Digital Darwinism, entrepreneurship and technology

Darwin wrote about natural selection and the need to evolve in order to survive. The same can be said for both digital technology and entrepreneurship. With ongoing technological advances playing a significant part in economic growth, entrepreneurs, if willing to adapt, can benefit significantly from an ever changing digital landscape.

At a recently hosted event on entrepreneurship, ACCA (The Association of Chartered Certified Accountants) along with leading industry panellist raised significant trends into the technology and digital tools that will help entrepreneurs succeed.

Based on the event’s discussion theme; digital technological evolution in business, ACCA used the event as an opportunity to present the report ‘Digital Darwinism: thriving in the face of technology change’. This report focuses on 10 key digital based technology trends that may have direct bearing on business ownership and entrepreneurship:

 

  1. Mobile: Anywhere, anytime access to broadband connectivity from a range of devices, wireless networks, operating systems and applications.
  2. Big data: The massive quantity and variety of structured and unstructured data from internet-connected systems, devices and physical objects.
  3. Artificial intelligence and robotics: The broad range of machines and computer systems that demonstrate limited characteristics of intelligence.
  4. Cyber security: Protection from new forms of cyber risk, attack, crime and terrorism caused by increased reliance on personal and professional digital devices and data.
  5. Educational: Trends and tools that are changing and enhancing educational achievements, developments, techniques and possibilities.
  6. Cloud: Internet-based technology resources – such as software applications, computing power and data storage – provided remotely as a service.
  7. Payment systems: New, evolving and emerging internet-enabled software applications, currencies, payment platforms, devices and services.
  8. Virtual and augmented reality: Technologies that use computer modelling to simulate, overlay and supplement reality and enable people to interact.
  9. Digital service delivery: New technologies used to provide online, interactive, self-service, business processes, software and services.
  10. Social: Technologies that support social interaction and are enabled by communications technology, such as the internet.

CHOOSING THE RIGHT TECHNOLOGY BY UNDERSTANDING YOUR CUSTOMERS

Notwithstanding the merits of the 10 digital trends outlined above, it is important to mention that entrepreneurs should be aware of their market, and choose the right technology for their business. There is no need to embrace all 10 technologies, or to over-engineer digital products, rather be selective and with the help of a clear business plan choose the right technology that can help move your business forward.

Knowing your customer’s needs and preferred technological platforms will help reduce the choice of technology you may need to engage with.

Understanding of your customers, market and your key performance indicators is as important as choosing the right technology that can help your business move forward.” – Zolani Ngange, Chief Executive Officer at NexBrill Capital

For further details on ACCA’s entrepreneurship initiatives and up and coming events, e-mail:  Nomsa.Nkomo@accaglobal.com

Visit http://bit.ly/2nY5cZv to read on ways to deal with technological impacts.

An accountant’s role in sustainability

Image

The concept of sustainability involves operating in a manner that takes full accountability and consideration of an organisation’s footprint on the planet, its people and the future.  In other words, taking into account the consequences of economic decisions on the natural environment, on economic development, and on the financial conditions in which people live and work. Individuals, societies and government are now more than ever interested in the economic and social effect that organisations and accountants are likely to have in meeting current concerns.

Sustainability is not about just getting on with doing the right thing. It is concerned with the upkeep and long-term enhancement of fundamental resources that reflect and affect an organisation’s overall impact and prosperity. It is entrenched in the comprehensive idea of sustainable development and presents key challenges and opportunities for the professional accountant in business. Sustainable development means taking account of the long term consequences of decisions on the natural and human resources on which organisations depend. It means ensuring the productive capacity of these capital and resources is not irreparably damaged, and that resources are not depleted faster than they can be replenished.

The on-going debate regarding the role of certified public accountants in sustainability has generally leaned towards sustainability reports and their effectiveness. Generally, the pursuit of sustainability depends on the gathering, analysis, reporting and assurance of accurate financial and non-financial information. According to ACCA, accountants perform a substantial role in the understanding, validating and attaining of efficiencies that organisations could gain from sustainable business practices. An accountant’s role in sustainability encompasses beyond the obvious one of collecting, analysing and reporting sustainability-related information.

“Professional accountants, directly or in a supportive capacity, perform a valuable role and can assist organisations drive sustainability matters into business strategy and implementation” – Karen Smal, Acting Head of ACCA South Africa

An accountant also plays a role in developing policies to address economic, environmental and social issues and should be aware of the trend towards the use of a multi-stakeholder process in communicating reporting recommendations. In terms of sustainability, accountants can provide organisations with much needed advice such as the benefits of reducing effluence and energy costs. “Companies are starting to see the link between sustainability and financial results”- Yvo de Boer, KPMG Special Adviser and former UN Climate Chief. The view that accountants are getting increasingly involved in sustainable matters is also resonated in ACCA’s environmental accountability document.

Evidently, accountants who are committed to sustainable accounting as an ideal, trend to be enthusiastic about sustainable matters and the role they play in sustainability.

 

Is the South African CFO risking accountability by assessing natural capital incorrectly?

blog 3

Natural capital – the stock of capital derived from natural resources such as biodiversity, ecosystems and services they provide – is declining globally. In South Africa stock from natural capital forms a large part of the economic value and many corporate companies have vested interest in risk assessing natural capital correctly. Sustainability forms a large part of risk assessing natural capital and in South Africa our sustainability effort is dwarfed by the much larger concern of smaller profit margins and economic slowdown.

A point to start is to evaluate your natural capital and to ensure that when one embarks on funding expansions or investing in an industry one should be well informed on the impact and cost of the natural capital. Business operations that have negative environmental impacts can have high, but often unrecognised costs for organisations, investors and society.

According to a recent report released by ACCA, KPMG and Fauna & Flora International; analysis estimates that global primary production and processing sectors (forestry, fisheries, agriculture, mining, oil and gas exploration, utilities, cement, steel, pulp and paper and petrochemicals) have unaccounted costs of US$7.3 trillion per year – mostly from greenhouse gas emissions, water use and land use.

In the South African economy CFO’s tend to underestimate the risk value of under assessing the company’s natural capital revenue contribution and cost factor. This leads to unexpected rise in budget spend. It is vital that the definitions of materiality affect the boundaries of materiality assessments, enhancing interest in and justification for natural capital’s consideration in corporate materiality assessments in relation to the three key areas:

  • the scope of issues that are material broadening to the environmental and social impacts of organisations, including those related to natural capital
  • the stakeholder groups to be included when assessing if an issue is material, extending to bodies such as NGOs and local communities that are concerned about natural capital issues
  • the time frame over which business impacts are considered material, incorporating previously unaccounted medium- and long-term impacts and effects on natural capital issues.

International companies and governments alike have filtered evaluation methods down to one of the below derivatives, CFO’s can adapt these methods to enhance accounting the risk and value factors on natural capital:

Large and eclectic dashboards

These dashboards bring together a number of indicators that are directly and indirectly related to the durability of socio-economic progress. One example of this is the Eurostat Sustainable Development Indicators, which is a list of over 100 indicators used to monitor the EU Sustainable Development Strategy.

Composite indices

Composite indices normalise and aggregate various data into a single number. For example, the Human Development Index, Osberg and Sharpe’s Index of Economic Well-Being, the Changing Wealth of Nations, or the Environmental Sustainability Index, which ranks countries based on an assessment of 76 variables covering 5 domains.

Indices focusing on overconsumption

Indicators that fall in this category conceive of sustainability with respect to consumption levels and investment in natural resources. Examples include adjusted net savings (ANS) and ecological footprint accounts. ANS is calculated as the change in total wealth over a given time period, while ecological footprint assessments determine how much of the regenerative capacity of the biosphere is required to maintain the consumption habits of a defined project or development.

South African CFO’s that incorporate natural capital issues in corporate materiality and risk assessments offers a range of benefits and value to companies: from better-informed decision making by an organisation and its stakeholders, to an enhanced and more comprehensive risk management process, to an increased ability to realise strategic opportunities.

 

Is Sustainable Accounting changing the world?

image4

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.

Sustainability Matters: ACCA asserts its stance on key sustainability policies

Image

 

Over the past 20 years the number of organisations at work to address their sustainability impact has improved considerably. This increase can be attributed to several factors including a broader, comprehensive understanding and acceptance of the links between economic activity and global sustainability issues; recognition of the risk management and economic benefits that organisations can gain from integrating sustainability into their strategies; and a growing demand from diverse stakeholders including customers, employees, investors and NGOs, for organisations to manage and monitor their processes in a more sustainable manner.

Whether working in the public practice or private sector, certified public accountants have a vital role to carry out in making organisations more accountable in the pursuit of sustainable development. According to ACCA’s new policy paper called Sustainability Matters, accountancy professionals are skilled and highly analytical, in other words, accountants are well positioned to assistance organisations transform into more accountable entities. The new policy paper collates ACCA’s thinking on a series of six business and sustainability-related issues which are namely: sustainability reporting; integrated reporting, the assurance of non-financial reporting and disclosure; climate change; natural capital and the green economy. The paper collates ACCA’s thinking on six sustainability-related issues: sustainability reporting; integrated reporting, the assurance of non-financial reporting and disclosure; climate change; natural capital and the green economy. The purpose of the new sustainability policy paper is to articulate and communicate the relevance of sustainability issues for the business community and the accountancy profession.

“ACCA places sustainability at the core of business and the accountancy profession.” – Karen Smal, Acting Head of ACCA South Africa

The shift to a sustainable economy will require significant changes in the way which goods and products are consumed. Businesses that want to decrease the environmental and social impacts can only managed what they measure. It is thus vital to ensure that organisations collect reliable data so that performance can be monitored and targets for improvements set. ACCA is capable to influence global sustainability concerns as well as contribute to the development of viable solutions in various ways. Through the ACCA qualification, students are taught about the sustainability risks and opportunity facing organisations. It undertakes a wide variety of research into how accountants and finance professionals can contribute in the shift to a sustainable economy and also works with governments, standard setters and regulatory bodies to ensure that standards and codes of practice concerned with corporate sustainability are fit for purpose. The document offers great insight and provides understanding regarding why sustainability matters to you too.

 

Over the past 20 years the number of organisations at work to address their sustainability impact has improved considerably. This increase can be attributed to several factors including a broader, comprehensive understanding and acceptance of the links between economic activity and global sustainability issues; recognition of the risk management and economic benefits that organisations can gain from integrating sustainability into their strategies; and a growing demand from diverse stakeholders including customers, employees, investors and NGOs, for organisations to manage and monitor their processes in a more sustainable manner.

Whether working in the public practice or private sector, certified public accountants have a vital role to carry out in making organisations more accountable in the pursuit of sustainable development. According to ACCA’s new policy paper called Sustainability Matters, accountancy professionals are skilled and highly analytical, in other words, accountants are well positioned to assistance organisations transform into more accountable entities. The new policy paper collates ACCA’s thinking on a series of six business and sustainability-related issues which are namely: sustainability reporting; integrated reporting, the assurance of non-financial reporting and disclosure; climate change; natural capital and the green economy. The paper collates ACCA’s thinking on six sustainability-related issues: sustainability reporting; integrated reporting, the assurance of non-financial reporting and disclosure; climate change; natural capital and the green economy. The purpose of the new sustainability policy paper is to articulate and communicate the relevance of sustainability issues for the business community and the accountancy profession.

“ACCA places sustainability at the core of business and the accountancy profession.” – Karen Smal, Acting Head of ACCA South Africa

The shift to a sustainable economy will require significant changes in the way which goods and products are consumed. Businesses that want to decrease the environmental and social impacts can only managed what they measure. It is thus vital to ensure that organisations collect reliable data so that performance can be monitored and targets for improvements set. ACCA is capable to influence global sustainability concerns as well as contribute to the development of viable solutions in various ways. Through the ACCA qualification, students are taught about the sustainability risks and opportunity facing organisations. It undertakes a wide variety of research into how accountants and finance professionals can contribute in the shift to a sustainable economy and also works with governments, standard setters and regulatory bodies to ensure that standards and codes of practice concerned with corporate sustainability are fit for purpose. The document offers great insight and provides understanding regarding why sustainability matters to you too.