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Financial & accounting goals for sustainable corporates

Governance, financial reporting and KPIs in procurement and the supply chain are all key areas where financial and accounting professionals can make a difference to their organisations and to the wider society. A report by the Chartered Global Management Accountant (CGMA) and the Association of International Certified Professional Accountants (AICPA) outlines some of the integrated ways of thinking and reporting that financial professionals and their teams can adopt as part of a sustainability strategy. The report, Creating a Sustainable Future: The role of the accountant in implementing the sustainable development goals, states: “The areas accounting professionals can influence range widely, from developing new programmes of activity to evidencing major successes, highlighting risk and proposing alternative courses of action.”

It adds that “there are new reasons for CFOs and their teams not only to identify and understand the implications of wider ESG information but also to apply such analysis in decision-making.” The report's content is useful for accounting and finance professionals who wish to engage their board in discussions about the Sustainable Development Goals (SDGs) within their company's business model – see below for a reminder of the topic areas covered by the 17 SDGs

Some of the main points for CFOs, treasurers and accounting professionals in the report include:

  • Stakeholder attention to wider sustainability issues is growing fast – so while ESG issues may not be a current focus within data collection or integrated into strategic programmes, this needs to change.
  • The need for greater accountability, internally to help guide strategy and related decision-making, as well as from regulators, investors and wider society, means that the demand for ESG data is set to increase significantly.
  • A report by the Business & Sustainable Development Commission (January 2017) suggests the SDGs could generate US$12 trillion in business savings and revenue by 2030, across the four sectors of energy, cities, food and agriculture, and health and wellbeing.
  • It also estimates alignment of business strategy to the SDGs could lead to the creation of 380 million new jobs linked to these four sectors in the next 10 or 15 years.
  • Accountants’ end-to-end view of an organisation’s business model and their access to technological systems makes them perfectly placed to introduce the conversations and report on the opportunities and delivery of value that the SDGs bring. The same goes for those in the financial/treasury function.
  • Technological innovation is enabling organisations to combine internal data with publicly available sources and use analytical tools to make sense of their impact on the world’s resources. Accountants and financial professionals should endeavour to build knowledge of these developments.
  • Outsourcing is growing, and global supply chains are increasingly complex and far-reaching, so organisations also need to be mindful of the potential impact their procurement practices can have on suppliers. Taking a longer-term approach can instil good practices, particularly in small and medium enterprises (SMEs), while identifying suppliers with trusted reputations and sustainability credentials can limit risk.
  • Professional accountants also have two key roles when it comes to human rights: working with relevant business functions to develop KPIs to help the organisation determine how it respects human rights in all its activities; and establishing and agreeing on management-reporting systems addressing non-financial issues such as human rights within the chain.

Top focus areas for accountants

Furthermore, the report outlines these top five SDG focus areas for management accountants:

  1. Governance: Poor governance is one of the main barriers to economic transformation. This must change. All management accountants, from entry level to the CFO, can apply their Code to this end, driving transparency and accountability and enabling and coordinating efforts in relation to the Goals.
  2. Partnerships: Partnerships are essential to the realisation of the Goals and business’s long-term objectives. Finance professionals have the ability to demonstrate that action through partnerships delivers added value. They can also identify ways to add further value through robust systems of accounting and reporting.
  3. Climate action: By analysing and supporting initiatives related to carbon emissions and the use of natural resources, including disclosure and reporting, finance professionals should seek ways to reduce costs while lowering emissions.
  4. Supporting innovation and infrastructure: Finance professionals need to drive public and private-sector governance and financial management to promote innovation and infrastructure. To secure the sustainability of the organisation, they need to identify and evaluate opportunities for investment in new technologies and infrastructure.
  5. Financial reporting: By working towards and reporting against a set of globally recognised accounting, audit and ethical standards, finance professionals will make information more widely accessible, understood, compared and trust-enhanced.  

This item appears in the following sections:
Sustainable Green Treasury
Sustainable Business Models
Sustainable Investing
Sustainable Risk Management
SustainableTrade

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