Is sustainability accounting real? Can we completely measure social impact? Is it possible to calculate true social value?
I listened in as experts debated sustainability accounting, reporting, and stakeholder value at the Indian Institute of Management (Bengaluru)’s Centre for Corporate Governance and Citizenship-led Leaderspeak Dialogues series on August 23. For me, a practitioner, the discussions were enriching and provided food for thought. From knowing when an externality needs to be internalized by an organization to acknowledging the interlinkages that exist when it comes to people, profit and planet – the opportunities to raise the bar with social audits and reporting looked promising.
Consider these scenarios.
– Organizations who operate their own transport fleet as a benefit for employees (applicable in countries like India) probably fail to factor or offset the costs employees would probably pay to get to work if public transport wasn’t available. How do companies consider accounting for this gap?
– An organization operates a plant beside a river and while the plant is water neutral or positive does it account for the impact on communities fishing for survival downstream? Is the quality of water ever going to be the same after recycling?
– Employees, as individuals, every day continue to engage their communities to improve sustainability practices. However, when organizations are aware or can’t compute that impact into their accounting, does it make it complete?
Having a less negative impact on the environment means being more attractive as an employer, as a brand or as a citizen. Likewise, conducting sustainability accounting gives legitimacy for companies to operate, signals good intent, shows that the organization walks the talk, and mitigates risks. Despite that, accounting needs to consider multiple dimensions, evolving dynamics, and increased scrutiny while considering their reports.
Moderated by Professor Vasanthi Srinivasan, HR &OB (IIMB), the discussion had Jeremy Nicholls, Chief Executive Social Value International sharing his views on the evolution of sustainability accounting and what the current state of affairs meant for companies.
Santhosh Jayaram, Partner and Head Sustainability and CSR Advisory (KPMG) shared anecdotal evidence of the externalities which impact the internal value of organizations and thereby sustainability accounting. A couple of leaders, Sandeep Shrivastava, Senior Vice President Corporate Environment and Sustainability (Ambuja Cement) and P.S.Narayan, Vice President & Head Sustainability and Social Initiatives (Wipro) shared their sustainability accounting journeys, best practices, and insights.
Professor P.D Jose, Corporate Strategy (IIMB) summed up the discussion with pertinent questions about the metrics we use, behavioral changes expected, the subjectivity of accounting and if society could keep pace with the speed of measurement. He also invited debate on future proofing how reporting is conducted. In essence, he asked – if were we getting measured by our reports or were we measuring our reports? Finally, after all this reporting if the world wasn’t getting better to live in or we were regressing as a society, does it really matter what and how we calculated as our true value?
As a communicator these discussions also got me thinking about the true value of internal communication and if considering only the positive indicators served the purpose of determining impact. What if we factored in, for example, the missed opportunities to engage employees, the cost of information overload, poorly designed communication and the dissonance caused by ambiguity?
Here is what I took away from the discussion –
1. There is a need for corporate social responsibility and sustainability practitioners to raise their financial acumen. Knowing what to measure and therefore accounting them can help present a comprehensive picture of their organization’s social value.
2. Arriving at the social impact and value continues to be fuzzy. Standardization can help – although what one measures is quite subjective. While adding social, financial and environmental aspects there are chances of other topics dropping off the radar. You can end up measuring what you want to and miss out on what is crucial for stakeholders.
3. There can be more awareness about sustainability accounting and standards. It will help for practitioners to view social impact objectively and serve as ambassadors of change within and outside their organizations when it comes to reporting right.
4. The ability of practitioners to connect the dots in the value chain and know the inter-dependencies and cross overs are essential skills for the future of reporting.
So, who can save the planet? Accountants, academicians or practitioners? The jury is out on that!
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