Twelve months into a 15-year plan to change the world, how is the accountancy profession shaping the Sustainable Development Goals? Peter Wilson investigates and finds that the goals might also reshape the profession.

Grand plans do not get any grander than this one. When 193 nations agreed through the United Nations in September 2015 to pursue 17 “Sustainable Goals for Development”, they were setting out the most ambitious and wide-reaching agenda for change that the international community had ever supported.

Superceding and broadening the Millennium Development Goals – which ran from 2000-2015 – the new Sustainable Development Goals (SDG), or Global Goals, are supposed to be a guide for the next 15 years and to cover everything from poverty alleviation and gender equality to climate change, infrastructure and job creation. For some it was all too ambitious. The Economist called the SDGs a sprawling mess that was “unfeasibly expensive”, calculating that achieving them would cost $2trn-$3trn per year of public and private expenditure, or 4% of world GDP.

But others, including the British and international leaders of the accountancy profession, embraced the SDGs as a new framework for their existing commitment to pursuing the public interest.

“We as an organisation are here to serve our members’ interest and the public interest and in the long run they are essentially the same thing,” says Richard Spencer, the head of ICAEW’s five-strong sustainability team.

“The difficulty is that it can often be hard to see what the public interest is, and these goals are an articulation by the world of what the world wants, and that actually is a very good articulation of the public interest.”

“So we have taken the view that this provides an objective standard that we can use to focus our work and it has helped to reposition our vision, to be less introverted as a profession. Our vision now is that a successful economy depends upon and interacts with a successful society and a successful environment,” explains Spencer.

And he is adamant the goals are not simply “pie in the sky”. “Did we achieve all of the Millennium Goals? No. But we made real progress in many areas of the goals and we will probably see the same sort of thing happening here, and that has to be worthwhile.”

During the first year of the SDGs, ICAEW’s leaders have bought in to the idea of using the goals “as a coherent narrative for things we are already doing” in areas such as gender equality, the environment and supporting accountants in developing nations, says Spencer.

The next step is likely to see adjustments to the curriculum of accountancy training to reflect the goals, and specific initiatives in tandem with the International Federation of Accountants, which in November 2016 nominated eight goals of relevance to the profession.

Those related to quality education; gender equality; decent work and economic growth; industry, innovation and infrastructure; responsible consumption and production; climate action; peace and justice and strong institutions; and partnerships for the goals.

Fayez Choudhury, the chief executive of the three million-strong federation, said the “skillset, experience, and influence professional accountants possess gives them enormous scope to shape solutions to sustainable development challenges”.

The ultimate aim, according to Spencer, is to use the profession’s influence to change the way the wider business community works.

“The challenge that business faces is that you can’t achieve those goals doing what you are doing now, just better. You have got to change the whole way you are doing things.”

The good news is that the Institute’s research suggests that business leaders “get it” about the scope of change needed to make the economy more sustainable.

“Businesses do recognise, especially with the environment, that they can’t really continue as they are. We interviewed 26 leading companies and asked them, ‘Why do you care, why are you at all interested in protecting natural capital?’ and they said, ‘Well, continuing in our current business models we run out of food, fibre and fresh water in three years.’

“So they do recognise that horizon, which for so long has been next generation, is now telescoping in dramatically and so-called 100-year events or 1,000-year events are now occurring regularly.”

Spencer is confident major companies will incorporate aspects of the Global Goals into their own Key Performance Indicators, either through customer and shareholder pressure or an awareness of their own self-interest.

“If you are depleting the resources you are dependent on, that is not good business, so we are trying to shift the thinking of business by shifting the thinking of our members.

“When you think that most of the food that most of us eat is linked in some way to 10 major companies, such as Nestlé, if a change towards more sustainable food practices came from those companies it would filter down very quickly.”

ICAEW has begun holding workshops around the UK to explain the SDGs to its members. Spencer says: “What we are saying here is this huge change has to happen and you can cast that in one of two ways. You can say this is going to be an awful regulatory burden that we are going to be forced to do or you can say, actually, this is an opportunity, this is the disruption.”

Dave White, an ICAEW member based in Weston-super-Mare, Somerset, who has attended one of the SDG presentations, says he sees the changes embodied in the goals as a massive opportunity for the accountancy profession to broaden its own future. “The traditional work portfolio of chartered accountants is declining for all sorts of reasons including technological change such as digital reporting and the EU and others doing everything they can to reduce compliance workloads and reporting demands on companies.”

A keen supporter of ICAEW’s Business Advice Service, White is lead partner at White Bruce, a practice of six accountants and six other professionals spread across the West Country from Plymouth to Bristol. He believes that accountants could respond to the contraction of their traditional work by expanding their roles in advising businesses, helping them with cyber security “and now, perhaps, helping companies to audit their commitment to the global goals”.

“Before long many, many companies are going to start measuring their performance on a much more complex range of indicators than they have done in the past… things like their carbon emissions and other forms of environmental impact,” says White.

“It seems to me a win-win situation if accountants spread the message about the value of supporting the Global Goals and in the process generate some work for themselves by helping clients to measure and audit their own performance on those goals.”

Most chartered accountants do not yet have the required experience to undertake that work, explains White, “but it’s our core skillset – we just need to learn to apply them to the Global Goals.

“If there are 147,000 ICAEW members they might have an average of 50 business contacts each, so if you do the maths it’s quite astonishing how wide that reach can be. Amazingly resilient networks can grow up around an accountancy practice and we can have an effect far beyond our own numbers. I am quite optimistic that the next generation is going to be a lot more interested in these issues, and that has to eventually feed through into corporate behaviour.”

Francesca Sharp, an ICAEW sustainability manager, says Institute members “advise nearly two million businesses in the UK and quite a lot of them are start-ups”.

“If you think of the lifetime of the average business, most that exist today won’t exist in 2030. There will be the giants, perhaps, but the new micro enterprises will probably be delivering on these goals so there is a lot of attraction to inspire those future businesses.

“Half of our membership are working in business and if we are influencing the next generation of leaders there is a lot of traction with younger members,” she adds.

“Some of our younger members are going to be those start-up entrepreneurs themselves.”

About 80% of the FTSE 100 has an ICAEW member on the board, and Sharp says that creates a great opportunity for influence and leadership “along with the sort of leverage you have from people like Justine Greening, an ICAEW chartered accountant and member of cabinet”.

In July an ICAEW delegation met Greening, who was then secretary for international development, with responsibility for supporting the Global Goals, to discuss how the Institute could help to build up the accounting profession in developing countries.

“With a lot of developing economies a strong economy can’t be achieved without robust professional accountancy coming in and holding governments and business accountable, whether it is through standards or traditional measures of reporting,” says Sharp.

One of the most active of the Big Six accountancy firms focusing on the Global Goals is PwC, whose “global sustainability leader” Malcolm Preston was invited by the UN Development Program to chair a two-day conference on the SDGs involving 700 participants and ministers from five governments in Singapore in late November.

“We have developed a methodology for measuring the social and environmental impact of a business and we are already providing that service to a lot of our clients,” he says.

“If a CEO wants to be on the receiving end of ‘fair’ regulation and a welcoming licence to operate, he or she needs a strategy that, at the national level, is goal congruent with government ambition.

“We surveyed 1,000 companies and one of the things we identified was that while many, many companies appreciated the significance of the SDGs, only 13% had identified tools to assess their impact against the goals.

“So we said, ‘right, we need to build a tool’ and we invested a significant amount of effort in that.”

PwC brought together 285 published indicators of how different countries were performing on the SDGs and built algorithms linking that to other data points such as world trade flows.

The result, the firm’s SDG Selector, can tell a company which SDGs are most sensitive in its sector in a particular country so it will be “ahead of the curve in knowing whether they are helping or hindering that country in relation to the goals”.

PwC’s SDG Navigator goes further in identifying SDG risks and opportunities for a firm’s core operations in each country, a service that it is offering at cost. “We have shown it to dozens of companies and have not yet had a firm say, ‘That is not relevant to us, we don’t want to engage with the Goals’,” says Preston.

Major business adviser Grant Thornton announced in November that it was the first professional services firm to join companies such as De Beers and The Body Shop in the Future-Fit Development Council, a body working to develop benchmarks to measure the non-financial performance of companies.

A huge challenge surrounding the SDGs remains the question of how to collect, measure and compare data from so many countries and businesses relating to complex indicators ranging from income inequality to carbon emissions.

Richard Anning, head of the IT Faculty at ICAEW, says the UN has defined its goals “but now it has to work out how to measure them and then how to capture that information, report it and make
use of it”.

Even the UK’s Office for National Statistics, one of the world’s most advanced statistical bodies, has taken a year to begin working through its own approach to handling such data.

The leading candidate to handle the challenge is XBRL (eXtensible Business Reporting Language), the most widely-used machine-readable format for handling digital information.

The adoption of XBRL has been boosted by the US Securities Exchange Commission and Companies House in the UK using it to collect corporate financial returns, HMRC adopting it for the filing of digital tax returns and Bank Indonesia collecting financial statements from 34 Islamic banks.

“It is now used in several countries as a way of electronically filing information to regulators so the theory is: if you are looking at trying to measure water use or carbon emissions this could be the best shared way of handling that data,” says Anning. “We can see that it has great potential, the question is, do you make it compulsory or just hope that people recognise it is a good idea as a standard?”

John Turner, chief executive of XBRL International, the non-profit group supporting the XBRL standard, says a mandate would have the most impact. “If you want to reach a critical mass to create a network effect then sometimes a stick is more useful than a carrot.”

It is already used by the Chinese government, for instance, to monitor state-owned enterprises, and the nation’s largest oil and gas company, PetroChina, uses XBRL to handle everything from sales transactions through to annual reports. “No alternative has come along, so if there is going to be a digital standard this is going to be it,” states Turner. XBRL is supported by various international groups promoting the corporate reporting of environmental data, including the Climate Disclosure Standards Board (CDSB), which was formed at the World Economic Forum in 2007.

Michael Zimonyi, CDSB’s policy manager, says his group “hopes that XBRL will become the standard” for measuring progress on the SDG goals. “It is very important to have non-financial data aligned with financial information so there is less of a burden on the organisations reporting the information and on the users of that data,” he said.

“The discussions are still going on about how to deal with these masses of information, but from our perspective XBRL is the only realistic option.”

Originally published in Economia, February 2017.