Accountants are facing new expectations, as I set out in a previous blog. Enhancing our value to society is our most immediate challenge, as various factors reshape our role: globalisation, environmental depletion, technology disruptions, gender revolution, public scrutiny and civil society’s demands.
Becoming your own ‘Tesla’
To address this change, we need to do things differently. But first, to change our way of thinking. We do not always need to come up with something new. Rather, we have to look at our services from a different perspective.
People will always invent alternatives to fulfil their needs. We need to foster innovation in our services to better respond to society’s demands; otherwise a new Tesla or BlaBlaCar can take us on a bumpy road.
Measure what makes life worthwhile
Robert Kennedy once said: “[GDP]… measures everything, except what makes life worthwhile”. He was talking about a country’s Gross Domestic Product (GDP), but I think his comment equally applies to financial statements 50 years later. Despite the public demand for more information on companies, we have not really been doing things differently than half a century ago.
For the past 15 years, IFRS has been moving the world towards a single financial reporting standard. IFRS is welcomed as it adds consistency, quality and comparability. However, what is measured and reported remains broadly the same as in Luca Pacioli’s time.
To do things differently, we need to measure not the economic growth alone, but focus more on people and their capabilities, environmental and social aspects.
Several reporting initiatives attempted to develop this field such as the UNDP HDI (Human Development Index) and the European Commission’s Beyond GDP initiative. Nevertheless, the road is still long and there is little meaningful take-up from the existing initiatives.
An exception is the Gross National Happiness Index in Bhutan which analyses and measures the Bhutanese people’s wellbeing, but this covers only 0.01% of the world population.
Reporting on what matters
Coming back to Kennedy’s vision, I am optimistic that accountants are getting closer to measuring “what makes life worthwhile” by “doing things differently”. With financial and non-financial information reporting they can address stakeholders’ needs to better assess companies’ long-term performance.
Accountants can assist companies in disclosing information on the way they operate and manage financial, social and environmental challenges. To support accountants in this regard we issued the following: