forefront of business leaders’ minds, with 62% of those surveyed claiming that their drive is to ensure they are compliant with the latest legislation, while only 47% say it is to make a positive impact on the community.

ICBC (China Bank) Ransomware attack

A ransomware attack on one of the largest commercial banks in the world has been reported. The attack on the Industrial and Commercial Bank of China (ICBC) has reportedly disrupted some trades in the U.S. Treasury market on Thursday 9th November 2023, the Treasury Department said. 

Commenting on the attack, Oz Alashe, founder and CEO of CybSafe said: "The reported ransomware attack on the Industrial and Commercial Bank of China (ICBC) has already caused significant disruption to the U.S. Treasury market. While there is currently no clarity on who was behind the attacks, the ripple effect of such attacks and the impact on the broader market is clear. 

“With the rising severity, sophistication and frequency of cyber attacks, often involving human error, companies urgently need to rethink their approach to ransomware defense. It's not just about technology - a people-centric strategy is crucial. This means inspiring and measuring behavioral change, going beyond basic security awareness and training to improve security posture." 

“With the right information, at the right time, people can be transformed into your best line of defense. The ICBC incident is a reminder of the high stakes involved and the essential role of placing people and measurable behaviour change central to safeguarding an organisation's digital assets."

FAF appoints members to Board of Trustees

The Financial Accounting Foundation (FAF) has appointed two members to the Board of Trustees: Michael Clement and Elizabeth Pearce. Both new members will begin their terms of service on 1 January 2024 and conclude on 31 December 2028. 

The FAF is the parent organisation of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). 

FAF chair Edward Bernard “The FAF Board of Trustees is pleased to welcome Michael and Beth as its newest members. Both of these individuals bring extensive knowledge and a wealth of experience in their respective fields to the roles they will play on the Board. I look forward to working with them.” 

The appointees will fill the roles of Trustees Mary Barth, current vice chair of the Board, and David Lillard, Jr., the Board’s secretary and treasurer. Both began their terms in April of 2019 and will conclude their service on December 31, 2023. 

Clement is on the faculty of the University of Texas at Austin, where he teaches in the Department of Accounting. He is also a visiting professor of Business Administration in the Accounting and Management unit at Harvard Business School.  His current research investigates the dissemination and use of financial information in the capital markets, with a focus on the activities and performance of sell-side security analysts. 

Pearce currently serves as the chair of the Governmental Accounting Standards Advisory Council (GASAC), a role to which she was appointed by the FAF Board of Trustees in 2022. In this role she engages members of the Council in active discussions regarding technical and other issues which may impact the diverse stakeholder base of the GASAC.

FAF appoints GASAC chair

The US Financial Accounting Foundation (FAF) board of trustees has appointed Robert Hamilton as chair of the Governmental Accounting Standards Advisory Council (GASAC). 

Hamilton’s term as chair will last for one year, commencing on 1 January 2024 and ending on 31st December 2024. He will then be eligible for reappointment for an additional two-year term. 

Hamilton has served as the vice chair of the GASAC since August 2022, and as the National Association of State Auditors, Comptrollers and Treasurers (NASACT) representative to the GASAC for the last three years. He currently serves as a manager for the Department of Administrative Services, Statewide Accounting and Reporting, for the state of Oregon. 

Previously, he was a public accountant in Oregon for Michael L. Piels CPA LLP, where he served both governmental and not-for-profit clients, among others. 
Commenting on Hamilton's appointment, GASB Chair Joel Black said, "We look forward to working with Robert in his new role as chair of the GASAC. As vice chair, he has been an engaged member of the Council and given generously of his time and talents."

Kearney: Number of zombie companies in energy sector fell by 13% in 2022 

New research from Kearney reveals that the number of zombie companies in the energy industry fell 13% in 2022, dropping from 3.9% in 2021 to 3.4%. This is despite a 5% increase in the global share of zombie companies across all industries.  

The OECD defines zombie companies as those that are unable to meet interest obligations with operating profit for three years running. Kearney analysed 70,000 globally listed enterprises across 180 industries and 153 countries with its Dawn of the Debt research: Will higher interest rates doom more zombie companies?. It found that the energy industry has defied the global trend, instead seeing these types of companies fall as a share of the sector.   

While 2022 was a turbulent year for energy companies, marked by the invasion of Russia into Ukraine and the subsequent reshuffling of the global energy landscape, soaring energy prices have ultimately supported highly leveraged companies in the industry. The most substantial percentage decrease in zombie companies can be observed within the electricity supplier segment, with a decrease of nearly 45%.  

Despite this decline in zombie companies in the energy sector in 2022, an in-depth analysis of the energy and utilities industry reveals its susceptibility to the effects of interest rate hikes. In the event of further interest rate increases, the industry would experience a significant rise in the proportion of zombie companies. If interest rates were to increase by a factor of 1.5, the share of zombies would grow to 4.3% of the energy industry, while an increase by a factor of 2 would result in a further rise to 4.5%. This indicates a substantial increase of nearly 50% compared to the industry’s baseline.  

Commenting on this, Kearney partner and managing director, Nils Kuhlwein, said: “It is unsurprising, but welcome, to see that the energy and utilities industry is one of the few industries where the number of resurrections exceeds the number of new zombie firms. However, affected companies should be concerned by the potential impact of future interest rate rises, and use the breathing space provided by higher profits to ensure they are able to service their debt obligations over the longer-term.”  

Kearney partner, Benedikt Frank, concluded: “The health of the energy and utilities industry is central to the broader health of the European and global economy. The stress tests carried out by Kearney should therefore be a wake-up call to business leaders in this industry, who need to ensure their organisations are resilient enough to withstand interest rates rising beyond their current levels. That being said, it is positive to see that the number of zombie companies in the energy industry has come down over the last year, giving businesses the best possible chance to prepare for the future.”

Amidst accountant shortage, finance teams to scale their headcount

Ledge has released a finance industry report with new benchmark data that shows that finance teams at tech companies are forced to inefficiently scale their headcount to manage the heavy workload of their finance operations. Ledge’s research found that as businesses mature from early to late stage, finance team headcount grows at a rate of 3.5x, a whopping 20% faster than all other combined functions of the company. 

Ledge’s findings underline that tech companies are more dependent than ever on skilled finance professionals to manually wrangle complex and high-volume finance operations, even in the midst of an unprecedented accountant shortage. The number of CPA candidates is the lowest it's been since recording began, and 87% of businesses say they find it increasingly hard to recruit accountants they need. Bloomberg doesn’t mince words when it says “the accountant shortage threatens capitalism’s future.” 

That’s because finance operations have never been more onerous or complex. The rapid adoption of digital payments has supplemented the traditional payments stack with a plethora of new ways to pay and be paid, and transaction volumes have simultaneously skyrocketed. PwC reports that there has been a 42% increase in global cashless payment volumes, and it’s expected to further increase by more than 80% by 2025, from 1 trillion transactions to almost 1.9 trillion. 

This transformation in the payments space has created insurmountable challenges for finance teams at fast-growing businesses, who rely on spreadsheets and manual processes to manage massive volumes of payments data that is fragmented across disconnected silos. 40% of finance teams’ time is spent processing transactions and 48% of finance teams report that fragmented data is the largest impediment to them closing their books.  

Ledge’s finding that finance teams grow 20% faster than the rest of the company reflects this strain – the increased complexity and workload forces tech companies to devote more and more manpower to their finance operations just to stay afloat. 

Ledge CEO and co-founder, Tal Kirschenbaum, said: “While the digital payments space has seen considerable innovation, most finance systems and processes haven’t changed in decades. Finance professionals still overwhelmingly rely on Excel to manage their finance and treasury operations, stitching together an unbelievably fragmented stack of banks, PSPs, billing systems, databases, an ERP, and more. Highly skilled finance professionals at leading global enterprises still lack the automated tools they need to efficiently report on the most basic metrics like cash position and revenue. As our research indicates, these teams are instead forced to increase headcount with manual processes that dramatically increase the risk of material losses, expensive audits, compliance issues, and other challenges.” 

For this benchmark research, Ledge calculated the finance department staffing ratios of 120 private SaaS companies and online marketplaces in the US, from early to late-stage funding.

‘Bleisure’ travel bolstered by post-pandemic flexible working trends

‘Bleisure’, a trend of combining a work trip with leisure activities, is becoming a mainstream and sustained component of travel and hospitality demand, according to new data from global professional services firm Alvarez & Marsal

According to the survey of 3818 global travellers, close to a third (31%) have taken combined business and leisure trips in the past 12 months. When examining the reasons behind the growth, the prevailing motivation was the flexibility afforded by working schedules (41%), demonstrating the profound impact that additional versatility around working schedules, post-pandemic, is having upon holiday habits. Other motivations included the cost of living (37%), the facilities at the accommodation (36%) and availability of family or friends at the destination (31%). 

Regarding the approach to bleisure travel, only a minority (27%) indicated the preference for leisure as a precursor to a work-related trip, whilst nearly half (45%) extended their business trips with leisure activity at the end, showing a desire to unwind and explore following work commitments. Notably, bleisure trips tend to be relatively short in duration, with only 4% of respondents opting to extend their stay by five nights or more. 

Alvarez & Marsal managing director and head of travel, hospitality, and leisure, Ed Bignold, said: "The travel industry has demonstrated extraordinary post-Covid resilience, and the rise of ‘bleisure’ trips to a mainstream travel option is yet another example of how the industry has adapted and flexed to consumers’ ever-changing preferences. 

"This latest data is most interesting however, as it provides evidence that the new ‘bleisure’ demand base is both more significant than many expected and being sustained over a meaningful period of time, which therefore has implications for how travel and hospitality operators are defining their products, brands and distribution, as well as for investors and owners insofar as the CAPEX choices being made at the asset level."

IFRS' Lee White named next CEO of International Federation of Accountants

The International Federation of Accountants (IFAC) has announced that Lee White has been named to succeed Kevin Dancey as CEO. White will assume his new post in March 2024 and will be based in London. 

White, who has been with the IFRS Foundation since 2018, has more than 30 years of global executive, regulatory and leadership experience. A chartered accountant, White has most recently led the creation of the International Sustainability Standards Board (ISSB) within the IFRS Foundation and the launch of the ISSB’s first two standards in June. White is an avid champion of the role of professional accountants in driving and delivering high-quality sustainability-related disclosure and assurance. 

Before joining the IFRS Foundation, he spent nine years at Chartered Accountants Australia and New Zealand (CAANZ), including six years as its CEO, having been instrumental in the successful merger of the Institute of Chartered Accountants Australia (ICAA) with CAANZ. Earlier in his career, White was chief accountant of the Australian Securities and Investments Commission (ASIC) during which time he was directly involved in the creation of the International Forum of Independent Audit Regulators (IFIAR). 

On the occasion of his appointment, White said: “I am delighted with and humbled by the opportunity ahead. Engagement of the global accounting profession has never been more critical if society is to address many of the world’s most pressing economic and environmental issues. I look forward to leading our profession in a way that will continue to serve a vital public interest role, and also to raising awareness about the extraordinary opportunities available to accountants today.” 

IFAC president, Asmâa Resmouki, concluded: “We are very fortunate to have secured a leader of Lee’s calibre to take IFAC on the next chapter of its journey, and I would like to thank IFAC’s CEO Search Committee for their efforts in identifying the best candidate for the role. Lee’s deep knowledge of IFAC, his global business acumen and his commitment to the public interest promise to serve the profession, and indeed all of IFAC’s stakeholders, very well.”