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The accountant’s role in business sustainability

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

Why sustainability is a top priority for clients

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

Evidence suggests that customers are increasingly drawn to businessesthat take sustainability seriously. In the US for instance, more thanhalf of consumers say thatthey take into account a company’s environmental policies before deciding to dobusiness with it. Taking a “green” approach can also help companies to reduceoverheads, increase efficiency - and thereby boost profits.

Sustainability policies can also help companies to stay one step aheadof the regulators; if companies voluntarily adopt progressive measuresin areas such as energy conservation and employee protection, then thosecompanies are in the driving seat and can plan ahead better; rather thanreacting 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 howaccountants can make a difference in this area. Drawing from that study, aswell as an earlier ICAEW report on this topic, here are some of the reasons whyaccountants are ideally placed to help businesses become more sustainable…

Putting thebusiness case for sustainability to stakeholders

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

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

Reportingand disclosure

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

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

Accountants can help organisations present a transparent, accurate andverifiable picture of their sustainability efforts. A policy is only credibleif the sums add up - so accountants should be seen as a natural port of call toensure this is the case.

Identifyingopportunities

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

Partnershiparrangements

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

So as well as being well placed to help their clients develop meaningfulsustainability policies, by adapting such policies themselves, accountancyfirms may be able to enhance their own value proposition in the eyes ofpotential clients.   

Disclaimer

The content of this blog is of generalinterest and is not intended to apply to specific circumstances. It does notpurport to be a comprehensive analysis of all matters relevant to its subjectmatter. The content should not, therefore, be regarded as constituting adviceand not be relied upon as such. In relation to any particular problem whichthey may have, readers are advised to seek specific advice. Further, the lawmay have changed since first publication and the reader is cautionedaccordingly.

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