LEAD STORY
Accountants Find Their Role in Creating a Sustainable World
It’s the start of a new year, which often means new resolutions for personal improvement. People pledge to lose weight, hit the gym, spend more time with family or learn a new skill.
But in the modern business world, many resolutions for improving the workplace environment or a company’s overall performance have to do with the concept of “going green.”
Resolving to do right by the environment has been in vogue for at least a few years now, and the time has come to develop a way to quantify the success of the various improvements and innovations designed to push sustainability. That’s where accountants come in.
In October the AICPA launched a sustainability initiative with a personal video message from HRH Prince Charles of Wales.
Prince Charles launched the Accounting for Sustainability Project in 2004. Part of that project has involved coordinating a network of international accounting bodies, including the AICPA, for the following purposes (according to the official website of the initiative):
To create an open, cross border network, where members can share knowledge and collaborate on accounting for sustainability-related matters.
To promote the Accounting Bodies to use their collective spheres of influence to promote A4S and the use of connected reporting to their members and communities, and;
To build the membership of the network globally.
“One of the things that we’re saying is that everybody will have a role to play as sustainability becomes increasingly important,” said Ken Witt, AICPA Technical Manager and liaison to the AICPA’s Business & Industry Executive Committee (BIEC). The BIEC is responsible for helping to shape the role of CPAs in sustainability.
“The job of CPAs in business will be to make the connection between strategy and sustainability, and also to provide the measurement for accounting and reporting on sustainability and performance,” Witt says.
Meanwhile, for CPAs in public practice, their mission will be to provide client services related to sustainability initiatives, and also to provide assurance on company sustainability reports.
“The AICPA initiative has two primary thrusts,” Witt says. “One is to have a seat at the table and be in a position to influence the development of universally accepted standards and frameworks. And then, to provide the education information and resources to its members to help them to implement sustainability initiatives that add value to their companies and clients.”
In December, Witt and Arleen Thomas, AICPA Senior Vice President represented the AICPA at an Accounting for Sustainability Forum held in London. Representatives of more than 20 organizations at the forum agreed to form a committee that would oversee development of an integrated reporting model. The model would connect reporting of organizations’ strategy, risk and financial and sustainability performance.
The AICPA also joined the Accounting for Sustainability Project and 12 major accounting institutes around the world in an open letter to those attending the Copenhagen Convention on Climate Change last month. The letter called for the development of universally accepted accounting standards that would provide relevant financial reporting information on climate change.
The AICPA’s various efforts to bring accountants into the world of sustainability are still in their early stages. They are concentrating now on increasing participation in international forums like the Accounting for Sustainability project and the Climate Disclosure Standards Board. With a new website in the works, and by publishing journal articles, the committee hopes to raise awareness about the role of the CPA in sustainability, and provide educational resources to help members develop expertise in this emerging area.
“I think there’s just been a general increase in interest in sustainability by investors and consumers,” Witt says. “Also, there are many companies that are taking a leadership role and influencing their supply chains.”
Recently, much of the focus on sustainability has been related to the climate change debate, and although there are still many who don’t believe that climate change is a real phenomenon, sustainability is about more than just climate change. Also, many accountants might be inclined to look at investments in sustainability as cost-prohibitive. However, Witt says there are a lot of instances where adapting more environmentally sound measures and sustainable practices have actually saved money and helped the future of a business.
One example is InterfaceFLOR, a carpet tile manufacturer based in Georgia. “They have made huge reductions in amounts of energy that they used, huge increases in material they’ve recycled, eliminated tremendous amounts of waste and are tremendously successful in the marketplace,” Witt said.
Wal-Mart is another example, according to Witt.
“They have saved tons of money by driving costs out of their business,” Witt said. “That’s their mantra. They have not only eliminated costs related to packaging and transportation and energy usage; they’ve developed innovative heating and cooling and waste recycling systems.”
Accountants have a significant role to play in company sustainability initiatives and will also have to help catalyze integrated reporting.
“The idea of connected reporting is to get the key sustainability information into mainstream financial statements rather than stand-alone sustainability reports,” Witt says. “What are the significant sustainability issues for a business? How is that business addressing them? What are the risks and what are the opportunities?”
He believes accountants are equipped to help answer these questions and look for solutions.
“We have a lot of expertise,” Witt says. “Especially with respect to environmental issues, there are a lot of measurement and accounting issues and analysis issues that we have the expertise to address. As investors are increasingly asking for information about company sustainability initiatives, we have the accounting and reporting expertise that will come into play.”
