Crumbling levels of trust in data and information is a part of a drop in trust more generally. Learn how chartered accountants will be called on to help, now and in the future.
Trust has always been the bedrock of a functioning society. The earliest human communities couldn’t have grown crops or raised livestock if they didn’t trust one another, and as humans spread across the world building larger, more complex societies and economies, trust underpinned their success.
Trust has also been at the heart of the accounting profession since its inception, and work is underway to ensure it retains its reputation for trustworthiness.
But beyond the profession’s own debate, the more general challenge of ‘trust’ as a whole – ensuring and assuring that people will do and have done what they say – has changed dramatically in recent decades, and will continue to do so in the future. These forces will require accountants to take on a larger and different role than their predecessors did.
This is because if the information we use to make millions of daily decisions can’t be trusted (or we can’t seek redress if it turns out to be wrong), our society cannot function. Declining trust in this information then erodes public trust in the institutions that provide it, whether government, business, NGOs or the media. And it’s this trust that holds nearly every interaction together – from consumers insuring their property to businesses planning for the future to governments making post-COVID rebuilding plans.
These issues have been thrown into stark contrast by the COVID pandemic. Tim Nguyen, Unit Head, High Impact Events Preparedness, at the World Health Organisation, argues that the pandemic has shown how many people trusting the right information reduced infection rates and ensured healthcare services weren’t completely overwhelmed. However, it has also shown how others who distrust official lines and instead follow poorly-sourced information can make bad decisions – in this case, that cost them their lives.
Today, trust in the information produced and used by all of us – organisations and individuals – faces three very modern threats.
We now depend on a far more complex array of people and organisations than ever before for all aspects of our lives. And in today’s globalised world, this means where once we could rely on a smaller number of in-person local interactions, we must now rely on impersonal data and information to underpin our decisions. So our demand for information is far greater than it’s ever been, but we are more disconnected from its source.
Meanwhile, the supply of that information and data that could help us decide who to trust has grown so large that it is impossible to consume and parse even a fraction of a percent of it. Research firm IDC predicts that by 2025, 463 exabytes of data will be produced every day; to put that in context, five exabytes would store all the words ever spoken by human beings.
Finally, it has become far easier for all of us to produce and, crucially, share information and data on social and digital platforms, some of which will unintentionally mislead and a small segment of which will intentionally mislead.
For example, a European Commission survey from 2018 showed that over a third of Europeans now come across fake information every day. And, in response to these problems, there is a raft of regulatory and free speech issues yet to be hammered out if we are to prevent malicious disinformation spreading across social media.
Unsurprisingly then, public trust in information appears to be declining. PR firm Edelman, which has run an annual survey on public trust for 21 years, says: “None of the societal leaders we track—government leaders, CEOs, journalists and even religious leaders—are trusted to do what is right, with drops in trust scores for all in 2020.” Edelman warns that all four main institutions—business, government, NGOs and the media—face “information bankruptcy” (i.e. the ‘face value’ of the information we consume can’t be trusted and so will not spur people to act or make the right decisions).
A chartered accountant on the frontline of this trust debate is Ed Humpherson ACA, Director General for Regulation at the UK Statistics Authority, who is responsible for assessing the validity of HM Government statistics. He says: “the phrase information bankruptcy captures this sense that we're in an environment where individuals and organisations are overwhelmed with data, and not quite sure how to sift the good from the bad. How do I know which of these things – these numbers – which are being held at me, are reliable and which are not?”
How chartered accountants will help restore trust for the common good
So the challenge of ensuring that societies across the world have access to reliable, fact-based information that they know they can trust is a large and pressing problem, and there is clearly a core role to play for those with accountancy skills and experience.
First, accountants can help tackle “information bankruptcy”. In public institutions this means assuring all stakeholders (regulators, investors, customers, employees, the public, voters) that sustainable financial growth doesn’t come at the expense of unsustainable destruction of natural capital or exacerbating social problems – anything from entrenching poverty to sustaining sexist or racist stereotypes. For many members in the near term, this could mean continuing to do the traditional job of collating, checking, assuring, analysing and presenting data for the whole organisation, but doing so with an increasingly large proportion of non-financial data as they help senior managers understand, explain and improve the company’s business model (or non-profit organisation’s operating model), while being transparent about their approach.
Second, it’s clear that how the world values financial or economic success is changing rapidly. A diverse and growing band of senior decision-makers sees the environmental and social challenges summed up by the UN Sustainable Development Goals (SDGs) as the key challenges for all of us. As Alan Jope, CEO of Unilever puts it, the UN's SDGs “are not just a nice thing to do – they are a path to a prosperous world”. And, as Larry Fink, CEO of BlackRock, one of the world’s largest asset managers, outlined in his annual letter to ‘investee’ CEOs, “from January through November 2020, investors in mutual funds and ETFs invested $288bn globally in sustainable assets, a 96% increase over the whole of 2019.” It is clear that capital allocation decisions, the price of assets and long-term public policy decisions all now take into account the need for more than just a solid financial return.
Across the short to medium term, this provides two important roles for accountants to play. First, in an atmosphere where there is rapidly changing information, they are in a position to understand how to help clients or colleagues access the best, most useful verified information and then guide them to make worthwhile decisions as a result. This requires understanding a whole host of emerging artificial intelligence/machine learning-related technologies, as well as a huge number of data governance issues. Second, they need to understand, as Peter Bakker, CEO of the World Business Council for Sustainable Development, and author of the claim that “accountants will save the world” puts it, “how will this change decision-making in a company? If you apply true pricing, true costing – integrating externalities – how does that change [executives’] decisions? How does it change the capital allocation of investors’ capital valuation models?” Accountants have the opportunity to stop being the gatekeepers of a company’s information and start helping decision-makers to make the right decisions.
Third, this challenge of public trust in information will lead to the creation of a lot of roles that don’t yet exist. Imagine that in response to a public-trust crisis, the EU decides that all social media companies with an EU presence must submit to an in-depth audit of their controls and processes to moderate hate speech. This would be a massive multidisciplinary undertaking, but it is something that accountants could make a fundamental contribution to. Being ready for these kinds of new roles and helping to shape them will be key to the long-term health of the profession. Other examples might include an ‘official examiner’, who provides the legally required ‘sign-off’ on an AI technology before it is deployed in public. This again is a role that accountants would excel at, and society would be worse off if they didn’t take it on.
Hear more at Virtually Live!
ICAEW's flagship three-day digital conference returns for 2021 with a session exploring the importance of trust in business, as well as sessions on protecting human rights and fraud risks.