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Quarterly issue 4

Measuring sustainability is the top priority for accountants over the coming decade

Author: ICAEW Insights

Published: 26 Nov 2020

Advocating for global standards is a vital part of building a sustainable future says International Federation of Accountants President Alan Johnson.

An ongoing pandemic, social unrest, and the accelerating climate crisis are among the issues that have reached boiling point in 2020. Personally and professionally, we have been challenged. With all the uncertainty that lies ahead, we have the difficult but necessary task of anticipating and addressing the key challenges to come.

Here, accountancy has a unique advantage: we are a global profession with global aims, and a shared responsibility to always act in the public interest, which ICAEW has always been committed to. I commend you for your rich history and remarkable work to advance the profession for more than 140 years.

IFAC is the voice of the global profession, representing more than three million accountants. In our strategic plan for 2021 and beyond, we are focusing on key trends and the opportunities they represent. These will position us to lead on some of the most pressing issues that exist, even beyond our profession.

Sustainable development is the definitive task of the coming decade. If we believe that you “measure what you treasure”, then measurement must be high on the list of skills we deploy to help businesses address climate issues, and to encourage policies that lead to a sustainable world. Unilever CEO Alan Jope said recently: “You don’t get what you expect, you get what you inspect.”

Looking beyond the financials and to the future, our profession must lead in developing and delivering information on sustainability and  the impacts of ESG to management, investors and the public.

Professional accountants can deliver value in decision-making and reporting by providing a timely view of organisational performance and sustainability, which acknowledges the complexity of modern business models and encompasses financial and non-financial indicators.

We must also lead in developing global sustainability standards. The IFRS Foundation consultation on sustainability reporting closes in December, and I encourage stakeholders to provide feedback.

The global economy has become deeply integrated. Despite this, many jurisdictions are making trade and public policy decisions that risk inconsistency and further fragmentation in regulations and international standards. The resulting fragmented regulatory structure does not serve individual jurisdictions nor the global economy at large.

Like the climate crisis, many of the global issues we face require thoughtful, coordinated solutions. In its support of standards for audit and assurance, ethics, and public sector accounting, IFAC advocates for global standards that drive comparability of financial information. By doing so, we elevate our profession and deliver on our public interest mandate.

International standards are also a key part of the equation when it comes to audit quality. The International Auditing and Assurance Standards Board (IAASB) has been focusing efforts on an updated set of quality management standards. This robust set of standards, focused on quality and ethics, supports the delivery of high-quality audits, an important element in enhancing trust in the profession. These standard-setting efforts also support the promotion of high-quality stewardship and governance.

Finally, as we look to the future of the global economy in the wake of the COVID-19 pandemic, we must focus our efforts on the public sector. Government leaders are making decisions now that will impact individuals, businesses and economies alike for years – if not decades – to come. These decisions should be based on high-quality information about the government’s balance sheet. By delivering clarity on government finances and transparency of the outcomes to citizens, accounting professionals can help shepherd recovery at local, regional and global levels. 

Perhaps the most important lesson we can learn from 2020 is to remain nimble, responsive and willing to embrace change. Resilience has not been easy, but it has taught us many skills, all of which will serve us well.