Accounting for the future in Australia and beyond
Accounting and sustainability are inseparably linked says Professor Carol Adams CA, who considers herself a citizen of the world.
Last time we spoke, Professor Carol Adams CA was in her office in Melbourne, Australia. This time she’s in an apartment in Durham, UK. Next time, who knows? She has lived in Germany, Australia, Bermuda, England and Scotland, and worked in countless other parts of the world. She is never quite sure where her career will lead her, and Carol is perfectly comfortable with that.
“Where am I from? All over really,” she says. “My father was in the Merchant Navy so we travelled a lot, but I primarily grew up in the Bermuda, England and Scotland.”
“Fourteen years ago I moved from Glasgow, where it rains quite a lot, to Melbourne. The idea of bringing up kids in Australia was very appealing and we thoroughly enjoyed our time there.”
In Australia Carol, an ICAS member, took a job as a Professor of Accounting at Monash University. Here she continued the research that has been a theme of much of her career - sustainability and accounting. She is now a member of the Sustainability Committee at ICAS, further developing, focusing and promoting the vital connection between numbers and effects.
What does the ICAS Sustainability Committee do?
“It is a group of experts from different walks of life, not all accountants. We track current developments and figure out what they mean for business and for accountants, in order to inform the profession.”
In the industry, is there a good understanding of the relationship between accounting and sustainability?
“Currently the understanding is very poor. I've talked to audiences of professional accountants about integrating sustainability into accounting, reporting and business practices. I've asked how many of them are involved in the sustainability accounting and reporting initiatives in their organisations. For every 100 people, only a few put their hands up.”
Is this a serious issue?
“I find it quite alarming. Look at the things accountants do. For example, they provide information to help managers make decisions about capital investment projects. It might be a project to build something or different options between different types of infrastructure etc. In providing that information, accountants absolutely must be aware of the social and environmental impacts of the various options for different capital investment projects.
Accountants absolutely must be aware of the social and environmental impacts of [their work].
“In talking to most accountants, I don't sense that they know much about that at all. But if they're not aware of what those consequences, impacts, opportunities and risks could be, then they can't provide the information that managers must have in order to make important decisions. That potentially has a serious business consequence.”
What knowledge do accountants need around this?
“They need to know what managers require in order to make a good decision. They need to understand how you go about collecting information, how to identify what information is important, and how you might make trade-offs between environmental and social issues. These things are really important to value creation, to avoiding increased costs down the road and to avoiding reputation damage.”
How much influence does the business have on whether an accountant is empowered to provide such information?
“That shouldn’t matter. If you think about what is needed to make a good business, it's about being able to identify risks and opportunities. It's about having a strategy that's relevant to the external environment, having good managers and being able to think long-term. That means accountants must be able to think broadly about a range of issues.
It's about having a strategy that's relevant to the external environment.
“They have to be good at problem solving and that's not just whether the books balance. An accountant is supposed to be thinking about the underlying substance of transactions. You have to be able to engage people in thinking about how you can improve accounting information for decision making. That's a skill you need to have.”
Are things changing?
“I think so. There was a perception years ago that accounting was only for those who wanted to earn a lot of money. It was quite acceptable and standard to have a very blinkered view of the world. Young people today are not like that. Financial reward has a lower place in their priorities and they're much more aware of a range of global issues than the people I trained with. I think they're looking for something different in an accounting career.”
So accountants must change with the times?
“Yes. The world is changing and businesses need to be aware of its trends. A lot of those trends are driven by environmental issues, by climate change, by issues around water scarcity, food scarcity, energy security etc in many parts of the world. What do all those things, including growing middle classes, mean for business? Accountants need to be aware of that. That’s the first step in being able to provide the right information to businesses.”