Accounting and financial professionals may remain unconvinced when it comes to understanding the risks - and opportunities - of environmental and social issues which will reshape the economy in the coming decades, suggests a report by The Prince of Wales’s Accounting for Sustainability Project (A4S).
The report, Future Proofed Decision Making: Integrating environmental and social factors into strategy, finance and operations, sheds new light on the context in which urgent work to value social and natural capital is currently taking place, revealing that senior decision makers first need to understand why these issues are relevant to Board level decision making and for the credibility of the data to be proven.
A senior manager that participated in the research explains one view, “Almost the only non-financial factor that the Board leads on is corporate reputation… Apart from that one, every single decision has to be financially-based.”
According to UNEP, the global economy depends on an estimated US$21-72 trillion of services provided by the environment - natural capital that is traditionally not accounted for in decision making or profit.
The research indicates that although some decision makers recognized that sustainability drives growth for their companies, there was still scepticism by others over the quality and robustness of many types of environmental and social data, which is preventing more widespread use by senior management.
As one chief executive interviewed explained, “The Holy Grail is a well-being impact: our contribution per unit of planetary impact. But this is incredibly difficult to grapple with.”
The report also summarises the key barriers and drivers for change and how A4S’s work in 2013 will be shaped by the need to address these concerns, along with steps organisations can begin to take now.
Part of A4S’s 2013 programme of work includes the launch of an international leadership network for CFOs. A4S will also take part in the development of a training programme for CFOs and the finance community more generally, working in partnership with the University of Cambridge's Programme for Sustainable Leadership and with WBCSD.
“There is a clear and urgent need to communicate better to senior decision makers - especially CFOs - the business case for considering the environment and society in the day-to-day running of their organisation," says Sarah Nolleth, Director of The Prince’s for Accounting Sustainability Project (A4S).
"Not only do the report findings show that the business case needs to be articulated more effectively, but they also show that it needs to be made in the right way and using the right language in order for change to take place.”