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The accountant’s role in business sustainability

Especially over the last decade or so, business sustainability has become more than just a fad or buzzword. A realistic sustainability policy is concerned with making a business more resilient; and, as the ICAEW explained, sustainability needs to be measured, reported and assured. The skillset of accountants makes them ideally placed to contribute to an organisation’s sustainability efforts.

Why sustainability is a top priority for clients

Business sustainability can be described as responsible business growth; making decisions with the long term future of the business in mind; but also ones that are designed to protect the natural environment, and that seek to make a positive impact in the social, cultural and economic environment.

Evidence suggests that customers are increasingly drawn to businesses that take sustainability seriously. In the US for instance, more than half of consumers say that they take into account a company’s environmental policies before deciding to do business with it. Taking a “green” approach can also help companies to reduce overheads, increase efficiency - and thereby boost profits.

Sustainability policies can also help companies to stay one step ahead of the regulators; if companies voluntarily adopt progressive measures in areas such as energy conservation and employee protection, then those companies are in the driving seat and can plan ahead better; rather than reacting to compulsory legislation in these areas further down the line. 

How do accountants have a role to play in this?

Last year, the global management accountants’ organisation, CGMA published a report focusing on how accountants can make a difference in this area. Drawing from that study, as well as an earlier ICAEW report on this topic, here are some of the reasons why accountants are ideally placed to help businesses become more sustainable…

Putting the business case for sustainability to stakeholders

Does a plan to become more sustainable make good business sense? In the short-term, a shift towards greener or more socially responsible policies might mean a bigger outlay and a hit on profits. Especially if this is also going to have a negative effect on shareholder dividends, companies may struggle to secure stakeholder buy-in to the idea.

An accountant can help organisations make the business case for sustainability. In many situations, this might involve long-term viability reporting; helping stakeholders look beyond the short-term costs associated with adopting ‘greener’ policies and realising the longer term benefits.

Reporting and disclosure

Sustainability policies can bring reputational benefits to companies. If, however, those companies are perceived to have made misleading statements and given the wrong impression on their position, this can have significant adverse reputational consequences for the company in question. 

The Volkswagen emissions controversy provides a useful example of this: in its literature, the company had claimed a strong commitment to corporate social responsibility and sustainability. When the emissions issue came to light, VW drew particular criticism for the mismatch between what it claimed and what it was actually doing in real life.

Accountants can help organisations present a transparent, accurate and verifiable picture of their sustainability efforts. A policy is only credible if the sums add up - so accountants should be seen as a natural port of call to ensure this is the case.

Identifying opportunities

Line-by-line budget analysis might reveal specific areas where greater efficiencies might be possible within an organisation. Especially in areas such as saving fuel and running ‘greener’ offices, those efficiencies might tie in neatly with a wider commitment to sustainability. In areas such as life cycle costing of proposed new capital assets, accountants can also help businesses integrate sustainability into the decision-making process.  

Partnership arrangements

A key part of a typical business sustainability policy tends to involve looking at the attitudes and practices of the third parties you work with. Do these potential partners share our values? Can they demonstrate a similar commitment to corporate social responsibility? By demonstrating a commitment to best practice these areas, accountancy firms can help to position themselves as a ‘natural choice’ for potential clients looking to do business with ethical service providers.

So as well as being well placed to help their clients develop meaningful sustainability policies, by adapting such policies themselves, accountancy firms may be able to enhance their own value proposition in the eyes of potential clients.   

Disclaimer

The content of this blog is of general interest and is not intended to apply to specific circumstances. It does not purport to be a comprehensive analysis of all matters relevant to its subject matter. The content should not, therefore, be regarded as constituting advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice. Further, the law may have changed since first publication and the reader is cautioned accordingly.

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