What contribution can accountants make to sustainability? According to Peter Bakker, president of the World Business Council for Sustainable Development (WBCSD), their contribution can be quite significant indeed. In fact, as he stated at a United Nations Conference on Sustainable Development in Rio de Janeiro, accountants could “save the world”.
But why should that be surprising? The purpose of the accountant is to ensure that rate of expenditure does not exceed rate of income, and if you expand that practice to include the environment, as well as the financial mechanisms of an organization, then it’s clear how the skills of an accountant can be pivotal in advancing the cause of sustainability.
Accounting for sustainable practices
Sustainability requires investment in more environmentally-friendly technologies, as well as the more efficient application of the technologies that are currently employed. In other words, the manner in which organizations utilize the resources at their disposal is key to achieving sustainable practices.
Since accountants seek to improve an organisation’s bottom line, they contribute to sustainability by promoting more cost-effective use of resources.
An example of this can be seen in carbon tax, a regulation adopted by countries across the globe whereby companies operating in those countries are taxed according to the rate of their carbon emissions. Consequently, they seek the assistance of accountants in incorporating methods that reduce their expenditure on carbon tax, which in turn leads to a reduction of carbon emissions.
However, Peter Bakker believes that accountants can contribute to sustainability in more direct ways. If accounting methods were to be applied to the social and environmental capital of an organization, as well as its financial capital, then industries would be better able to combine their resources to achieve more sustainable practices. He gives as an example the collaboration between transportation service TNT Express and the UN World Food Program (WFP), which led to more efficient methods of delivering food and supplies to disaster areas.
TNT generated significant social capital from its collaboration with the WFP, but this was not reflected in its financial records. The problem is that the tools and techniques for managing social and environmental capital are not as well-defined as those used to report on financial capital. If they were, then benefits such as those achieved by the TNT-WFP collaboration would be more evident, and the methods of obtaining them better documented.
This is why the WBCSD, in collaboration with the Prince’s Accounting for Sustainability Project and the International Integrated Reporting Council, has undertaken to improve the methods by which sustainable performance is measured and reported.
The transdisciplinary approach
A survey of 121 professional accounting firms in South Australia found that there was an increasing demand for recruits that were educated in issues pertaining to sustainability.
Furthermore, the research found that accounting firms wanted their recruits to be capable of a ‘transdisciplinary approach’; in other words, able to collaborate with professionals from other industries.
Carbon tax is an example of where such an approach could be beneficial. Accountants do not possess the full breadth of skills, knowledge and experience required to have complete understanding of the issue, so incorporating the expertise of engineers, who will have a deeper understanding of the physical mechanisms that play a role in carbon emissions, would assist them in advising their clients.
Researchers from the Centre for Accounting, Governance and Sustainability (CAGS) found that leading German companies are making increasing use of the transdisciplinary approach when tackling issues pertaining to carbon accounting. It’s believed that collaboration between professionals from the accounting, engineering, science, and research fields will be essential in promoting future environmental sustainability.
Read our guide to TAFE courses in Australia.