Time to Act: The Accountancy Profession’s Contribution to the Sustainable Development Goals
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The recent agreement between all 193 UN member states on the 17 Sustainable Development Goals (also referred to as the “Global Goals”) demonstrates a widespread political commitment to dealing with some of the world’s most intractable problems.
For 200 years or more, globalization and industrialization provided many societal benefits. They have also led to sustainable development dilemmas, including inequality and social challenges in the supply chain, climate change, and other ethical and moral challenges. The Goals set targets to enable us to respond to these challenges and, as such, represent an agenda for people, planet, and prosperity.
The Goals clearly position sustainable development as a global challenge, and they are as relevant to developed economies as they are to the world’s least developed and most disadvantaged. According to a study by the German Foundation Berteslmann Stiftung, the countries most well positioned to achieve the Goals are Sweden, Norway, Denmark, Finland, and Switzerland. Conversely, some OECD member states—such as the US, Greece, Italy, South Korea, and Turkey—have relatively weak rankings. For example, the US has much to accomplish in terms of the Goals on ending poverty, improving nutrition, and adapting to climate change.
The role business plays in achieving the Goals is equally critical as the role played by governments, non-governmental organizations, civil society, and philanthropies. Some of the problems the Goals address were caused by capital markets’ predominant focus on delivering short-term financial results, often at the expense of long-term societal and strategic risks. In addition, sustainable development challenges—including ethical challenges, such as corruption—largely arise from political and capital market failures.
Some corporations are stepping up and specifically highlighting their contributions. For example, Ericsson addresses the role of information communications technology as well as its own specific role in helping to reach each one of the Goals.
It is crucial for the accountancy profession to also consider its contribution, directly and indirectly, to achieving the Goals. We need to articulate how accountancy and the profession currently facilitate achievement, and where there is room for improvement. One step in the right direction is to build on a strong and diverse profession that can continue to develop professional accountants with the relevant skills and awareness to contribute to sustainable and resilient organizations, capital markets, and economies.
A number of IFAC member organizations are considering their contributions to the Goals. To help all professional accountancy organizations (PAOs) consider their purpose, strategies, and plans in this context, we highlight the most relevant Goals below and how we are already contributing to each.
Our profession will benefit from an open and continuing dialogue on how we can collectively help achieve the Goals. Please share your views and perspectives on how we do—and can—contribute to the Goals in the comments section below.
How the profession is contributing
- By meeting the global demand for accountants with a range of skills—technical but also increasingly leadership, business, and entrepreneurship-related skills. Providing relevant professional education and skills is at the heart of the profession.
- By providing continuing development to accountants throughout their careers, helping them maintain relevance and a positive contribution to sustainable outcomes.
- By enabling accountants to support sustainable outcomes by incorporating sustainable development into accountancy education, and delivering continuing global support to facilitate accountants’ participation in sustainable business practice.
- IFAC’s recent study, Nexus 2: The Accountancy Profession—A Global Value Add, shows how accountancy is strongly linked to prosperity and improved living standards. It highlights the scale of the profession’s importance to the global economy, particularly in terms of strengthening accountancy capacity in developing economies, where accountants have a significant role to play in strengthening the institutions and architecture that will improve people’s lives (this also supports other Goals, such as 10: Reduced Inequalities)
- Creating opportunities for people to become accountants provides direct support to the development of regional, national, and local economies.
- Accountants enable and facilitate investment in infrastructure and confidence in financing by providing key services in financial and corporate reporting/analysis, due diligence, business advice, and anti-corruption/money laundering activities.
- Better accounting for infrastructure, involving the proper valuation and recognition of assets, facilitates better utilization of those assets. Corporate reporting can also facilitate long-term investment, especially in infrastructure. As the B-20 Infrastructure and Investment Taskforce report recommended last year, enhanced corporate reporting through integrated reporting is essential to re-balance economic and capital market decision making in favor of long-term value creation and investment.
- The profession’s role in developing and supporting globally accepted standards for financial reporting (for both the public and private sectors), auditing, and ethics also assists in facilitating trans-border investments and transactions by ensuring common practices across the globe. Specifically, the profession’s Accountability. Now. campaign, supported by a broad coalition, is raising awareness of effective public sector financial management and accounting, facilitating partnerships, and supporting capacity building.
- Through relevant professional and business skills, accountants provide decision-useful insight and analysis to decision makers, high-quality corporate reporting, and credibility through audit and assurance services. Ultimately, the profession has a significant role in ensuring well-governed and -managed organizations and institutions that can serve society and thrive over the long term.
- Goal 12 is likely to also place a new demand on enhanced corporate reporting, and a new level of transparency that needs to demonstrate:
- How corporate objectives/activities contribute to sustainable development goals;
- Material risks, opportunities, and impacts, and their ability to create value over time; and
- A net-positive contribution to the environment, economies, and society instead of being “less bad.”
- The profession has been proactive in highlighting the significant contribution accountants make in helping governments, capital markets, and organizations implement plans for climate change mitigation and adaptation. At the global level, IFAC submitted a letter of support to the UN Framework Convention on Climate Change as it facilitated a new international agreement on emissions reduction targets leading up to the 21st session of the Conference of the Parties in 2015.
- Deploying their skills to climate change adaptation and mitigation, accountants can help make significant progress. Accountants can, for example, establish appropriate targets and goals for emissions management and abatement, supported by objective data and insights, to help organizations thrive over the long term. In certain roles, accountants could have specific responsibilities in relation to delivering accountability against climate change targets. For example, supreme audit institutions in particular play a major role in holding governments to account.
- The profession upholds the highest ethical, governance, and professional standards and as such can positively influence organizations in public and private sectors through their own behavior and actions in the various roles that they perform. Accountants apply professionalism and ethical behavior in their work in accordance with the Code of Ethics for Professional Accountants™.
- Financial reporting based on accrual accounting helps governments and public sector organizations develop policies and programs that deliver sustainable, resilient public services and stronger economies (see “Incomplete Public Accounting threatens Africa’s Welfare and Growth,” Financial Times, January 20, 2016). Effective governance and financial management in the public sector leads to informed decision making and reduced fraud and corruption, and ultimately enables foreign direct investment.
- Strong partnerships and collaboration are the most important ingredient in achieving the Goals. IFAC and the profession work with, and through, others to make an effective contribution to the Goals. Important partners include:
- Regulators, thereby ensuring regulation facilitates rather than hinders the contributions of the profession and business, and enabling investment to achieve desired outcomes;
- PAOs, thereby contributing to strong country systems to attain sustainable organizations, markets, and economies;
- The World Bank and other development agencies, thereby contributing to the financing and investment of the development of the accountancy profession;
- The Natural Capital Coalition and Protocol to identify, measure, and value natural capital so that it is visible and understood when making decisions. This also enables the accountancy profession to contribute to other Goals, including 15: Life on Land and 14: Life Below Water;
- The Prince of Wales’s Accounting for Sustainability Project to work with CFOs and PAOs on sustainability and sustainable development; and
- The International Integrating Reporting Council to achieve an integrated approach to corporate reporting, enabling better quality, more meaningful reporting that acts as a catalyst for behavioral change and long-term thinking.