Accountants could be the ‘rock stars’ of our new economy, says B Lab UK’s Charmian Love, whose dream is to create a community of companies working for a better future. Words by Michelle Perry.
Charmian Love is fascinated by living tree bridges in India, a type of natural suspension bridge constructed over rivers using the roots and branches of living trees. Love believes they are the perfect metaphor to explain her vision of how organisations can “intertwine themselves with one another and grow with one another” to contribute to the evolution of our economic system, to the benefit of all sections of society as well as the planet.
That may sound a little grand, but then the Entrepreneur in Residence at the University of Oxford’s Saïd Business School is not your typical business leader. For starters, Love, who also teaches an MBA course on Regenerative and Circular Economy and an Executive MBA course on “Systempreneurship”, favours T-shirts and neon green sunglasses over suits. She is also a young woman whose first job was as a valuer of fine art.
Today, Love is a Co-Founder and Chair of B Lab UK, a non-profit arm of the B Corporation, focused on building and strengthening the community of B Corps – sustainable businesses with verifiable social and environmental credentials. B Lab’s vision is to speed up “a global culture shift to redefine success in business and build an inclusive, equitable and regenerative economic system for all people and the planet”. Becoming a B Corp is not to be taken lightly; in addition to a performance requirement, companies have to change their legal articles.
Assessing green credentials
The online B Corp assessment considers, among other elements, governance, staff engagement, local supply chain and environmental impact. There is an independent verification and due diligence process after the online assessment. To be considered a B Corp, companies have to score a minimum of 80 out of 200 points. And companies have to recertify every three years.
UK household names such as the Jamie Oliver Group, Teapigs and The Body Shop, as well as smaller brands such as Vivobarefoot, Oddbox and Vita Coco, are some of the 400 UK businesses now certified by B Corp.
Accountants, says Love – who sits on ICAEW’s Sustainability Committee – can be at the frontline of helping businesses achieve these goals to create sustainable businesses. “As trusted advisers, accountants can be encouraging businesses to think about how to value positive and negative externalities. So let’s start talking about the true cost of things, how businesses are operating and what’s being counted in financial reports, and what’s not, but actually should be there.”
One of B Lab UK’s goals is to seek an amendment to the Companies Act to make it mandatory for companies to explicitly state how they are promoting “the success of the company” for the benefit of their shareholders, employees, suppliers and local communities affected by company activities in their strategic report on an annual basis.
In 2018 the Department for Business, Energy & Industrial Strategy published secondary legislation (The Companies (Miscellaneous Reporting) Regulations 2018) requiring increased statutory disclosures in annual reports, and online in some cases, on engagement with employees, stakeholders, remuneration matters and corporate governance arrangements. The new requirement applies to company reporting on financial years starting on or after 1 January 2019. The first reporting under the new regulations began in 2020. However there are no financial penalties for failure to comply.
“We want to see an amendment to make it mandatory for all businesses in the UK to make sure that they are stating what their objectives are in terms of the material positive impact of their organisation, making it explicit that directors’ duties are to equally consider shareholders and stakeholders and to report on their impact on an annual basis,” Love says.
Governance leader
The UK has always been a leader in terms of corporate governance and Love says now is the time for the UK to lead the way in tightening governance and reporting in regard to environmental impact.
“Apparently Wayne Gretzky – known as the Great One in Canadian hockey – was once asked what made him so great. He replied, ‘I skate to where the puck is going to be, not where it has been.’ Leadership means doing things that are above and beyond what others are already doing. With the UK hosting the United Nations Climate Change conference in 2021, I truly think this is THE moment for the UK to lead.”
It’s not just her energy and affability that have ensured Love success, but her ability to think differently to others. After a few years in the art world, Love hankered for something more business-focused and applied to Harvard Business School. After a brief time at Boston Consulting Group following the completion of her MBA, she moved to London from Canada and in 2008 co-founded Volans with John Elkington and Pamela Hartigan. Volans is a London-based think-tank and advisory firm focused on helping organisations undergo systemic change.
Love may not have necessarily followed the well-trodden path into business, but she hasn’t wasted any time in establishing herself.
Her career has coincided with a growing backlash over the past decade towards groupthink.
“So many people think the same way. One of the big ideas of our time is how we can approach problems by linking up different perspectives – seeing things in new ways from different angles. This is where the really radical ideas and innovation can emerge. Groupthink has led us astray in a very big way in the world. We have to have the confidence and the courage to imagine something different, and to be willing to strive for it,” she says.
Boosting diversity
Organisations have been working to boost diversity in boardrooms, but the going is slow. About 37% of the UK’s top public companies have all-white boards according to the government-backed Parker Review published in February 2020. Women now hold a third of board positions in the FTSE 350 but most of those are non-executive posts, therefore not leadership positions of power.
This autumn Legal & General Investment Management (LGIM), which has more than £1trn in assets and is the UK’s biggest fund manager, wrote to chairs of the UK’s top public companies with all-white boards warning that it would vote against them if they failed to diversify their boardrooms by 2022, according to The Times. LGIM holds a 2% to 3% stake in almost every FTSE 100 company.
LGIM also announced in October that it would be making public climate ratings for about 1,000 companies it invests in, and would vote against any “laggard”’ companies. In 2016 it voted against and divested “poor climate performers – including ExxonMobil – from its Future World range of funds”.
With risks such as climate change and cyberattacks increasing long before we faced this global pandemic, business leaders recognised different input is needed to achieve different outcomes. But action has been slow to follow.
The missing link
Love completed her MBA a year before the 2008 financial crisis. Having lived through the experience of global economic turmoil has helped her realise, she says, that we need to rethink life at a fundamental level.
“We should have done a lot better job of going deeper and fixing the things that were wrong back then. The problem is that we didn’t and instead we have found ourselves now in not just a financial crisis but a health, social and cultural crisis.”
For Love, accountants can provide the missing link in what has become the lack of interconnectedness between profit and purpose.
“I think accountants have a really important role, which is why I have a T-shirt quoting Peter Bakker (President and CEO of the World Business Council for Sustainable Development) that says ‘Accountants will save the world’, because I do believe it. If we can mobilise and give confidence to this industry, accountants could be the rock stars of our new economy.”