Is Sustainable Accounting changing the world?


ACCA’s new policy paper called Sustainability Matters articulates and communicates the weight of sustainability issues for organisations and the accountancy profession. ACCA places sustainability at the core of all business operations and lays emphasis on the importance of making organisations more responsible and accountable in the pursuit of sustainable development.

We all know the wise saying that “what gets measured gets acted on”, but is sustainability accounting changing the world?

Sustainability accounting, also known as corporate social reporting or non-financial reporting, is considered a subcategory of financial accounting that focuses on the disclosure of non-financial information regarding a company’s performance to external parties. It involves relating sustainability initiatives to company strategy, risk and opportunity evaluation, and providing measurement, accounting and performance management skills to ensure that sustainability is set into routine operations of a company. In the same way, the Code of and Report on Governance Principles for South Africa (King III) has embedded that strategy, risk, performance and sustainability, are inseparable. Basically, sustainability accounting is a tool used by businesses to become more sustainable.

We are living in a critical time, where transparency, accountability and the need for robust decision-making in the business sphere is on the rise. For businesses, it is more important than ever to manage both positive and negative impacts of all business activities. Sustainable accounting should not only create greater transparency but should also allow for better informed decision-making. It should also provide stakeholders with a reflection on previous performance and a view to the imminent future in respect of environmental, social and governance initiatives. Candidly, we have only just scratched the surface of the sustainability challenge. Recent years have revealed that sustainability accounting has a deeper and more transformational purpose. That purpose is the redefinition of corporate value and value creation. It creates a way to understand and communicate growth and plans for value creation as well as more sustainable outcomes for businesses.

“It is becoming more and more imperative that accounting plays an effective role in determining and communicating threats, benefits and value to the organisation” – Karen Smal, Acting Head of ACCA South Africa

Sustainable accounting recognises the vital role of financial information in this transformation and shows how traditional financial accounting can be extended to take account of sustainability impacts at the organisational level.  Engaging an organisation in the transition to sustainability is challenging. It requires that people take part in a practice which shapes their understanding of the need to change their behaviour and gives them alternatives on how to change. Thus, sustainability accounting can be a vehicle for that practice. The difficulties of sustainability accounting should not prevent organisations from making a start.