The management accounting profession, along with the wider business world, is being redefined by the work we are doing in the sustainability and ESG space. We have always been, and will remain, focused on adding value to organisations. What has changed is that now we understand that value incorporates more than just financial capital.
Organisations are taking a multi-capital approach, in which the complex interplay between all the Integrated Reporting capitals — financial and manufactured, as well as intellectual, human, social and relationship, and natural — will transform business models to create the sustainable organisations of the future. Our role in this transformation will be to maximise value by driving the effective and efficient allocation and deployment of all capitals, including financial, and other resources and relationships.
This will mean the finance function itself will change.
There are four major shifts that management accountants will need to make for this transformation to be successful. And they all cut across traditional boundaries:
- We will engage with our organisations’ business models on a much deeper level. Beyond the important traditional areas of cost and revenue, we also need to look at other dimensions, including purpose, the customer value proposition, and organisational culture. Our analysis will have a greater impact on how strategy is developed and managed in a multicapital environment.
- We need to develop a greater understanding of the importance of intellectual, human, social and relationship, and natural capitals. There will be a continuing shift of focus from tangible towards intangible assets. Capturing and managing intangible value will be a key part of our role. All the capitals may need to be accounted for in the business model.
- Sustainability means prioritising medium- and long-term value creation over short-term financial returns. It will also require us to engage in more challenging conversations across the wider stakeholder groups, to shift the focus to a longer time horizon.
- Accounting and finance professionals have always had relationships with investors and providers of credit. If we are to build sustainable organisations in a multicapital world, we will also need to develop further our relationships with customers, distributors, suppliers, employees, regulators, and other stakeholders.
The consequence of these four shifts is that management accountants will be operating in a more complex environment than in the past, and this new role will require a new skillset, centred on how we work with partners across our organisations.
A key short- to medium-term challenge for businesses is finding and retaining talent that has sustainability knowledge and skills. This is why taking a lifelong learning approach will serve us well in addressing the ongoing skills challenge.
Our success will depend on how well we can collaborate as well as analyse. Engaging with a wider range of stakeholders will place a greater premium on communication skills. Our skills will also be used in maximising the value of all the capitals and making connections between them and developing a focus on sustainability-related information. We will need to become more effective at problem-solving and creative thinking as we approach issues we may not even have considered in the past.
Adapting to this new world will undoubtably be a challenge, but it is also a great opportunity. It is a chance to extend the power of our analysis and insights right across the organisations we serve, adding value in new ways and building the sustainable future we all want to see.
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