How to account for a better world

Accountancy and finance professionals have a crucial role to play in creating, embedding and growing sustainable businesses. Sharon Machado, Head of Sustainable Business at ACCA, discusses how ACCA and its members are helping to avert the climate crisis and create prosperity by ensuring all businesses can become sustainable.  

ACCA has a practical five-point action plan to account for a better world:  

• Embed sustainability and risk management in ways of working  
• Adopt an inclusive culture - collaborate, co-create and share 
• Leverage technology – automate and use data driven insights  
• Practise ethics in creating and using sustainability information  
• Continuously learn for an evolving sustainable business landscape  

At an ACCA sustainability roundtable, a participant who is chief executive of a Dutch small and medium sized practice (SMP) said, ‘The impact of leadership is what stakeholders are really assessing. So leaders must make sustainability a strategic reason, not a compliance issue.’ That is a great way of explaining the sustainability ask from stakeholders. These stakeholders want to understand an organisation’s approach to governance, strategy and risk management. They also want to understand and see the progress that is being made: both through the metrics that the business is choosing to use and through the targets which indicate its ambition for the future.  

For organisations, particularly small and medium sized businesses – such an ask might be daunting, even impossible. But reporting standards and ACCA’s guidance to implement them come in.  Applying the standards and ACCA guidance will better support organisations to thrive, thanks to enablers of governance, risk management and operational effectiveness. 

No business or individual can create a sustainable business on their own. Creating an inclusive structure is the only way to deliver timely, positive outcomes. ACCA is urging business to apply the integrated reporting framework thinking – input, process, outputs and outcomes.  

A mutually beneficial opportunity exists for businesses and academics to collaborate. Academics need to adopt practical insights that business organisations possess, and commercial organisations need to research the technical knowledge that educational and research institutions are developing. Together, groups of businesses and academics can workshop to develop a relevant process or share data. Outputs will vary – it could be a common process, a sustainability insight, a new business model or a sector-specific risk management approach. But the outcomes should benefit business, academia and policy makers. Policy makers benefit as the output is more likely to take the form of cohesive and coherent data insights that can be used to assess the success of current policies and to develop new ones.

To build sustainable businesses the finance function will have to work closely with technology colleagues. Making progress in creating and using sustainability information will require automation - one of the issues in sustainability is the risk of organisations being overwhelmed by data which actually hinders seeing the sustainability picture clearly. It can  become a barrier to effective decision making.   

To make progress on sustainability, businesses will also need to understand and deploy data analytics. With their training and skills and their experience of sharing information across an organisation and beyond, financial professionals have a key role. The phrase that resonates is ‘collect data once, share many times’.  

To mark Global Ethics Day on 24 October 2024, ACCA will release research looking at the ethical issues facing the accountancy profession. Preliminary results from that work suggests that accountants see sustainability, AI, leadership and culture as the top ethical challenges they are wrestling with. Look out for in-depth results next month.  

It has been clear for some time that sustainability poses its own unique ethical challenges. ACCA explores these in its report Ethical dilemmas in an era of sustainability reporting.  

The key issues are: 

• Ensuring the integrity of processes and systems 
• Being aware of the responsibility towards many different stakeholders who have a legitimate interest in the issues. This includes being aware of the different levels of skills and knowledge of those who have to use sustainability information.  
• The pace of adoption required of new reporting and assurance rules, requirements and guidelines.  
• A limited talent pool available to carry out the reporting and assurance work.  
  
  

All of these challenges carry ethical threats while perhaps the underlying concern is greenwashing, where organisations make vague or misleading environmental claims about their business, operations, supply chains and products. Financial professionals have a leading role in creating and using sustainability-related information. And as it remains a fast moving and growing discipline accountants need to have their ethical codes and their independence standards front of mind, at all times. As mentioned, the ACCA report Ethical dilemmas sets out some real-life case studies, these are supported with a toolkit to identify and navigate such dilemmas. The importance of ethics for enabling real progress in sustainability cannot be overemphasised. 

The end of September sees the launch of ACCA’s new Professional Diploma in Sustainability. The diploma is a world-leading qualification that equips accountants with the knowledge and skills they need to serve as experts and leaders in the critical area of sustainability – reporting and assurance, ethics and strategy. Businesses are increasingly demanding professionals who can answer this demand – and the diploma offers rich fields of new opportunity for accountants to pursue fascinating, satisfying and rewarding career paths.  

It is clear the learning is not a one off - as the sustainability landscape evolves, so will the demands for learning. 

How to account for a better world is the number one challenge for the accountancy profession.   But with ACCA’s five-point action plan we believe we can work with finance professionals across the globe to make the real difference that business and the world needs.  

Main image: Sharon Machado, Head of Sustainable Business, ACCA