Contribution from UNEP DTIE to the World Summit on Sustainable Development
Background
The Division of Technology, Industry and Economics (DTIE) of the United Nations Environment Programme (UNEP) is contributing to the World Summit on Sustainable Development (WSSD) with three supporting initiatives:
In addition, UNEP has joined forces with the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI) to produce a joint report on key trends that are shaping the world markets. This report contributes to the goals of the World Summit on Sustainable Development by highlighting the new mindsets needed for business to succeed in a century where accountability is to become a cornerstone of their operations
Ultimately, these efforts will highlight key policy goals for industry to progress toward sustainable development in the coming decade. You are invited to contribute to this debate and make your voice heard at the WSSD.
This report is released by the Association of Chartered Certified Accountants (ACCA) and the United Nations Environment Programme. Unless otherwise stated, all the interpretation and findings set forth in this publication are those of the Association of Chartered Certified Accountants (ACCA)
The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Association of Chartered Certified Accountants (ACCA) or the United Nations Environment Programme concerning the legal status of any country, territory, city or area or of its authorities, or concerning delimitation of its frontiers or boundaries. The contents of this volume do not necessarily reflect the views or policies of the United Nations Environment Programme, nor does citing of trade names or commercial processes constitute endorsement.
This publication may be reproduced in whole or in part and in any form for educational or nonprofit purposes without special permission from the copyright holders, provided acknowledgement of the source is made. The Association of Chartered Certified Accountants (ACCA) and the United Nations Environment Programme would appreciate receiving a copy of any publication that uses this report as a source.
First published in the United Kingdom in 2002.
Copyright © 2002 Association of Chartered Certified Accountants and United
Nations Environment Programme
ISBN: 92-807-2174-7
Sustainability profile of the Accounting industry
• Achievements
- Drawing on the same conceptual framework that underpins financial reporting, the accounting profession has contributed significantly to all key social, environmental and sustainability reporting initiatives.
- The leading accountancy bodies have established national and regional sustainability reporting award schemes, which have contributed to both improved reporting and the establishment of consistent reporting benchmarks.
- The major trans-national accounting firms have contributed significantly to the development and application of the verification methodologies needed to add credibility to social, environmental and sustainability reporting initiatives.
• Unfinished business
- To date there are no international financial reporting or auditing standards dealing directly with social, environmental or sustainability accounting, reporting or auditing issues.
- Small and medium-sized accounting firms very seldom work with corporate clients on social, environmental and sustainable development issues - to date, only the major transnational accounting firms are involved with this type of activity.
- The accounting profession could play a more prominent role in promoting sustainable development as a major strategic issue for the financial community.
• Future challenges and possible commitments
- The accounting profession should commit to introducing social, environmental and sustainable development issues into the standard educational curriculum.
- International accounting and auditing standard setters should acknowledge the importance of social, environmental and sustainable development issues by putting them on their core work agendas.
- The accounting profession should work with the international academic community to develop standardised techniques of full-cost accounting and to explore the increasingly wide variety of environmental finance opportunities that are being developed.
Foreword
The global accountancy profession occupies an important position in world trade – providing the universal ‘language of business’ (the language of bottom lines, gearing and payback) and at the same time acting as an independent referee as to the truth and fairness of published financial statements and the impartiality of public offer documents. But many people, including many in the profession itself, still see accounting and accountants as remote from any possible contact with the notions of corporate social responsibility and sustainable development. At a recent ceremony in London, where my own body, the Association of Chartered Certified Accountants (ACCA), was presented with the prestigious Queen’s Award for Enterprise, the presenting official, the Lord Lieutenant of London, when told I was leading ACCA’s social and environmental initiatives asked in surprise ‘what has the accounting profession got to do with the environment?’
He was serious.
In reading this report it is important to note that it has not been endorsed by either the International Federation of Accountants (IFAC) or the International Accounting Standards Board (IASB), the major representative and standard setting bodies for the profession. Nevertheless it has been written by an accounting insider, someone who has been intimately involved with the development of ‘green accounting’, and the review process the report has undergone indicates broad support from other involved organisations for the conclusions reached.
‘Sustainability is an ideal end-state. Like democracy, it is a lofty ideal whose perfect realisation eludes us. For this reason, there will always be competing definitions of sustainability. We know these definitions will always include the well-being of people, nature, our economy and our social institutions, working together effectively over the long-term. But as the process of attempting to achieve sustainability will continuously reveal new challenges and questions – pushing back the horizons as it were – a definitive definition is impossible.’(1)
(1) Atkinson A. (1998) The compass of sustainability: framework for a comprehensive information system
The report tries to throw a new light on the accounting profession and on accounting professionals, by detailing the work that has been done since the early-1990s in terms of identifying the roles and responsibilities of the profession, in terms firstly of environmental issues and latterly in response to the broader sustainability imperative
In common, I suspect, with other reports in this series, the results are neither half as bad as we feared, nor half as good as we had originally hoped. And even if we had done all we had been implored to do we would still not be in a position to say ‘that’s it, job done’ because sustainability doesn’t work like that. In the course of researching this report I came across the quote below which perfectly exemplifies the intangible and frustrating nature of the sustainability debate.
For those involved with environmental accounting from the inside, the path from 1992 to 2002 has been an interesting one. It is like a track that started out from well outside the conventional City of Accounting, but eventually it became a road leading to the City’s main gates. In the next few years, we shall see if the City fathers have the courage to open up those gates and embrace the sustainability debate in the fullest sense.
Executive summary
Introduction
Accountants occupy various roles in world commerce. Many accountants (of varying descriptions – financial accountants, management accountants, internal auditors, etc.) occupy vital – and often highly placed – positions in industry and commerce and in the public sector. Others work in professional firms of auditors. These firms provide auditing, taxation, accounting and a range of consultancy services to every conceivable branch of society – from multinationals to governments, from small and medium-sized enterprises (SMEs) to international charities and local non-governmental organisations. Although the accounting sector itself might be considered a relatively low-impact sector in terms of direct environmental and social impacts, it is the accountant’s involvement in the twin issues of organisational decision-making and external reporting that imposes on the accounting profession the responsibility for understanding, absorbing and articulating the implications of the sustainable development debate. The importance of the role of the accounting profession should not be under-stated. Global capital markets are heavily dependent on the intermediary/assurance role that accountants occupy – whether as auditors of listed company financial statements or as reporting accountants in initial public offerings. The continuing reverberations from the collapse of United States energy trader Enron demonstrate the intimacy of the relationship between the profession and the market. This sectoral report presents a description of the global profession in early 2002, and examines the steps that the various strata of the profession – the (several million) individual accountants working in industry or the public sector, the 150 or so professional institutes that comprise the International Federation of Accountants, the major transnational accounting firms (the ‘Big 5’), and the many small and medium sized practices, have taken in response to the emerging sustainable development debate.
As will be explored in more detail below, the accounting profession first addressed environmental issues directly in 1990(2) and, since then, progress has been achieved on many fronts. Progress is, however, contingent on the availability of an appropriate mix of resources and concern on the one hand, and the pressure from competing issues on the other. There is little doubt that the accounting profession has, at some levels, a sufficiency of tangible and intellectual resources and concern to be able – theoretically – to address social, environmental and sustainable development issues with the appropriate degree of urgency. It is perhaps the competing issues of the 1990s that have meant that progress in engaging with the sustainable development debate has not been as rapid as some would have hoped. These competing issues are ongoing and include:
• the technological revolution that has occurred in the last decade. Accountants have been deeply impacted by the internet revolution, touching as it does every aspect of their work including such issues as e-commerce, real-time reporting, Web-based reporting and new reporting languages (e.g. XBRL);
• the emergence of global and regional quality control issues – culminating for the accounting profession in the Far East financial crisis (1997 to 1998) which has, following pressure from the World Bank and others, led to a subsequent high-level focus on professional restructuring and monitoring issues. The Enron collapse, referred to above, looks set to prolong the debate over auditor independence and quality control;
• the convergence of global capital markets – which has led international (and national) accounting standard setters in both the financial reporting and auditing fields, to concentrate their resources on capital market focused convergence issues, often to the exclusion from explicit consideration of social, environmental and sustainable development issues.
(2) The choice of 1990 as a launch date for the profession’s interest in sustainability issues is deliberate as explained below. Nevertheless we should not ignore important earlier contributions such as “Accounting and Society” (Ralph W Estes 1973) and “Corporate Social Reporting” (Gray R, Owen D and Maunders K 1987), nor the public reporting activities of a number of forward looking United States and German companies.
Given the magnitude of the challenges posed by the above issues, it seems fair to acknowledge, as the Institute of Chartered Accountants in England & Wales (ICAEW) comments on the first draft of this report point out, that ‘it [the sustainability debate] is prone to inclusive political correctness and the accounting profession should not attempt to respond to all the different agendas and expectations’.
An alternative (and more challenging) view was expressed by Professor Rob Gray, director of the Centre for Social and Environmental Accounting Research at the University of Glasgow: ‘Throughout the report (it first appears in the executive summary) I would have liked to have seen more recognition that there are conflicts between good business practice and social, environmental and sustainability issues. If the new agenda can be driven entirely by what makes good business sense then the only reason we have not made more progress is because business people are stupid or otherwise distracted. This is not an entirely plausible explanation. There are issues of a social, environmental and sustainability nature for which no business case can exist – I would like us all to recognise this more often and more explicitly. While the report does recognise some of the limits to voluntary action (for example in environmental reporting) I do think that this needs to be extended. This theme appears in a number of my other comments.’
Balancing these two views of the profession’s responsibilities is a difficult task. This report tries to present an objective view of the many areas where the profession has indeed made progress, and the equally numerous opportunities where more (sometimes much more) could be done.
One important point that needs to be stressed in the executive summary is that this report does not recommend that existing financial reporting standards be merged with sustainability reporting standards. That does not mean, however, that the annual report package as a whole should not be enlarged to recognise the new realities of the information demands of the market place.
The recent reported growth in socially responsible investment indicates that such investors will in all probability have information needs that are not properly satisfied by current financial GAAP.
Positive aspects of the profession’s ten year progress since Rio:
• Developing the conceptual underpinnings for environmental and sustainability reporting. Drawing upon nearly half a century’s thinking on the conceptual framework under-pinning financial reporting, the accounting profession has been able to contribute significantly to the environmental and sustainability reporting frameworks developed by FEE and GRI respectively. The conceptual frameworks and related statements developed by accounting standard setters (such as IASC and FASB) have proved very adaptable to an alternative reporting scenario – whether environmental, social or sustainability focused.
• Encouraging environmental, social and sustainability reporting. The national and regional environmental and sustainability reporting award schemes established by almost 20 of the world’s leading accounting bodies have had a significant influence on the take-up of environmental and related forms of reporting and, due to the inclusive nature of the award procedures, have established a consistent benchmark for the quality of wider public reporting.
• Exploring corporate governance and accountability issues. Probably the first principles – based code of corporate governance to emerge after the excesses of the 1980s was the United Kingdom’s ‘Cadbury Code’ in 1992. Adopted by many countries, this code has been revisited and expanded in subsequent studies, culminating in the recent Turnbull (1999 – United Kingdom) and King (2001 – South Africa) reports, both of which embrace issues such as non-financial reporting (including social and environmental issues) and reputational risk management processes (covering ethical, environmental and social risk issues). The accounting profession has been deeply involved in the development of these governance codes.
• Expanding the boundaries of accounting. The accounting profession has been centrally involved – as one would expect – in the development of new areas of accounting, areas that are increasingly seen to be important tools in the drive for sustainability at the corporate level. A subsequent section of this report will deal with this issue in more depth, but particular issues where progress has been made include:
- environmental financial accounting (for external reporting to financial stakeholders),
- environmental management accounting (for internal decision-making and reporting purposes),
- sustainability accounting (accounting for the social, economic and environmental aspects of decision-making).
• Developing appropriate verification methodologies. The major internationally based accounting firms have moved swiftly to develop verification methodologies appropriate to the new forms of corporate reporting. Shell, for example, might have found it more difficult to recoup its reputation subsequent to Brent Spar and Nigeria, had it not been for the global coverage and global reputation of Pricewaterhouse Coopers and KPMG, the joint verifiers of Shell’s annual Report to Society.That said, the verification approaches developed by the accounting firms and their non-accounting profession rivals have been criticised for saying too little about real performance.
• Influencing corporate behaviour. A significant part of the sustainable development role that the accounting profession plays reflects the consulting and advisory roles of the professional firms – especially the so-called ‘Big 5’. Despite the business risks involved, these large accounting firms have recognised the need to create multi-disciplinary teams and contribute financial and intellectual resources commensurate with the need of the multi-national companies they service.
• Contributions outside. The accounting profession has contributed significantly to initiatives originating from outside the profession. Examples include: - the UNCTAD/ISAR environmental accounting programme, which has undertaken training in a dozen developing or transitional economies; - the sustainability reporting guidelines of the Global Reporting Initiative (GRI) – covering both the conceptual framework, boundary issues and verification aspects of sustainability reporting - where both the Canadian Institute of Chartered Accountants (CICA) and the Association of Chartered Certified Accountants (ACCA) have provided substantial long-term financial resources.
Negative issues – issues requiring more positive thought.
Despite the very specific positives reported above (and developed in subsequent sections) there remain some concerns regarding the profession’s contribution to the post-Rio agenda. These include:
• Lack of global standard setter involvement. To date, with the exception of IAS 37 which uses a few environmental scenarios to illustrate the practical accounting for liabilities and provisions, there are no international financial reporting or auditing standards dealing explicitly with social, environmental or sustainability accounting, reporting or auditing issues. An International Auditing Practice Statement (not quite as authoritative as a standard) The consideration of environmental matters in the audit of financial statements was issued by the International Auditing Practices Committee in 1998, and a potential standard for the verification of environmental reports is under review by the International Audit and Assurance Standards Board (IAASB) at present.
• Failure to sell environmental issues down below the Big 5 – to small practitioners and SMEs. At the multinational level of engagement, the accounting profession – largely represented by the Big 5 accounting firms – has a good record of working with corporate clients on social, environmental and sustainable development issues. Further down the size scale, however, as we approaches smaller and medium-sized entities, there is less evidence that accounting firms – or institutes – are taking these issues sufficiently seriously. As CICA has noted, however, even within the Big 5 firms, real engagement with sustainability-related issues may be limited to relatively small specialist groups.
• Accountants fail to join up with other groups – such as environmental economists – to develop appropriate environmental costing techniques. It is noticeable that many of the advances in environmental accounting – particularly at the management accounting and strategic sustainability accounting levels – are being carried out by non-accounting based organisations.These include the United States Environmental Protection Agency (EPA – United States) and the Tellus Institute (also United States), Forum for the Future (FoF – United Kingdom), the Japanese Environmental Protection Agency and the World Resources Institute (WRI – United States).
• A new expectation gap on assurance issues. The experience of developing an assurance framework for sustainability reporting (through both GRI and FEE) has demonstrated that – despite the very positive contributions the profession has to make on both the technical and conceptual aspects of assurance provision – there is a danger of a new expectation gap related to independence and competence issues. The accounting profession should not assume that its statutory monopoly of the financial statement audit and attest function can be extended unopposed into the area of assurance provision for environmental, social and sustainability reporting purposes. In such areas, the stakeholders’ groups are different – and possibly more vocal – and have different expectations regarding consultation and involvement when contrasted with traditional shareholder groups.
• Failure to recognise environmental sustainability issues as major strategic/ financial issue that should engage capital market participants. Despite its intimate involvement with private sector reporting entities and its upfront acknowledgement of the importance of environmental issues, the accounting profession itself has failed to make a significant impact on the views of the financial community – especially the investment analysts and fund managers
• Failure to advance the business case for environmental and sustainability management. One result of the failure to sell environmental issues throughout the firm/profession, is that accountants are all too infrequently involved in making the business case for environmental or sustainability management initiatives.
• Lack of close relationship between accounting function and environmental function. Despite an improving sustainability reporting track record, industry itself still fails to convince when it comes to integrating and reconciling the roles of the internal sustainability team on the one hand and financial/managerial accounting function on the other.
• Little involvement at in-house level Based on the survey outcomes reported in Part 3, accounting firms and institutes have generally proved poor at implementing the sort of environmental procedures and controls that they themselves often recommend to client organisations.
Future potentials/ headline issues
The section below summarises the main conclusions of the report under a series of functional headings. Because of the timescale involved in implementing the majority of the recommendations made below, the conclusions amount, in effect, to a long-term roadmap directed at taking the profession forward to Johannesburg + 10 – or Earth Summit 3 in 2012.
The recommendations are directed at every aspect of the profession – from the global representative bodies to individual accountants in industry and commerce, to partners in trans-national accounting firms; from financial reporting to sustainability accounting; from corporate governance to accounting education. In other words, there is something for everyone.
It is the hope of the author that the ‘future potentials’ outlined below can form a central part of a future debate within the profession as to their respective importance and priority.
1) Environmental cost and liability disclosures in the annual report and accounts of public companies (environmental financial accounting).
• Despite a great deal of grassroots activity in the environmental accounting area, private sector accounting standards setters at the international (IASB) and national levels have generally chosen to avoid dealing directly with the topic of environmental issues in financial reporting. The recommendations of the UN ISAR group and the EC represent worthy attempts by non-accounting organisations to fill the gap and should be taken forward by IASB and national standard letter.
• Concerned professional bodies and the regional accounting organisations should put pressure on the IASB to add the issue of environmental financial accounting and reporting to its agenda. In particular, the 1998 FEE memorandum, to the (then) IASC, demonstrating how environmental issues could be integrated into individually relevant financial reporting standards, should be re-assessed. A free-standing advisory document – based upon the FEE memorandum – would probably satisfy many of those currently calling for greater IASB involvement.
• When reviewing potential environmental disclosures, standard setters should consider the applicability and widespread use of the financial materiality concept. In view of the wider stakeholder group now interested in corporate annual report disclosures, the information content of disclosures of environmental expenditures, fines, penalties and benefits may override conventional notions of materiality.
2) Environmental risk management and strategic issues disclosed in the annual report and accounts of public companies (environmental financial accounting/ corporate governance).
• In view of recent (CSR/SRI) developments in the financial marketplace, accounting standard setters should take a broader review of their remit vis ŕ vis financial statements, and require an explicit consideration of social and environmental issues as part of management’s regular overview of the business.
• Accountants generally need to become more aware of the impact that social and environmental issues can have on their risk assessment exercises – this awareness gap needs to be dealt with through the educational and continuing professional development processes.
• The accounting profession – which has been centrally involved in the development of contemporary attitudes towards corporate governance – should seek to understand and incorporate social, environmental and sustainability related issues into national codes of corporate governance.
3) Identification and allocation of environmental costs (and cost drivers) and benefits within internal accounting systems (environmental management accounting).
• Significant advances in our understanding of environmental costs and strategic cost management have been made, but unless environmental management accounting is addressed at the global level by the International Federation of Accountants, or by the regional accountancy groups such as FEE, the accounting profession is in danger of relinquishing responsibility for environmental management accounting issues to non-accounting groups.
• More needs to be done to convert the environmental management accounting experiences of the last decade into formal education and training materials for the next generation of management accountants. Similarly, there is a need to provide continuing education to already qualified accountants in industry and commerce who fall outside the mandatory continuing professional education requirements of the mainstream accountancy bodies.
4) Emissions trading regimes and economic environmental instruments such as land-fill taxes (environmental finance/financial management).
• The financial accounting and reporting steps under-pinning the emergence of emissions trading regimes should be thought through in the form of an accounting standard at the international level as an adjunct to (or integral part of) a revised IAS 39 (in the same way that environmental issues are explicitly dealt with – through the medium of practical examples – in IAS 37).
• The accounting profession generally is well-placed to commission research to explore the impacts of environmental taxation regimes.
5) Accounting for stocks of flora and fauna (accounting for bio-diversity) and accounting for the quantity (and quality?) of so-called ‘natural capital’ (environmental accounting)
• Although bio-diversity, and the impact of corporate activity on bio-diversity, is a subject of increasing interest, there is probably no need for any formal accounting standard or guidance in this area as yet. For relevant industry sectors – for example farming, forestry and the extractive industries – companies will respond appropriately to the disclosure demands of an increasingly alert investor community.
• At the research level, however, as an essential under-pinning for the sustainability reporting exercises with which it is increasingly becoming involved, the accounting profession should become involved in the development of inventories for bio-diversity and natural capital.
6) Identifying, measuring and reporting on the environmental impacts of organisational activity (environmental reporting).
• Environmental reporting is still practised by only a tiny minority of the world’s companies. Proponents of greater corporate accountability should not assume that environmental reporting is a ‘done deal’.
• Accountants provide a wide range of services to industry and are well-placed to encourage and assist non-reporting employers and clients to enter the environmental reporting process.
• For non-listed and smaller companies a simpler environmental reporting framework – perhaps focusing on energy, water, waste and CO2 emissions – could be linked to the taxation system to reward more efficient companies. Accountants as business advisers are well placed to assist on the reporting under these headings.
• The accounting profession has a role to play in developing a more integrated form of reporting – in which key environmental, social and sustainability indicators are presented to shareholders and other stakeholders within the statutory annual report and accounts package. This does not mean, however, that the conventional financial reporting standards framework has to change its base set of rules.
7) Identifying, measuring and reporting the social impacts of organisations (social accounting and reporting).
• The investor community is increasingly demanding CSR-based performance/ impact data. The accounting profession should not be deterred from addressing social and sustainability related issues simply because of the overtly political nature of some of the issues involved.
• Experience has already shown that some social issues are susceptible to management processes – for example, the environment, health and safety management systems. Both GRI and CSR Europe have set out relatively straightforward examples of CSR disclosures.
• Care will need to be taken in determining and prioritising appropriate items for financial disclosure purposes – reporters themselves may still wish to distinguish between reports directed at capital market participants and others.
8) Measuring and costing physical emissions and social externalities so as to compute sustainable levels of profit (full cost – sustainability – accounting).
• The accounting profession should continue to work with the corporate sector and researchers from disciplines outside the accounting field to construct a fully fledged and robust FCA investment appraisal methodology.
• The accounting profession, industry and government should consult on the extent to which sustainable cost measurement calculations and provisions could (eventually) become acceptable for corporate taxation purposes.
9) Reporting on the economic, environmental and social aspects of organisational activity (sustainability reporting).
• The major global standard setting bodies such as IASB and IFAC need to extend their respective agendas to incorporate partnership arrangements with bodies such as GRI – especially when public reporting and corresponding assurance provision provide such obvious examples of overlapping interests.
• The major global international standard setting bodies such as IASB and IFAC need to embark on an internal educational process to properly deal with emerging issues such as sustainability reporting and related assurance issues: this may entail revisiting and expanding their existing financial reporting and assurance provision frameworks.
10) Verification of environment/sustainability reports (assurance provision).
• The accounting profession should continue to use its expertise and resource to develop verification standards for social and sustainability reporting but should be seen to be as inclusive as possible in the developmental process.
• Verification partnerships marrying the resources of the Big 5 with the reputation and knowledge of relevant NGOs represent a potential model for future verification activity.
• The profession generally could become more obviously involved in management systems certification (e.g. ISO 14001 etc.).
• All the above points argue for a substantial revision to the way in which auditors are educated and trained.
11) Providing consulting services in the area of environment, sustainability or reputation issues (consulting).
• The accounting profession has tremendous potential to support industry in developing environmental and sustainability solutions. In order to remain credible in the marketplace – and in the eyes of the wider stakeholder circle – accounting firms need to ensure that they maintain their independence and objectivity at all times.
• Accounting firms could do more to internalise and publicise the work they carry out and the solutions they provide. There is a need to create a learning profession, and the major firms are an integral part of the learning and dissemination process.
12) Creating internal environmental management systems and initiating external triple bottom line reporting.
• Both at the firm level and at the institute level more could be done to both manage and report on environmental, social and sustainability issues.
• There needs to be some work on sector specific indictors for the profession.
13) Accounting education.
• The education and training regimes of prospective accountants should be modernised to reflect the importance and ubiquitousness of social, environmental and sustainable development related issues. It would be best if these issues were fully integrated into the normal accounting, auditing and taxation syllabi in much the same way as IT issues are now treated. This recommendation applies as much to university programmes as to the professional syllabi of the accounting bodies.
• The continuing professional development programmes (CPD) run for accountants by their professional bodies should also reflect the growing strategic importance of social, environmental and sustainable development related issues.
• The Education Committee of the International Federation of Accountants should add this issue to its agenda – especially as it is currently considering the development of a global benchmark accounting curriculum. For IFAC this is an opportunity to lead that should not be overlooked.
Conclusion
Accountants operate globally and across all industry sectors – they are thus well placed to argue the business case for sustainable development – once they have the tools to do so!
As of end 2001, a great deal of developmental work has already been done, and many of the requisite skills are generally available – even though considerable amounts of profession-wide training are still required. Nevertheless, only a tiny handful of professional bodies are currently using (or even anticipating using) their syllabi as a means of promoting environmental or sustainable development issues. To date, almost all the responsibility for engaging in the sustainability debate has been absorbed by a small number of professional institutes, the Big 5 firms and a number of forward-looking accounting academics.
A key issue in determining whether or not the profession can progress and take up the responsibilities for which it is well equipped, is the extent to which the key global representative bodies – the International Federation of Accountants (IFAC) and the International Accounting Standards Board (IASB) – are prepared to take a broader view of their public interest roles. The major representatives bodies of the accounting profession – the IFAC and the IASB – should add social, environmental and sustainable development issues to their core agendas as a matter of urgency.
The main areas of concern at the global level are:
• The failure to explore how environmental and social issues (and related risk issues) might be integrated into financial reporting standards generally
• The deferral of a standard on verification of environmental reports (currently on the agenda of the International Auditing Practices Committee – now renamed the International Audit and Assurance Standards Board)
• The absence of any strategic plan at the IFAC level for dealing with social, environmental or sustainable development related issues.This is probably of greatest concern in the areas of accountancy education and financial management.
This report prepared by:
The Association of Chartered Certified
Accountants (ACCA)
29 Lincoln’s Inn Fields
London WC2A 3EE
United Kingdom
Tel: +44 20 7396 7000
Fax: +44 20 7396 7070
Web site: http://www.accaglobal.com
Other reports in this series:
Accounting, Advertising, Aluminium, Automotive, Aviation, Chemicals, Coal,
Construction, Consulting Engineering, Electricity, Fertilizer, Finance and,
Insurance, Food and Drink, Information and Communications Technology, Iron and
Steel, Oil and Gas, Railways, Refrigeration, Road Transport, Tourism, Waste
Management, and Water Management.
source:
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