Goal driven: How management accounting can help to achieve the UN’s sustainable development goals
The challenges facing humanity have never been more stark: with our population set to exceed 8.5 billion by 2030, the Earth’s limited resources will be stretched to breaking point, potentially leading to even more poverty, disadvantage and inequality.
But it’s not too late to avert the crisis. Some of the world’s most influential thought leaders have argued that we can, through a global collaboration, achieve the sustainable development needed to solve some of the world’s most intractable problems. The concept has already been turned into action, with the publication of the United Nations’ sustainable development goals (SDGs) in 2015. This brought 193 member states together in a global demonstration of the political will to confront these problems and, more crucially, form a plan for how to do so.
The 17 SDGs – ranging in scope from reducing inequality and eradicating poverty to providing high-quality education and clean energy – have since become a rallying call for governments, businesses and individuals to unite with a common purpose that is beneficial to everyone. Businesses in particular have been identified as having a crucial role in securing a better future for mankind. Underpinning this idea is an expectation on businesses and other organisations to focus more on the value of people and recognise the need to put social responsibility before profit.
The part that financial managers have to play in bringing about this transformation should not be underestimated. The management accounting profession promotes economic activity in both the public and private sectors with decision- making that focuses on sustainable value creation. Applying its professional tools and techniques – in governance and in measuring, reporting and analysing data – it can also track how enterprises are faring in their pursuit of the SDGs.
Below, FM identifies the eight SDGs that have human value at their core and where management accounting can be the strongest driver of change, while disseminating the thoughts of some of the world’s most progressive thinkers on how the profession can provide for a better future for all.
Sustainable Development Goals
Established in 2015, the 17 United Nations sustainable development goals (SDGs) aim “to end poverty, protect the planet and ensure prosperity for all” as part of a new sustainable development agenda. Each SDG sets specific targets to be reached before 2030. By placing human relationships at the heart of the business model, management accounting can make a huge contribution to their achievement. Here we examine the eight goals in which the profession can make the biggest impact.
1. No poverty
2. Zero hunger
3. Good health and well-being
4. Quality education: Affordable and comprehensive education is critical in ending poverty and enabling economic development.
Management accounting can contribute by:
- Increasing financial literacy.
- Expanding accountancy education to boost the profession’s talent pool.
- Providing continuing education to focus professionals on sustainable outcomes.
5. Gender equality: Women make up more than 70% of the world’s poor. Ensuring their full and effective participation in business activities and providing equal opportunities for leadership and decision-making can empower women and eradicate poverty.
Management accounting can contribute by:
- Championing equal access to education.
- Supporting a diverse talent pool.
- Encouraging diversity at board level.
6. Clean water and sanitation
7. Affordable and clean energy
8. Decent work and economic growth: The promotion of sustained, inclusive economic growth that can bring job creation, productive employment and decent work for all underpins many of the SDGs.
Management accounting can contribute by:
- Furthering the adoption of globally accepted standards for reporting.
- Promoting ethical investment.
- Ensuring that businesses aspire and adhere to the SDGs.
9. Industry, innovation and infrastructure: Building resilient infrastructure and promoting innovation and sustainable industrialisation can meet climate change goals and increase prosperity.
Management accounting can contribute by:
- Making the case for long-term value creation over short-term profit.
- Encouraging investment in disruptive technology and infrastructure.
- Ensuring sound financial planning and risk management.
10. Reduced inequalities
11. Sustainable cities and communities
12. Responsible consumption and production: Encouraging sustainable consumption and production patterns to ensure long-term prosperity.
Management accounting can contribute by:
- Encouraging integrated reporting that considers stakeholder value, as well as shareholder value.
- Reducing risk through proper corporate governance.
- Supporting the development of products, services and process that contribute to the SDGs.
13. Climate action: Governments and organisations must be held to account to combat climate change and avoid ecological and environmental disaster.
Management accounting can contribute by:
- Framing ecological opportunities and risks in a commercial context.
- Encouraging investment in cleaner and greener business methods.
- Aligning corporate reporting to equate natural capital with financial capital services and processes that contribute to SDGs.
14. Life below water
15. Life on land
16. Peace, justice and strong institutions: In order for markets to function properly and lift people out of poverty, they must have transparent financial institutions and accountable justice systems to provide a level playing field and opportunity for all.
Management accounting can contribute by:
- Advocating good governance.
- Encouraging a globally accepted integrated reporting framework.
- Always holding institutions to account.
17. Partnerships for the goals: Strengthening the collaborative relationships between businesses, governments and individuals is the only way for the SDGs to succeed.
Management accounting can contribute by:
- Encouraging partnerships across the value chain.
- Fostering an understanding that joined-up approaches benefit all parties.
- Highlighting the cost/ opportunity benefit in reports.
“We need action from everyone, everywhere. These 17 Sustainable Development Goals are our guide. They are a to-do list for people and planet – and a blueprint for success. They compel us to look beyond national boundaries and short-term interests and act in solidarity for the long term. We can no longer afford to think and work in silos. Institutions will have to become fit for purpose, a grand new purpose.”
Ban Ki-moon, secretary-general, United Nations
“By providing quality education, training and continuous professional development, CIMA is ideally placed to be the right vehicle for attaining the SDGs.”
Ovais Sarmad FCMA, CGMA, chief of staff, International Organization for Migration
“We want to provide the best education and training to our employees, because our industry is all about what employees know. How we account for that value is heavily focused on intellectual property, measured in intangible assets. This is not a tick-box procedure. It’s a way of ensuring that we’re developing the best of the best.”
Pramod Prakash Panda, vice-president and head of training education and assessment, Infosys
“Promise us that you will keep your commitments and invest in our future. Promise that every child will have the right to safe, free and quality primary and secondary education. This is the investment the world needs and what world leaders must do.”
Malala Yousafzai, education activist and Nobel laureate
“Investing in women’s lives is an investment in sustainable development, in human rights, in future generations – and, consequently, in our own long-term national interests.”
Liye Kebede, model and World Health Organization ambassador for maternal health
“Gender equality is more than a goal … it is a precondition for meeting the challenge of reducing poverty, promoting sustainable development and building good governance.”
Kofi Annan, former UN secretary-general
“Sustainable development is a fundamental break that's going to reshuffle the entire deck. There are companies today that are going to dominate in the future simply because they understand this.”
François-Henri Pinault, CEO, Kering
“The expectation on businesses is at an all-time high. Management accountants are critical in helping them to integrate the goals into governance, management and reporting, as well as in facilitating greater connectivity between social and environmental responsibility and economic benefit.”
Stathis Gould, head of professional accountants in business service delivery, IFAC
“We are engaged in nothing less than the transformation of global capital markets. That demands major change. If business isn’t sustainable then society is at risk. If society isn’t sustainable then business is at risk. So it’s just enlightened self-interest for business to support the SDGs.”
Mark Wilson, group CEO, Aviva
“Clean air and water and a liveable climate are inalienable human rights. Solving this crisis is not a question of politics. It is our moral obligation.”
Leonardo DiCaprio, actor and UN campaigner on climate change
“Today’s one-dimensional business approach, which measures and reports changes only to shareholder-owned financial capital, prioritises the financial goals of shareholders over a host of other interests, including those of society and the planet. This is not only unsustainable, but self-defeating. Without sufficient social and natural capital, businesses cannot function over time.”
Pavan Sukhdev, environmental economist
“What will the future model be in terms of fuel sources and consumer choice? We must differentiate between the company’s current value, as shown in its P&L account, and the long-term value that will be severely affected by these factors.”
Ramesh Subramanyam, CFO, Tata Power
“We have to make people aware of the threats they may face, but we also have to encourage them to think about what they can do to mitigate the situation. There will always be fraud, so we will always need people who understand accounting to check the systems are functioning in the correct way.”
Gerard Ee, president, Institute of Singapore Chartered Accountants
“While there are many pathways forward to achieve the SDGs, one thing is clear: business as usual is not an option if we want to close the $2.5 trillion annual funding gap in developing countries alone. To realise these goals we need to foster a new era of collaboration and co-ordination among leaders from different sectors.”
Judith Rodin, president, Rockefeller Foundation