The other bottom line

Sustainability and corporate reporting; the pursuit of knowledge development, advancement, and sharing has existed from the early establishment of the accounting profession — and continues to grow as CPAs champion research and innovation.

Sustainability. The word suggests activities like recycling and tree planting, but increasingly it’s tied to the impact our actions and purchases have on the world. We want to work for, buy from, and invest in organizations that care about not just their environmental impact but their social and economic footprint as well.

This drive toward corporate awareness is relatively new. Barely 40 years ago, disaster literally struck Bligh Reef in the form of the Exxon Valdez oil tanker. The changes that resulted led to a model of sustainability reporting CPAs have helped to guide ever since.

THE FOUNDATIONS OF SUSTAINABILITY REPORTING

After Valdez, the Canadian Institute of Chartered Accountants (CICA), which was one of the three accounting bodies that unified to create what is now CPA Canada, saw the need to take a leadership role in highlighting the connection between corporate reporting and environmental concerns. They approached Alan Willis (FCPA, FCA), a former partner at Touche Ross (now known as Deloitte). At the time, environmental reporting was considered a fringe activity, but Willis was curious about the possibilities of creating a consistent framework for measuring, recording, and reporting on performance around the environment.

“In 1991, the CICA was one of only two accounting bodies in the world paying any attention to this stuff. Within the accounting profession, we got a reputation for being a leader in the field,” says Willis. “And we got involved in all kinds of things where we were the only accounting body at the table, or one of only two or three.”

Because of the Canadian profession and Willis’s early leadership, the organization was a founding body of the Global Reporting Initiative (GRI). Willis served on its first steering committee. The GRI worked to develop an accountability framework — common language to tell the environmental, social, economic, and governance stories of an organization. Today, the GRI’s Guidelines (now called Standards) are globally recognized as the de facto standard for sustainability reporting.

Willis was also involved in the early days of the International Integrated Reporting Council (IIRC). The IIRC Framework complements GRI Standards by drawing on both sustainability and financial reporting models to benchmark the value an organization is creating for shareholders, investors, and beyond. For his pioneering work advancing sustainability reporting in Canada and internationally, Willis received the Queen Elizabeth II Diamond Jubilee Medal in 2012.

CANADIAN ACCOUNTANTS: A LEGACY OF INNOVATION

Disclosure, part and parcel of how corporations function today, was not always readily available. Until the early part of the 20th century, the Canadian public had little legal right to know how an organization conducted its corporate affairs. The government of Ontario played a critical role in opening the doors with its 1907 legislation requiring public companies to provide shareholders with detailed audited information about their operations.

That legislation, written largely by what is now CPA Ontario, was one of the earliest statutes in the English-speaking world to mandate detailed financial statements. Its successful application led to the national disclosure and auditing requirements of the Canadian Companies Act of 1917. Those changes have informed everything that Canada’s accountants have done since, entrenching transparency as a fundamental tenet of the Canadian ideal of good business. CPAs continue to champion research and innovation, develop stronger integrated and sustainability reporting practices, and work with global bodies to set financial accounting and auditing standards.

FOSTERING RESILIENCE IN THE NEXT GENERATION

There is still work to be done before every customer, investor, and prospective employee can easily identify whether an organization is a gold star sustainability player. Recognizing the global scope of the challenges and the need for greater collaboration to solve them, CPA Canada often works with international partners. Canada recently became the first jurisdiction outside the U.K. to establish a CFO leadership network under the Accounting for Sustainability (A4S) initiative. Started by the Prince of Wales over a decade ago, A4S aims to share best practices and show global leadership on sustainability within the profession. “It is a network of financial leaders who see the importance of building sustainable enterprises for a more sustainable world,” explains Gord Beal, CPA Canada’s vice-president, Research, Guidance and Support, who is leading the charge for Canada’s accountants. “We’ve got right now a group of eight forward-looking CFOs — senior people from across the country — and we’re looking to grow.”

The Canadian A4S members have initiated some innovative programs at their organizations. Bruce West (FCPA, FCA), executive vice-president and CFO of the Co-operators, speaks in CPA Canada’s Climate Change Adaption Case #4 of the Canadian insurer’s work. After the 2013 Calgary floods, the Co-operators resolved to find ways to provide adequate coverage for clients while preserving the organization’s financial health. This objective aimed to develop less reliance on government disaster relief and stronger resilience in communities. “We are on the front line of climate change,” says West. “Our vision is to be a catalyst for a sustainable society.” The Canadian A4S chapter is applying collaboration, communication, and leadership tools to create practical solutions that might include new business models to balance economic stability with long-term social, human, and natural capital sustainability.

Climate change remains arguably the planet’s greatest business challenge. Addressing its growing urgency is something that accountants in this country have been thinking about for some time. Alan Willis co-authored one of CPA Canada’s latest reports and offers guidance for directors on the issue: “Climate change is the big game-changer of all issues, with enormous social and environmental and economic impacts. If you don’t take anything else seriously in the sustainability space, you have to take climate change seriously.”

And, if any player within the corporate organization is suited to tackle this generational challenge, it’s CPAs. “If we’re going to create a more sustainable world,” says Beal, “we need to change the way businesses operate. Accountants are pervasive. It would be a rare organization that does not have an accountant working in it, serving it as an advisor, or both. CPAs can influence change and play a leading role in making that change happen.”

Stay tuned for more stories about the people and the events that contributed to CPA Canada’s rich history as Canadians prepare to mark the 150th anniversary of Confederation.

KEEP THE CONVERSATION GOING

How else can CPAs have a positive impact on sustainability and fostering business resilience? Post a comment below.

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CPA Canada

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