CPA Ontario has issued a thought leadership report CPAs and the New Social Contract – The Rise of the Warrior Accountant.
Here’s what that title refers to:
- In 2020, Financial Times columnist Gillian Tett called attention to the “suddenly not-so-boring” accountants working to harmonize (environmental, social and governance) reporting at the World Economic Forum in Davos in January 2020. “The Warrior Accountant,” she wrote, will “do more to change the world on green issues than activists”.
- Tett, along with asset managers pitching ESG funds, an investment category that has boomed since the onset of the covid-19 pandemic, hopes CPAs will tie ESG metrics to business strategy, enabling their organizations to respond nimbly to emerging social shifts. If accountants get involved in determining materiality, developing metrics, setting targets and establishing controls, businesses will be better able to translate and manage their environmental and social impacts and the risks they face from social change.
- This will require the “warrior accountant” to shift their stance, from a defensive position where ESG helps to guard against reputational risk, to an offensive posture that is more assertive in putting organizational ESG performance in the public domain.
- …CPAs who are already involved in ESG issues agree that there is an opportunity for the profession to use its expertise in measuring, disclosing and auditing to bring rigour, consistency and comparability to ESG reporting, says Elizabeth Demers, Professor of Financial Accounting at the University of Waterloo. “We are the ultimate experts in measurement, disclosure and attestation, which is what’s needed in the ESG realm. We should be leading,” she says. Brian Lawson, Vice Chair at Brookfield Asset Management, agrees that accountants will “absolutely” play a key role in this space. “The financial reporting teams within companies are trained to measure performance and have deep experience in understanding and assessing performance against standards and principles, making them best equipped to measure ESG.”
You may think that this in itself sounds somewhat defensive, with a note of underlying panic at missing out on an appropriate piece of the available pie: the report notes that ESG may currently be viewed for example as a matter of risk management, or a compliance activity, or part of the investment process. If finance and accounting doesn’t do better in that competition, it’s partly attributable to a lack of structure and focus on the part of the profession:
- Our own market research has shown around half of the next generation of CPAs want their careers to make an impact on sustainability issues. But clarity around the pathway through the accounting profession to working in this space is yet to be established. Young accountants in public practice traditionally start out in financial audit and follow a stable career progression. In comparison, forging a career in non-financial reporting seems risky, with few deliberate connections between finance and sustainability. In the meantime, some CPAs are informally connecting to figure out how to transition into the ESG field, even though it appears to be an untested career path…
The report, which apart from the advocacy aspect contains a useful summary of the “ESG landscape and its rapid evolution as a business priority,” makes for interesting enough reading. Still, I can’t say I’m too enthusiastic about the “warrior accountant” label, not only because it’s so regressively clunky on its own terms, but also because it seems to suggest that all or most of accounting up to this point has been just about as non-warrior-like as all the sallow cliches suggest. Further, the term lays claim to a virtue that somehow transcends such regular accounting, whereas it’s plain that the primary concern is about not missing out on an economic opportunity. It might be more honest just to express it in those terms, not to mention more effective in translating “thought leadership” into, um, actual leadership.
Anyway, the report ends on the following note:
- CPA Ontario believes that CPAs, armed with the information and tools to make sense of the changes taking place, should embrace the warrior accountant mission. Our profession has a valuable role to play adding rigour, accuracy and consistency to social measurement and reporting, just as we do to financial reporting.
- It may still be too early to tell what the lasting impact of the covid-19 pandemic, and its effect on how governments and communities view the role of the company, will be. Will a vaccine-led recovery consign a year of soul-searching to the dustbin? Or will 2021 be like 1945: a pivotal year that future generations will look back on as a turning point that shaped the decades ahead? If so, “warrior accountants” may yet be in the vanguard of change.
Of course, there’s a possibility in between, in which the “soul-searching,” such as it’s been, only fuels the desire to get back to some recognizable notion of normality (which has always been evident in the weirdly disconnected performance of the stock market during all this), and, as I’ve written before, the issues in the report become more about points of differentiation in picking investment winners and losers (whatever the inherent virtues of the underlying companies) rather than about changing the world for the better…
The opinions expressed are solely those of the author