The Perfect Storm
The accountancy profession is staring into the eye of a storm. Fast and fundamental changes in the political, social, and economic environment present a perfect storm. A storm which will demand the disruptors amongst us to weather it and navigate to calm waters. This article is a call to those disruptors: to come forward and offer your candid counsel. For we need to disrupt ourselves if we are to avoid being disrupted by others. We must avoid simply ‘moving the deck chairs around on the deck of the Titanic.’
Wikipedia describes stewardship as “the job of supervising or taking care of something, such as an organization or property.” Corporate reporting is an instrument or means of stewardship. And the accountant is, or can be, the steward. Stewardship is undergoing dramatic change. A long overdue makeover. There are significant developments both globally and in Europe. Last year the International Sustainability Standards Board (ISSB) issued its augural global sustainability disclosure standards, the International Auditing and Assurance Standards Board (IAASB) plans to finalize its proposed international standard on sustainability assurance later this year, and the International Ethics Standards Board for Accountants (IESBA) has just issued a consultation on new ethical benchmarks for sustainability reporting and assurance. The European Union’s Corporate Sustainability Reporting Directive (CSRD) is one of the key enablers in the EU’s sustainable transition. The CSRD stands to revolutionize corporate reporting, placing sustainability reporting (ESG) alongside financial reporting, in so doing dramatically changing, for the better, stewardship. Stewardship 2.0. In addition, the European Financial Reporting Advisory Group (EFRAG) is also consulting on sustainability reporting standards for listed SME entities and voluntary standards for non-listed SMEs. This rapidly evolving environment will therefore impact businesses of all sizes and sectors.
Sustainability - Challenge, Responsibility, Opportunity
Sustainability reporting and assurance presents an enormous challenge and responsibility for the accountancy profession – and an equally large opportunity. It offers the potential for the accountancy profession to emerge from the back-office shadows - where according to accounting historian Jacob Soll (see this IFAC video and this IFAC article) they retreated to in recent times - and be at the front desk of government policy and economic and social stewardship. In effect, accountants can be the key enablers of sustainable transition and as such the stewards of a sustainable economy and society.
IFAC, and many others, believe that the emergence of sustainability reporting and assurance is a crucial inflexion point for the accountancy profession: “We believe the accountancy profession is best positioned to lead sustainability reporting and assurance… Professional accountancy organizations (PAOs) need to be key partners in fostering skills and capacity to meet the evolving demands of sustainable business practices” (IFAC, 2023).
Small and Medium-sized Accountancy Practices
Small and medium-sized accountancy practices (SMPs) stand to play a pivotal role in this transition of the profession. SMPs are often mavericks, the true entrepreneurs of the accountancy sector, who are unable or unwilling to conform and work in larger organizations. Some academics, such as Carlos Ramirez (2009), have found they can be hard if not impossible to govern, especially by their PAOs. And yet if they are to capitalize on the opportunity SMPs will need the support of their PAOs among others: "SMPs, however, will likely need to be made aware of, encouraged to adapt, and be provided practical support to make this adaptation if they are to realise this potential" (Marin, Ortiz & Thompson, 2022).
Stewards of Sustainable Transition
How can we secure this position as stewards of sustainable transition? Well, we believe the profession needs to do what is painfully lacking in its DNA. To think revolution not evolution, to embrace rather than avoid risk, to gamble to gain. We are told zero based budgeting is best and yet we tend to simply tinker with the status quo. We think the accountancy profession needs to give a platform, a voice, to what we call ‘the disruptors’. We believe disruptors can help the profession navigate the perfect storm and position us as stewards of a sustainable society.
Disruptors: We Need You
Who are disruptors? We could have used various alternative labels. Positive ones like ‘early adaptors’ and ‘tempered radicals’. Less positive ones like ‘insurgents’ and ‘mosquitoes.’ In essence we are looking for those that challenge convention, that are not given to a ‘put up and shut up’ mentality, that offer a fresh and fearless view. An unedited view. An honest view. You know who you are. You likely are not heard nor listened to by your peers. But we will listen.
We want to interview you, especially those of you that are SMPs that have a passion for sustainability. Because we believe only SMPs that live and breathe sustainability, the true believers, can ever be partners for sustainable SMEs. In other words, to be authentic and persuasive, to be believable, SMPs have to ‘walk the talk’ themselves. As a Dutch proverb states: “The baker has to eat his own bread”.