Time for Accountants to Save the World

A sustainable and stable future requires business entities to look beyond profits and governments to do more than just increasing Gross Domestic Profit (GDP). The current circumstances require chartered accountants and audit firms to understand the importance of their involvement in the development of a sustainable future, according to Peter Bakker, president of the World Business Council for Sustainable Development.

In 2012, during United Nations conference on sustainable development held in Rio, Peter Bakker said that accountants will be the ones that will save the world from adverse impact of climate change. He pointed out that how actual change would be brought by reconfiguration of thousands of decisions which business managers, the public sector organizations and NGOs make every single day, all across the world. In order for them to continue to do what they have been doing for past several years, it is important to not only understand the benefits and costs of those decisions in financial terms but also their impact on environment.

Bakker, CEO of the World Business Council for Sustainable Development, is very happy that his opinions and beliefs are reaching thousands of people with every passing day as they have become far more mainstream than they were when he first spoke in the conference at Rio about nine years ago. He further said that when you look around you realize that a lot of good progress has been made. For instance when he outlined his thinking in an article in 2013, the social and human capital protocol and the natural capital protocol had not yet been designed but now they are there. Back then nobody had even thought about the Task Force on Climate-related Financial Disclosures (TCFD). 

He also said that good progress has been made but the question here is that have accountants actually lead the way, in saving the world? The answer would be no as we haven’t seen enough progress.

Bakker has warned that many people in the accounting profession accounting companies feel that it would be best if non-financial information with regards to sustainability issues are looked upon and reported by the sustainability department. Baker feels that the accountants haven’t done enough with regards to integrating sustainability into the accountancy profession.

How Accountants Will Save the World?

Peter Bakker has a crystal clear vision for the accountants and the accountancy profession. According to Bakker, people don’t consider his thinking that accountants will save the world as wild and crazy as they used to see it way back in the year 2012. He expects that when the time of UN Climate Change Conference 26 comes, TCFD will move closer towards a mandatory framework in a number of different countries all across the world. IFRS is discussing the prospects of having a Sustainability Standards Board in place. This is the first step which the accountancy profession has taken with regards to integrating sustainability into the existing accounting system. Once this step gets done than next step would include establishing accounting rules with regards to reporting on the aforementioned stuff.

Bakker also thinks that it’s highly critical for the profession to start understanding that how new accounting standards and practices will significantly change decision-making but till now no there has been no discussion or conversation in this regard.

He also said that time has come for the younger generation of qualified chartered accountants to lead the way. Chartered accountants in between the age of 25 and 40, then they are relatively young into their careers. He feels that accountants in the aforementioned age bracket are pretty well aware of the expectations from businesses now-a-days as well as the challenges the world is facing currently. He believes that the new generation can use their energy to really be part of the process of changing the rules and brining positive impact with regards to how things are being done in their organizations as well as in the accounting profession globally.

He summed all of this by using analogy of a car manufacturer for which he recently worked with. Currently, the said company has more than 3000 engineers working for it. All the engineers are currently working on improving the internal combustion engine. However, all these people clearly know that, before the end of this decade, this is a dead-end street. They need to explore unique and completely new ways of re-inventing themselves and the same can be said for the accountancy profession. 

He believes that accountants are pretty much in the same position. The changes that will require all business entities to think and act beyond accounting and finance are now inevitable. He says that these changes will happen and governance expectations will change as well with them. Capital Markets have started asking some really point questions from Chief Financial Officers (CFOs) regarding the climate change.

The job of an accountant is not just to provide financial and other information and hope that somebody else takes action on the basis of that information. If accountants take this advice on board, then not only will they play a lead role in saving the world, but they will also save the profession from the now obvious fate of the combustion engine.