Accountants Lead a Charge for Change and Sustainability

The International Federation of Accounting (IFAC) is a global organization for the accounting profession. IFAC is committed "to protecting the public interest by developing high quality international standards, promoting strong ethical values, encouraging quality practice, and supporting the development of all sectors of the profession around the world."


With a good amount of fanfare appropriate to the dignity of the profession, the IFAC announces its launching of a sustainability framework.

The framework is introduced on the group's website with a quote from Michael Foley (assistant corporate controller for Johnson & Johnson USA): "There are a couple of thousand accountants in Johnson & Johnson and not many of them are even familiar with the term, 'sustainability.' "

What follows is a web-based tool that targets professional accountants working in all kinds of different organizations who the IFAC believes can "influence the way organizations integrate sustainability into their objectives, strategies, management and definitions of success." The release of this framework upstages the Corporate Social Responsibility and Sustainability officers, many of whom are still operating with incomplete frameworks and maintaining a separate insulated silo. Few of us felt that the accountants would seek to lead the way to sustainability.

IFAC borrows heavily from the decade-old SIGMA Project. This project developed guidelines to help provide clear, practical advice to organizations to help them make move down the path towards sustainability. It was the first effort to link management systems, risk management, business excellence frameworks, the three responsibilities, and continual improvement into a single framework. These items are the foundation of a sustainability program and are the focus of this blog. As a matter of fact, it was this project that served as the inspiration for the development of my Harvard University "Strategies for Sustainability Management" course seven years ago. There has been a lot of improvement since the publication of the SIGMA Project Guidelines. However, it is significant that the accountants picked up on this "treasure" seemingly before the other sustainability professionals.

There is so much information covering sustainability and corporate responsibility already available on the Internet. Most professionals engaged in this profession are challenged with information overload. To avoid this dilemma, the accountants created the framework to bring together in one place all the critical information needed to successfully manage a sustainable organization. This information is presented to address four perspectives:

1.    Business strategy - Taking a strategic approach
2.    Internal management - Making it happen
3.    Financial investors - Telling the story to investors
4.    Other stakeholders - Wider transparency and accountability

Organizations that have had some success adding value with sustainability usually need to address all four perspectives. The sustainability framework provides examples of what they call "good practice" and provide a lot of links to help the reader find more information.

Many sustainability issues cut across all four perspectives and the perspectives are certainly interconnected. IFAC hopes that by maintaining this framework on their website, they will be able to provide professional accountants with an opportunity to consider themselves "knowledgeable change agents."

Who would have ever thought that the charge would be led by accounting? But it makes sense! Section 404 of the Sarbanes-Oxley Act provides an operational risk management framework that can serve as a foundation for any sustainability reporting initiative. This IFAC framework and accounting views of operational controls help interpret sustainability issues in a relevant way for any organization and helps integrate those issues into the way they do business. This is different from having a separate sustainability or corporate responsibility program! Sustainability needs to be a part of what every employee does every day. No amount of strategy can make this happen.

Finally, IFAC makes an argument to transfer the sustainability function to the corporate finance officer. This function is usually best placed to influence behavior through incorporating sustainability considerations into business cases, capital expenditure decisions, cost allocation and integration with remuneration and strategy. Now we will await the rebuttal from the sustainability and corporate responsibility officers. They better hurry -- the CEO may not wait too long …

 

Robert B. Pojasek, Ph.D., is the practice leader for Business Sustainability at First Environment Inc. and an internationally recognized authority on the topic of business sustainability and process improvement.  

 

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