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SUSTAINABILITY REPORTING FOR THE FUTURE
As reported in the February 2008 issue of student accountant, the success of ACCA UK’s Sustainability Reporting Awards reflects growing national and international interest in this form of non-financial reporting, in organisations of every size and in every sector. And as measures of sustainability are now becoming more closely linked to economic performance, sustainability reporting is moving ever nearer to the accountancy team.
But for many organisations – and accountants – sustainability reporting (or corporate social responsibility (CSR) reporting) remains an elusive concept. Over the years, sustainability reporting has changed in emphasis and structure as the process becomes more sophisticated and informed, as business strategies and priorities shift, and as report readers grow increasingly knowledgeable. As a result, many organisations entering the field – and even those with established track records – are often unsure as to how to produce an accurate report which is also relevant and meaningful.
As part of the 2007 award event, ACCA UK hosted a panel discussion which focused on the GRI Guidelines, created by the Global Reporting Initiative (GRI) and used by many organisations as the basis for their public sustainability reporting. The discussion was hosted by ACCA policy director Roger Adams, also a GRI board member, and opened with a presentation by Ralph Thurm, GRI associate director of business engagement and development.
Plateau problems
Ralph Thurm revealed that the GRI Guidelines are being adopted both more widely and at a more fundamental level within national business structures. However, take-up is neither as widespread nor as fast as had been hoped; in fact, with between two and three thousand organisations issuing sustainability reports, adoption is starting to plateau and certain problem areas seem to actively prevent organisations from starting to report their progress in sustainability. One example is in the investor community, where the guidelines’ focus on environmental and social impacts are not always considered relevant to investment decision making. The level of reporting in emerging markets – considered crucial – is also very low, and work is being done to address this; for example, the GRI is currently developing information gathering software which could lower the cost of reporting, thereby encouraging greater engagement.
‘Materiality’ – the choice of which issues to be reported on – was also discussed in detail as reports are diverging significantly on the scope of what they include. Thurm agreed that clearer guidance may be needed to guide report preparers on the materiality choice, and also for defining the organisational boundaries within which to report. New areas of reporting are also being encouraged such as human resources (HR) (or human capital management (HCM)) – previously ignored in many reports. HR/HCM is now considered an important area and so work is being done to improve HR/HCM performance measurement. Sector specific reporting guidelines are also now needed, and the GRI is looking at how to report more effectively within sectors such as food processing, airports, construction, and real estate.
Getting SMEs involved is also important, especially considering their significant contribution to the world economy. One suggestion was to make it clearer that reporting should be seen as an asset when an SME is being considered as a supplier – especially to an organisation which also reports – or where it is looking to retain its position within an existing supply chain. The GRI is currently working on such ideas with German sustainability organisation GTZ, and with major organisations such as Daimler and Puma.
Above all, there is an acceptance that greater education and training is needed to inform organisations of the benefits of sustainability reporting, and to show how it can be done efficiently and effectively.
Future fluidity
Contributing to the debate, panel members agreed that the sustainability reporting model will, if anything, become more fluid in future. Andrew Vickerman, head of communication and external relations at Rio Tinto Zinc (RTZ), advocated a shift to continuous sustainability reporting, where information will always be up to date rather than linked to an annual report. He also highlighted the conflict which often results from attempting to map stakeholder concerns on to business issues. Labour shortages, for example, are a significant issue for RTZ, but this isn’t an issue that particularly concerned stakeholders; more freedom was needed to justify the inclusion and omission of certain information, and the ability to weight issues according to business and stakeholder priorities. Above all, Vickerman said that it is vital that stakeholders – including employees, customers, NGOs, investors, academics, and suppliers – should really engage with any sustainability report. He thought that the move to more online reporting should be encouraged in this respect, as different stakeholders want different levels of detail, and this range was impossible to support in a printed document.
The complexity of the reporting guidelines was an issue raised by Judy Kuszewski, an award judge and director of independent think tank SustainAbility, who noted that some organisations can be put off even before starting when they see how involved the process was. More simplicity would encourage more organisations to take part, a point echoed by Mark Goyder, director of think tank Tomorrow’s Company, who added that a move towards the integration of annual and sustainability reports could also help establish sustainability as an essential part of any organisation’s annual cycle of reporting activities.
Paul Dickinson, CEO of the Carbon Disclosure Project, then spoke about the ‘push’ factor, saying that sustainability reports play an important role in helping citizens feel empowered and therefore more able to control corporate behaviour, and that transparency is one way to mitigate accusations of poor performance.
Supporting improvements
Summing up the discussion, ACCA policy director Roger Adams acknowledged that although sustainability reporting has come a long way, it is undoubtedly still in transition, and that the incredible variety of business operations, contexts, and stakeholder priorities make it difficult to generate guidelines which will suit everyone – nor should this diversity be ignored. Above all, the main aim should be to encourage more organisations to produce sustainability reports, and so anything that can be done by the GRI to help this should be supported.
Visit www.accaglobal.com/publicinterest/activities/subjects/sustainability for more on ACCA’s ongoing work on sustainability reporting, and for case studies of some of the 2007 award winners.
ENGAGING WITH ETHICS
Since its launch in August 2007, almost 15,000 students have accessed the Professional Ethics module, with nearly 1,500 students completing it. Commenting on uptake so far, Aude Leonetti, ACCA director of education and professional development, said: ‘We are extremely pleased with the number of students who have already engaged with the Professional Ethics module. It indicates that our students take their ethical development seriously, and the comments we have received from students illustrate their enthusiasm for the subject area, and show that they have gained new knowledge from this learning experience.’
A joined-up approach to ethics
The Professional Ethics module underpins the ethical knowledge which students develop through the syllabus and practical experience requirements of the ACCA Qualification.
The purpose of the module is to provide students with an interactive means of exploring and practising their own ethical attitudes. It starts by asking students to examine their ethical response to a variety of situations. They then learn about alternative ethical theories before applying their learning to a work-based case study. The centrepiece of the module is an animated case study which allows students to experience a dilemma from two points of view – that of the auditor and of the corporate financial accountant. The case study requires students to apply ethical knowledge and enhanced sensitivity to ethical issues by demonstrating ethical judgement and behaviour in their decision making.
ACCA encourages students to complete the Professional Ethics module over a period of time, and at their own pace, to allow the individual to reflect on what they have learnt. ACCA is encouraged to see that students have listened to this advice as over 29,000 individual learner sessions have been recorded since the module was launched, which shows that students access the material in short periods and return to it after reflecting on the content.
A positive learning experience
In the ninth and final unit of the module, students must write and submit a paragraph about what they have learnt, to show that they have completed the module, and the comments and feedback received through this exercise have been very encouraging. Michael Montaque, an ACCA student from Jamaica, said: ‘The Professional Ethics module has taught me that the professional accountant – to be relevant in a rapidly changing world – must be more than just technically competent.’
Students are given access to the Professional Ethics module when they become eligible to take Paper P1, Professional Accountant, and are recommended to take the Professional Ethics module at the same time as, or ideally before, attempting Paper P1. ACCA was therefore encouraged to see that the number of students accessing the Professional Ethics module increased on a daily basis around the December 2007 exam session. As Alexandre Mordvinov, an ACCA student from Russia explained: ‘I took the module in order to become better prepared for the Paper P1 exam. The actual experience exceeded my initial expectations – not only did it help prepare me for Paper P1 but the knowledge I gained will be really useful for solving ethical dilemmas in real life.’
Jo Cole, ACCA student and a finance graduate at Central Finance HQ, VT Group, in the UK, agrees: ‘I completed the Professional Ethics module online in preparation for Paper P1 and thought it was great. Now, whenever I do something, I’m always thinking whether it is ethically correct, and in line with our corporate governance practices.’
Volunteers sign up
Completing the Professional Ethics module is only compulsory for students who registered with ACCA after January 2007, but already almost 800 students have voluntarily chosen to complete the module because of their interest in the topic.
Petr Hadrava is an ACCA student from the Czech Republic – he was previously registered on the ACCA Professional Scheme and therefore not required to complete the module when he transferred over to the ACCA Qualification, but he still decided to take it: ‘Although it was not compulsory for me, it was a very useful exercise and an excellent investment of my time. This module shows that the correct decisions in terms of ethics are not always easy to make in a real-life situation. However, we have to be aware of the fact that an accountant should behave in accordance with public interest. The public cannot be given misleading information.’
Working through the Professional Ethics module has also introduced students to other services and support provided by ACCA including the ACCA Rulebook. As Shevonne Garvin, an ACCA student from Trinidad and Tobago, explains: ‘I was not aware of the help that the ACCA Rulebook could give to students, affiliates, and members when dealing with professional matters. The Professional Ethics module was indeed a learning experience. It has made me more aware of the implications of my ethical decisions when dealing with professional matters, and also of the importance of my duty as a professional accountant.’
Future developments
The online version of the Professional Ethics module is made available to students as soon as they become eligible, and can be accessed through the secure section of the ACCA website – myACCA. The module is also available as a CD-rom, or in paper format, for students who do not have reliable Internet access. In addition, during 2008, students will also be able to download the module to an MP3 player, and to certain models of mobile phones.
NEW ACCA QUALIFICATION IS A RECORD BREAKER
The first sitting of the exams for the new ACCA Qualification has attracted a record number of students and won praise from employers and tuition providers. In total, 156,000 students sat ACCA exams in December 2007, with 135,000 sitting the new ACCA Qualification papers – both records. More than 6,000 new affiliates completed their exams.
Clare Minchington, managing director – learning and technical policy, said: ‘The new exams have been very well received by candidates, employers, and tuition providers, which is very pleasing since the new qualification was developed following extensive consultations with those groups.
‘As a result of that consultation, the new ACCA Qualification focuses on professionalism and ethics, and the independent Exam Review Board, comprising publishers and tuition providers, welcomed our approach – describing the new Professional Accountant paper as imaginative and well grounded.’
Among the innovations which were introduced with the ACCA Qualification was the addition of an extra 15 minutes of reading and planning time on all three‑hour exams. In addition, the first three subjects in the ACCA Qualification are now available at any time during the year as two‑hour computer‑based exams, as well as on paper in June and December.
DECEMBER 2007 GLOBAL PASS RATES
ACCA Qualification
F1 Accountant in Business 81%
F2 Management Accounting 56%
F3 Financial Accounting 67%
F4 Corporate and Business Law 42%
F5 Performance Management 34%
F6 Taxation 50%
F7 Financial Reporting 40%
F8 Audit and Assurance 43%
F9 Financial Management 40%
P1 Professional Accountant 53%
P2 Corporate Reporting 48%
P3 Business Analysis 56%
P4 Advanced Financial Management 31%
P5 Advanced Performance Management 42%
P6 Advanced Taxation 28%
P7 Advanced Audit and Assurance 33%
CAT Scheme
1 Recording Financial Transactions 60%
2 Information for Management Control 42%
3 Maintaining Financial Records 53%
4 Accounting for Costs 27%
5 Managing People and Systems 45%
6 Drafting Financial Statements 80%
7 Planning, Control, and Performance Management 59%
8 Implementing Audit Procedures 48%
9 Preparing Tax Computations 67%
10 Managing Finances 76%
ACCA MEMBERSHIP GROWTH
The global membership of ACCA grew by more than 7,000 last year, making 2007 the highest year of growth in the past five years. The figures maintain ACCA’s status as the fastest-growing global professional accountancy body, with members in 170 countries.
ACCA now has 122,426 members, which represents a 6.1% rise over the 2006 figures. Global student and affiliate numbers grew by 10% to a new total of over 325,606.
Allen Blewitt, ACCA chief executive, said: ‘We are particularly delighted by the strong growth in membership figures, which is testament to the value that accountants around the world are seeing in joining ACCA. It is remarkable to think that our members could now fill Old Trafford and Anfield stadiums together, while our members and students combined would fill the new Wembley stadium five‑times over. The strong student growth figures demonstrate the enduring global popularity of ACCA’s qualifications, which, being wholly portable, mean newly-qualified accountants can make their careers internationally as well as in their own countries of origin. Typically, 20,000 of our students and members move country each year. This is globalism in action.
‘In a global market, with international standards in financial reporting and auditing being adopted throughout the world, a qualification which is based on the same exam – whether in Nuneaton or Nairobi – leaves ACCA members best-placed to help businesses thrive. The ACCA Qualification, introduced in 2007, will give the next generation of accountants an even greater grounding in what is needed for success in business.’
Blewitt added: ‘53% of the students who took the most recent examinations were women. We are also proud to be opening up opportunities to talented people throughout the world. The average age of ACCA members is now 39; this is promising for the next generation of international finance and business leaders.’
[PRINTER FRIENDLY VERSION]
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