Allen Blewitt - ACCA

ePolitix.com speaks to Allen Blewitt, chief executive of the ACCA, about their involvement in the debate around sustainability and CSR.

Question: What is sustainability reporting, and why is it important?

Allen Blewitt: I take the view that sustainability reporting goes back to the original concept of 'what is sustainability'. Sustainability as a concept for business was first developed properly in the 1980s by a group called the Brundtland Commission and the concept is that you take actions now, in terms of the way a company performs, that will not impact on the ability of future generations to meet their needs.

So it is very much an idea about long-termism and it is the antidote to the short-term focus that many companies have in terms of quarterly reporting and this year's results and so in that sense it is very beneficial view of a company's performance.

The reason it is important is that it is not just about financial performance, it is about a lot of other factors too, including what is the contribution of the company to the social environment, its employees, its stakeholders, its suppliers. Most importantly, in the 21st century, it is also about a company's impact on the environment.

It is important because we take the view that any company is part of the global village and any company, whether they are in financial services, in industry, whether they are a water supplier, has got a contribution that will impact negatively, or positively, on the total environment in which it operates. So it is vital to the health of a company.

The final reason I think it is important is that I take the view that all companies should consider themselves a long-term entity. The ACCA is 104 years old and I see it as part of my responsibility to see it lasts another 104 years but in 104 years' time we shouldn't have adversely affected the environment.

Question: How important is the Climate Change Bill in encouraging reporting on things like carbon emissions?

Allen Blewitt: I think this bill is vital. I know there is a lot of argy-bargy taking place at the moment thorough the parliamentary process and the early parts of the bill we saw mandated carbon reporting, we and many other stakeholders in this field are very supportive of mandatory reporting and we know that through committee and other stages this is being watered down and we are totally opposed to this.

The reason being that climate change is not a minor problem it is a major problem facing everyone around the world. We do not think that a gently gently evolutionary approach will solve this, there needs to be mandatory climate change reporting. Even if we don't quite have the measures yet, the mere fact that it is mandatory will accelerate the process of the development of measures.

Question: Your members are accountants. What is your interest in climate change and sustainability reporting?

Allen Blewitt: I should just give a slight historical background because ACCA were interested in sustainability when it was very unpopular. We were an early adopter about 20 years ago because we could see this was an issue that was going to become increasingly important, and that was before we had all of the evidence about climate change.

It is important for accountants on a number of levels; accountants are part of the world as well. One layer below that, accountants are the measurement professionals. One of the things we do with our professional skills is identify what the appropriate measures are for a company's performance, with key performance indicators for managers.

Also, we have the skills to offer some assurance to make sure the companies do have their claims verified independently. Therefore, accountants are at both ends of the chain when it comes to environmental reporting and they can't avoid being part of the wider world.

Question: Do we need a new group of environmental accountants, with a new set of skills?

Allen Blewitt: We are actually seeing people from a range of disciplines emerging, it is not just accountants. There are engineers specialising in environmental engineering, there are people working in the financial services in the investment community, and obviously, there are accountants specialising in this field. I think we will see multi-disciplinary developments in relation to climate change reporting and carbon reporting in particular.

There is a great opportunity in the City of London if the UK decides to embrace carbon reporting and carbon accounting because the sheer size of that market will accelerate and I would have thought the City would like to have the lion's share of that market as it moves forward. At the moment, we think it is about £20billion but it will grow very very rapidly over the next 10 to 15 years. 

Question: What is 'Going Concern' about?

Allen Blewitt: In a nutshell, Going Concern is our attempt to establish some priorities for companies, organisations and governments in terms of where they should go on sustainability, corporate social responsibility and climate change, those inter-related areas.

One of the first things we said was companies have to have an overall strategy, they have to put a line in the sand and be able to say this is where we stand on these issues. To be fair, a number of UK companies are already reporting on a voluntary basis. We are very pleased to be able to commend those but we need to do a lot more.

We think companies need to treat this not as an after-thought but as core to their whole governance, we think boards should have this as top of their list of issues just as they do with financial results.

We also think there are layers below that. In Going Concern we talk about standards. We need to prepare standards so that businesses can talk to their accountants about the standard and report against it. We need to have education processes so that the next generation of accountants and auditors know what sustainability and CSR are and they are tested on it in their qualifications.

The final area that is a huge challenge is for small and medium sized companies. We are in the middle of a major downturn in the economy. No one at the moment is keen to use the R word but, even if we don't call it a recession, it looks very much like one.

SMEs will have a tough time and it is difficult to advocate an issue like sustainability and CSR because people see it as a 'nice-to-have'. This means the whole concept will come under pressure as people adopt a short-term, make sure the business survives type approach.

Question: Do you think the emphasis on sustainability and CSR should be business-led or does there need to be encouragement from government?

Allen Blewitt: A lot of it has been voluntary so far. The ACCA have been running sustainability reporting awards in a number of countries around the world for nearly 20 years and that has brought out a lot of best practice.

We have seen people who want to measure themselves in front of their peers, who want to stand out in the crowd in terms of enhancing their reputation and who want to actually attract sustainability type investors onto their shareholding portfolio.

All of that is very good but I don't think the evolutionary path is going to be fast enough given the magnitude of the problem. I am not an alarmist but I take the scientific evidence for climate change very seriously and I don't think business will move fast enough because the short-term economic motive is too strong and too deeply embedded in the culture of management.

Therefore, I believe the catalyst has to be government mandating reporting and that will prompt the accounting profession and the business community to come up with standards against which they measure carbon reporting and carbon trading.

And so I would like to see two things; mandatory reporting and encouragement of a vibrant carbon trading environment here in the UK. Hopefully then the UK will become a benchmark for other economies as we move rapidly down this path.

Question: Do you think it would be useful to have a ratings system so that individuals and firms can gauge how seriously a business takes CSR and SD?

Allen Blewitt: I think that business is very comfortable with ratings systems. They are a simple way of measuring where you stand.

On the one hand, a system would encourage best practice and on the other it would discourage worst practice. No-one will want to be at the bottom of the ratings list because the media commentary and analysts' commentary would say they are not doing enough to meet society's expectations regarding sustainability and CSR. So a ratings agency, if one can come up with a series of measures, should be introduced.

My only comment would be is that I don't think we will get it right at the first iteration, and any ratings or league table developed will probably evolve as we start to learn more about how to make it work.

Question: How do businesses know what sustainability means to them?

Allen Blewitt: I think that is a fair point and as I said earlier, the definition given by the Bruntdland Commission about the way you satisfy your needs in this generation should not impact adversely on the ability of the future generations is a very simple but actually quite commonsensical approach.

The first thing a company need to do is to define their approach and business philosophy in relation to sustainability, where do they stand. Then they can develop their strategy, their governance and their measures around that. So, like with other aspects of the business, they have to state their objectives around sustainability and where they are going to fit them in.

Question: Would it help if CSR were made a part of all business-related qualifications?

Allen Blewitt: Yes, I think so. There are two aspects to this. Firstly, there is the future generation of professionals and the ACCA have taken steps towards that in our new qualification introduced last year. We have embedded sustainability and CSR in a number of the papers so the new accountants will definitely understand that.

There is also the retrofit reality: there are millions of accountants around the word and we need to make sure that in their continuing professional development the get opportunities for re-educating, and learning and refreshing their knowledge about these areas.

You can't just look forward you also have to look at the existing pool of people.

Question: How do you think, in a down-turning economy, we can encourage businesses to focus on CSR and their impact on the environment?

Allen Blewitt: I think that is going to be one of the big management debates that will happen very much in the boardrooms rather than in public and I would give this advice to organisations who think they can postpone it.

Firstly, sustainability isn't going to go away. Secondly, in a downturn one of the things that is important is your corporate reputation. If you are seen to be a good corporate citizen people will be loyal to you and will not abandon you for the cheapest possible product. Taking a positive line on sustainability does actually enhance corporate reputation.

The third reason is the ability to attract and retain talented employees. What we know from research, here and in a number of other countries, is that graduates are focusing their attention on those companies they believe have a positive social conscience and a positive attitude towards sustainability.

If you want to be a strong survivor when we move out of the downturn, you have to keep attracting good people now, which is another good reason for companies to focus on sustainability.

Question: Do you have any final comments for ePolitix.com readers?

Allen Blewitt: I would hope that in the public policy arena that there is a recognition that this is not just another business issue, but that this is the business issue moving forward.

I know that there will be enormous lobbying forces against mandatory climate change reporting and I think this is the time when policymakers need to tough it out.

In my view this is similar to a war-footing for the economy, in terms of how we deal with the realities of climate change and one small start will be the mandatory reporting of climate change and I would urge the policymakers to resist the siren calls of the lobbyists who ask them to water it down.