Accounting bodies from three countries have found an increase in sustainability strategies to address climate change, particularly within large companies.
The American Institute of CPAs, the U.K.’s Chartered Institute of Management Accountants, and the Canadian Institute of Chartered Accountants released the survey Thursday, measuring the state of accounting for sustainability in the U.K. and North America. U.K.-based organizations appear to be ahead of the curve in terms of implementing sustainability practices and finance function involvement compared to North American organizations, the survey found.
CIMA, AICPA, and CICA surveyed organizational leaders and interviewed sustainability executives from leading organizations to examine the key characteristics of business sustainability, and the level of involvement in corporate sustainability initiatives by finance employees.
The three accounting organizations are all founding members of the Accounting Bodies Network of the Prince’s Accounting for Sustainability Project, which meets in London Thursday.
"As companies both large and small incorporate environmental and social considerations into their strategies for long-term business success, U.S. CPAs and other professional accountants have an important role to play,” said AICPA senior vice president for member competency and development Arleen Thomas in a statement. “The survey report highlights the important work that we have to do in the accounting profession which is why the AICPA is taking a leadership role in the U.S. and collaborating with CIMA, CICA and the Prince’s Project to provide global thought leadership and services to help our members develop skills and competence in sustainability accounting and reporting."
Business sustainability involves ensuring that organizations implement environmental, social and economic strategies that contribute to long-term success. Organizations that act in a sustainable manner not only help maintain the well-being of the planet and people, they also create businesses that will survive and thrive in the long run, according to the accounting organizations. Leading companies recognize that sustainability performance translates to successful bottom-line business performance, and that investors are attracted to companies that act in a sustainable manner with a focus on long-term profitability and competitive advantage.
The survey found that compliance with regulatory requirements remains the most common driver of business sustainability, with 34 percent of large organizations and 24 percent of smaller organizations citing it. Profitability and other strategic factors are also perceived as being increasingly significant. After compliance, the next most critical drivers differed between large and small companies, with 32 percent of large organizations identifying the management of reputational risk, and 19 percent of smaller companies identifying cost-cutting efficiency.
Large companies have more robust sustainability capabilities, with 79 percent of larger companies currently having a formal sustainability strategy, compared to 33 percent of smaller companies. However, an additional 23 percent of smaller companies plan to formulate a strategy within the next two years.
The finance function’s contributions to organizational sustainability programs are highly valued, yet underdeveloped. Fifty-six percent of the survey respondents said that finance plays a role in business case/investment analysis, while 33 percent are tracking sustainability-related performance measures.
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