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Sustainable Value Creation and the Professional Accountant

by internationalbanker

By Kevin Dancey, Chief Executive Officer, International Federation of Accountants





This article was originally published in the Winter/February 2021 edition of International Banker

The immediate crisis of the pandemic—two million deaths and counting—has raised awareness of the long-term crisis in sustainable value creation (SVC).

It may be that unthinkable losses of lives, jobs and wealth have made predictions of future crises feel less abstract. The dire consensus1 among climate scientists and the global push for sustainable development2 are not new—and neither is the global conversation about addressing the issue. Regardless, sustainability in value creation—in the natural environment and many other senses related to economic activity—has become a popular objective with plenty of momentum.

The demand for sustainability has fueled a movement for enhanced corporate reporting. For sustainability-minded stakeholders to assess a company’s future performance, they need a clear and comprehensive picture of its ability to create sustainable value over time—not just a snapshot of its finances. Traditional financial reporting cannot meet this demand, and it was not meant to. The corporate reporting system needs to evolve and expand to deliver the right information—to shareholders, regulators and the public.

But new forms of non-financial and sustainability-related reporting will not be useful—in fact, they could be counter-productive—unless they deliver information that is consistent, comparable, reliable and assurable. Corporate reporting of any kind must inspire greater trust in companies and confidence in markets—not create confusion or new concerns.

It is important to think about value creation from two perspectives. One is the need for requirements for material non-financial information disclosures focused on company performance, risk profile, economic decisions and enterprise value creation (EVC). The other is the need for requirements for reporting on broader, material sustainable development and company impacts on economies, environments and people. The line between these two concepts will blur with time and produce a “dynamic materiality”: the impacts of the second set of issues will flow into decisions that belong to the first set. 

This is not just the dream of environmental activists. Among leading companies, regulators and investors, reality is setting in that old ideas of “value” need to change quickly3. Non-financial information that once seemed (at best) tangentially related to shareholder returns is now in great demand as its effects—for example, the threat that rising sea levels pose to coastal real estate—become inseparable from real value creation. While serving as the governor of the Bank of England (BoE), Mark Carney told a United Nations forum4, “To watch we must be able to see …. The world won’t get to net zero [greenhouse gas emissions] if the financial sector doesn’t know how our companies are responding.”

The work of many visionary organizations and individuals has set the stage. The momentum behind sustainability issues means the time to act is now: with a coherent, unified, global approach, executed at the company level by the professionals best prepared to both meet this demand and serve the public interest.

The way forward: a new sustainability standards board

Rationalization and alignment toward a global approach need to occur for sustainability information to achieve its full potential—before a fragmented, jurisdiction-by-jurisdiction approach becomes set in stone. Many organizations have shown great leadership. We would not be in such a strong position today without the work of the WEF/IBC (World Economic Forum/International Business Council), the European Commission (EC), the IOSCO (International Organization of Securities Commissions) Task Force, Accountancy Europe, the Task Force on Climate-related Financial Disclosures (TCFD) and the five leading reporting initiatives (the CDP, CDSB {Climate Disclosure Standards Board}, GRI {Global Reporting Initiative}, IIRC {International Integrated Reporting Council} and SASB {Sustainability Accounting Standards Board}), among many more. But discrete initiatives are not, and cannot evolve into, a global framework with sufficient coherence and legitimacy. Time is too short, and the singular opportunity of this moment is too great, to support anything less than comprehensive global action.

In September 2020, IFAC (International Federation of Accountants) called for a global solution5 in the form of a Sustainability Standards Board (SSB) to sit alongside the IASB (International Accounting Standards Board) under the IFRS (International Financial Reporting Standards) Foundation. With its independence, good governance and track record of due process, the IFRS Foundation is exceptionally well positioned to contribute to and promote a system for sustainability reporting that will garner support from public authorities such as the IOSCO, the Financial Stability Board (FSB) and the G20 (Group of Twenty). Support from these institutions is critical to legitimacy and ultimately to the adoption of sustainability reporting requirements around the world.

It is encouraging to see that earlier this month, the IFRS Foundation trustees, noting the “growing and urgent demand to improve the global consistency and comparability in sustainability reporting”, set a timeline6 for their deliberations on establishing a Sustainability Standards Board. IFAC remains firmly in support of moving forward.

Folding sustainability standards into the current system of governance in financial reporting will mainstream the issue—another crucial component of a successful and speedy transformation in corporate reporting. A board under the IFRS Foundation will not be on the sidelines; it will be at the center of the action. Anyone who has not yet grasped the importance of sustainability-related reporting will see that sustainability and financial reporting need to be aligned and integrated to avoid gaps and overlaps.

Most importantly, for a new SSB to deliver on its mandate as quickly as possible, it must leverage the great work that others have already done, such as the five leading reporting initiatives and the TCFD.

International cooperation through the IFRS Foundation promises to incorporate expertise from a wide range of fields, all of which will be essential to the design and implementation of sustainability-related reporting standards. Diversity of expertise is just one factor to consider in structuring a new SSB, alongside the adaptability of its structure, the diversity in background and geography of its board members, part-time versus full-time status for board members, and much more. Expertise is not only an exceptionally important issue for the SSB but also for the business world that will apply the new standards. 

With an SSB in place, the successful execution of the standards it produces will rely on the work of individual professionals within every organization. Companies will need to meet demands for more information while, at the same time, digitalization transforms their environment and, in many cases, their operations.

Sustainable value creation in a digitalizing world calls for a complete value-creation ecosystem within each company. Professional accountants are uniquely qualified to get this done.

Calling on professional accountants

Much of the information that all stakeholders are looking for in the push for non-financial reporting is already out there. To get that information to the right stakeholders, each company needs to identify what they need to know, measure it, make it useful, and take reasonable steps to ensure that it’s accurate.

If this process sounds familiar, that’s because each of these steps defines traditional reporting that already exists nearly everywhere—as carried out by professional accountants.

No contributor to sustainable value creation can work alone. Trends in digitalization and sustainability have proven this point beyond doubt: fluency in high technology, climate science, ecology, sociology and much more are no less important than training related to traditional finance functions. How, then, should a company use its human resources to evolve?

The right response is multidisciplinary. For the finance function to process unfamiliar technical language, it needs to call on subject-matter experts. Likewise, for those subject-matter experts to carry out the tasks of identifying, measuring and communicating relevant information, they will need to call on professionals with the relevant skillsets: professional accountants. These interactions will foster a mutually beneficial ecosystem of value creation.

But professional accountants stand out as exceptionally valuable parts of this ecosystem because of the nature of their contributions. Their skills and competencies, rather than any specific subject-matter expertise, are what separates them. To deliver high-quality, comparable information—both within a company and in its external-facing reports—requires the application of any number of various expert insights but clearly requires the well-defined and specific skillset of professional accountants. Teaching a professional accountant about the technical details of a company’s operations will be easier than teaching a technical expert the entire skillset of a professional accountant.

Value comes with the communication of high-quality information about a company’s operations. The accountancy profession is ready to apply its skills and adapt where necessary to continue capturing that information as operations change and new kinds of information draw interest. The profession might not be famous for scientific knowledge, but it has adapted to technological advances for centuries, since the advent of ancient methods of double-entry bookkeeping. With an emphasis on preparing for the digital age—a primary focus of IFAC and the global profession—all stakeholders stand to benefit from the profession’s contributions.

The way forward

As vaccinations pick up and recovery, rather than mitigation, becomes the primary focus of the COVID-19 response, the meaning of “value” is changing. Incrementally, for years, more voices have joined the chorus demanding a definition of value that includes information beyond traditional financial statements to serve many stakeholders in addition to shareholders. We have arrived at a turning point with a consensus behind strong, global action, and we need to seize the opportunity before events overtake us. The climate crisis is not slowing down. Society’s expectations for sustainability in business are only rising.

The way forward7 for sustainable value creation is in a unified, coherent, global and authoritative standard-setting process, with outcomes applied everywhere. Calling on the accountancy profession to lead and support this transformation—both in responding to change and anchoring it in essential skillsets—is a wise value proposition.



1 IPCC: “Special Report: Global Warming of 1.5 ºC

2 United Nations: Department of Economic and Social Affairs Sustainable Development: “The 17 Goals

3 The New York Times Deal Book: “BlackRock Chief Pushes a Big New Climate Goal for the Corporate World”, January 26, 2021, Andrew Ross Sorkin

4 Bank of England Speech: “Remarks given during the UN Secretary General’s Climate Action Summit 2019”, Mark Carney, Governor of the Bank of England

5 IFAC: “IFAC Calls for Creation of an International Sustainability Standards Board Alongside the International Accounting Standards Board (IASB)”, September 11, 2020

6 IFRS: “IFRS Foundation Trustees announce next steps in response to broad demand for global sustainability standards”,February 2, 2021

7 IFAC: “Contributing to the Global Economy: Enhancing Corporate Reporting: The Way Forward”, September 11, 2020


Kevin Dancey is CEO of the International Federation of Accountants. He has a long history of leadership in the accountancy profession and public service. Kevin led the unification of the Canadian accountancy profession and served as CPA Canada’s first President and CEO. Prior to this, he was PwC’s Senior Partner and CEO.


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