Accounting for Sustainability

As part of a week of events for the Prince of Wales' Charities in Wales, I was invited to speak at an event organised by the ACCA, the Association of Chartered Certified Accountants and the Sustainable Development Commission, to discuss the impact and benefits of the Prince's Accounting for Sustainability initiative. Some of the key points from the discussion are outlined below, and are followed by a short interview clip with Roger Adams, Executive Director Policy at ACCA.

20 years ago, ACCA commissioned a report “The Greening of Accountancy” that looked at where the profession should go in terms of the debate. HRH’s lead and desire is to see the inclusion of externalities in costing coming to fruition through the Accounting for Sustainability (A4S) project.

A4S is a pathway that we all need to take, rather than some far-distant vision of a new future.

A new vision of the profession – echoed in Stern’s quote about the greatest market failure of all time. Gore: “enable capital markets to achieve their intended purpose – consistently allocate capital for its best use – the continued wellbeing of people and planet.”

What are the options for A4S?

• Internal and external accounting for and of environmental costs – working with a wider set of accounts
• Disclosure of key strategic sustainability issues
• Investment decision making
• Other accounting aspects, such as greening the supply chain and supply tariff choices
• Full cost accounting –ensuring that all costs, not just contractually definable costs, are built into the operating model
• Carbon emissions

Roughly 3000 companies publish CSR reports. About 1000 of these use the GRI guidelines as a basis for their reporting, and about 25% of all reports are independently verified. Key sustainability issues must be brought into the annual accounts.