It might surprise you, but management accountants have a key role to play in helping companies to become sustainable. CIMA has a keen interest in sustainability and governance and how these two drivers will shape the future of business.
Acting in a sustainable manner makes good business sense. This is because sustainable strategies usually result in operations that are more successful long-term, generating more reliable cash flows. CIMA’s extensive research into this issue has enabled us to provide tools and guidance that can help companies develop in ways that are both successful and sustainable. We are also convinced that chartered management accountants are ideally equipped to help companies achieve these goals.
One of the organisations that CIMA has been working with closely is the International Integrated Reporting Committee, or IIRC. Integrated reporting is a new approach to recording a company’s performance that demonstrates the links between an organisation’s strategy, governance and financial performance and its social, environmental and economic context.
By reinforcing these connections, integrated reporting can help businesses to take more sustainable decisions and enable investors and other stakeholders to understand how an organisation is really doing. CIMA is supporting the IIRC’s aims to create a universally accepted framework for sustainable reporting.
So how do organisations move forward from here? There are some very interesting standard bearers coming into the arena. The German sportswear giant, Puma, claims to be the first business to publish a set of environmental profit and loss accounts. The company has calculated the cost of its total environmental impact in terms of carbon emissions and water consumption – not only for the core group but along its entire supply chain.
Puma intends to extend these metrics to land use, waste, pollutants and social impact. By putting a clear set of measurements in place, the company has a much better idea of where it needs to focus on waste and energy reduction, as well as how to factor this in to future procurement decisions. The company also views its new approach as a lever to get key suppliers and industry peers on board.
To further develop the issue, CIMA has joined forces with management consultancy Accenture, to provide specific sustainability recommendations to chief financial officers (CFOs). This work discusses how sustainability has the potential to drive business value across a number of dimensions.
The role of finance professionals
Finance professionals can be very influential. They can encourage the company’s board and senior management to commit to sustainability by providing reassurance and proof that sustainability performance can be measured and monitored. CFOs have the tools to ensure that sustainability can, and should, be taken into account clearly and consistently in day to day decision making – in order to ensure a healthy triple bottom line.
By incorporating sustainability performance management insights into planning and budgeting, CFOs and their teams can embed sustainability much more meaningfully into an organisation than by simply calling for business units or departments to follow, for example, a code of conduct.
We have identified eight core areas where finance professionals can add the most value, bringing these concepts into their ‘business as usual’ accounting practices. A host of other management accounting skills are central to the integration of sustainability performance management with overall business performance.
Because our members are not only equipped with a unique tool kit but are also obliged to adhere to CIMA’s strict code of ethical conduct, they are ideally placed to help build better businesses and a better environment for future generations.