CAs will bring about lasting change by embracing sustainability
Anne Adrain, Head of Sustainability and Assurance, says now is the time for CAs to spread their ESG skills throughout the business sector.
Environmental, social and governance (ESG) concerns are mainstream and critical to business success. Yet, despite the speed with which customer and investor thinking has evolved, many firms haven’t adapted accordingly. That’s where CAs come in. Occupying advisory roles and other positions of influence, CAs are key to communicating why sustainability must be embedded in decision-making. But that requires CAs themselves to stay on top of new regulatory developments and prevailing social attitudes.
A common criticism is that it’s not always clear how sustainability relates to business activity. It was often relegated to a glossy document, more marketing than corporate reporting. That’s all about to change. The fragmented landscape of sustainability reporting is becoming more closely aligned – and we can expect it to be on an equal footing with financial reporting in the coming years. In late 2020, five global sustainability groups announced their combined intention to work towards a more comprehensive corporate reporting landscape. The IFRS Foundation also revealed it was consulting on the establishment of a Sustainability Reporting Standards Board to sit alongside the IASB.
Crucially, one key factor behind the sudden buzz of regulatory activity is the sustained pressure from investors for clarity. As the issue of ethics climbs up the corporate agenda, investors are increasingly being asked by fund managers to share the extent to which they are policing the ESG credentials of their investment destinations. The lack of compatibility across reporting frameworks has added an unnecessary layer of difficulty in identifying the parts of investment portfolios that are truly sustainable. And many CAs working in financial services will have been frustrated by the disconnect between good intentions and good outcomes.
As sustainability reporting continues to harmonise and it becomes easier to monitor, disclose and compare corporate performance in the area, CAs will be able to leverage their skills and experience in new ways. As a business leader, you need a clear understanding of the risks and opportunities your organisation will face in the future. ESG is no different. You need clear information on the locations you operate in, where your employees are based, the security of your supply chain, and so on. And the pandemic has demonstrated that ongoing social injustices have strengthened a desire within business to be seen to be acting responsibly and inclusively.
The CA’s role fits well within the widening remit of business. At the heart of the profession is a sense of scepticism – a desire to challenge information and ensure it’s as robust and reliable as possible. That ethical responsibility is equally important when it comes to ESG. CAs have a duty to be associated with credible and genuine information. By applying the skills and knowledge they gain, CAs can inspire confidence in colleagues and investors on sustainability.
But there is a risk of a skills gap opening up. For CAs to perform their best and help firms embed ESG in decision-making, ongoing training is necessary. Accountants are no strangers to the importance of continuing professional development, but the speed with which sustainability has become a mainstream business issue has meant many CAs will need to dedicate additional time to sharpening their skills. That goes beyond technical competence, too. CAs must be aware of developments that may affect business viability and their particular sphere of responsibility, including changes in societal expectations and customer behaviours.
ICAS has a duty to support you through that process. For students, we are discussing how to embed sustainability-related content in all areas of the qualification. For existing CAs, we provide relevant training, guidance and resources. Getting up to speed in the area can be as simple as watching our webinars or reading articles on the ICAS website. And, more broadly, ICAS engages with standard-setters and policymakers to ensure that members’ views are represented in the global debate.
The campaign for greater sustainability has now gathered enough momentum to bring about long-lasting changes to the ways we live and do business. By welcoming the chance to enhance their skills and breadth of knowledge, CAs can build on their well-earned reputation as one of business’s most trusted voices.