THE 2030 AGENDA FOR SUSTAINABLE DEVELOPMENT
A SNAPSHOT OF THE ACCOUNTANCY PROFESSION’S CONTRIBUTION
The UN Sustainable Development
Goals: Are We Ready?
As we rapidly approach 8.5 billion people on Earth—expected by 2030—the challenges of inequality and our planet’s limited resources pose an interconnected set of global sustainable development challenges and uncertainties. Being globally systemic, these risks cannot be managed by any one country, government, business, or stakeholder group.
Consequently, there is a growing momentum for collaborative action toward achieving sustainable development, in the certain knowledge that the world’s economic development ultimately depends on it. This momentum led all 193 United Nations (UN) member states to approve the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs) in 2015, demonstrating a widespread political commitment to addressing some of the world’s most intractable problems, including extreme poverty, inequality, and climate change.
THE FOLLOW-UP AGENDA TO THE MILLENNIUM DEVELOPMENT GOALS
The SDGs provide a common language for governments, business, and others for addressing systemic interconnected development challenges, and succeed the previously articulated eight Millennium Development Goals (MDGs).
Introduced in 2000, the MDGs were approved by 146 UN member states. The final 2015 MDG Progress Report captured results from the past 15 years and outlined many successes. Extreme income poverty, for example, was cut in half and rates of HIV and malaria dropped by 40%.
But performance was uneven across countries, and MDG application was not universal. Today, huge gaps still exist between the rich and the poor. In developing regions, children in the poorest households are four times as likely to not attend school as those in the richest households. And there is still a long way to go on environmental sustainability, for example, with global carbon dioxide emissions
|increasing by more than 50% since 1990. Furthermore, the MDGs did not address comprehensively the breadth of targets and indicators required to achieve all three parts of sustainable development—economic growth, social inclusion, and environmental protection.
An open and global consultation, unprecedented in its size, helped shape the SDGs to address these gaps and indicate next steps. UN outreach and collaboration efforts reached well beyond national governments to include consultations with academia, media, private sector, employers, trade unions, civil society, and decision makers on the central challenges to development. UN Resident Coordinators at the country level led the consultation process, and will continue to feed into the post-2015 process. The process also included the MY World survey, which captured the input of 9.7 million people.
Ultimately, the SDGs allow the completion of unfinished business from the MDGs, and provide a more holistic sustainable development agenda with a strong focus on economic, social, and environmental sustainability.
In contrast to the MDGs, there are several important principles that underpin the SDGs.
• Universality: a foundational value of the SDGs and a departure from the MDGs, the Goals apply to all countries, irrespective of their development status, thereby recognizing the world as one system. All countries, including governments, business, and civil society, need to carefully examine what they can contribute.
|• Integration: balancing all three sustainable development dimensions—economic growth, social welfare, and environmental protection—and managing tradeoffs and maximizing synergies across Goals and targets.
• No one left behind: the Goals require countries to go beyond averages—the SDGs should benefit all, eradicate poverty, and reduce inequalities. Better and disaggregated data is also encouraged for all countries.
| A CALL TO ACTION FOR BUSINESS
The role business plays in achieving the SDGs is as critical as the role played by governments, non-governmental organizations, and civil society. Globally, the private sector accounts for the vast majority of jobs, capital flows, and an average 60% of gross domestic product (GDP). The private sector needs to respond and engage by connecting business strategies with the SDGs, developing business-led solutions, and enhancing corporate sustainability.
Governments are seeking public/private sector partnerships to create an agenda for action. It is estimated that achieving the SDGs will cost between 1.5% and 4% of global GDP. This leaves a significant gap between available funding and the levels of investment required for necessary infrastructure and solutions, which will not be met through governments’ domestic resource mobilization or aid alone. Publicprivate collaboration is an essential element of the SDG implementation efforts.
According to the UN Global Compact and Accenture Strategy 2016 CEO Study, business leaders believe the SDGs provide an essential window of opportunity to rethink approaches to sustainability. Of the CEOs participating in the survey, 89%said that commitment to sustainability is translating into real impact in their industry. This view is also backed up by PwC’s Make It Your Business: Engaging with the Sustainable Development Goals, which found that 71% of businesses say they are already planning how they will engage with the SDGs. Only 13% of businesses, however, have identified the tools needed to assess their impact against the SDGs.
Shaping and validating organizational objectives, strategies, and plans within the context of the SDGs will be how the ambition to respond to development challenges is instilled in the private sector. Mapping these against the SDGs is a good place to start, and some organizations have begun by highlighting their contributions to the SDGs in their corporate reporting (for more examples, refer
| to “The SDGs, Corporate Strategy, and Corporate Reporting”). Ultimately action is needed and some companies, such as Novo Nordisk, have stated that their efforts will be strategic and focused on taking action.
Resources and support tools are becoming available for businesses committed to meeting the Goals. For example, the World Business Council on Sustainable Development and the UN Global Compact, as well as the Business Call to Action, are providing resources to help businesses. The World Economic Forum has also published an article on how businesses can help.
|THE GLOBAL ACCOUNTANCY PROFESSION
The profession is an essential driver of strong and sustainable organizations, financial markets, and economies.
As a result, it inherently has a crucial role in achieving the SDGs and meeting the targets.
The profession is well-positioned to speak with one voice on issues relevant to all economies and societies. Building on a strong and diverse profession, professional accountancy organizations
(PAOs) should continue to produce accountants with the relevant skills and awareness to contribute to sustainable and resilient organizations, capital markets, and economies.
A strong accountancy profession, comprising highly trained ethical accountancy and finance professionals, serves the public interest by facilitating economic activity, development, and decision making by responsible and effective government and business leadership.
|The specific professional skills of accountants—including in governance, risk management and control, business analysis, and decision support, which involves measuring, reporting, and providing assurance on financial and non-financial data—will become increasingly in demand as the SDGs gain traction (see Global Goals, Shared Ambition).
| GLOBAL GOALS, SHARED AMBITION
PAO Leadership in Supporting the UN Sustainable Development Goals
The Institute of Chartered Accountants of England and Wales (ICAEW) Sustainable Business Initiative highlights that the profession:
• has a history of uniting to serve the public interest by creating public goods in the form of common bases of measurement, reporting, and assurance;
• understands the situation around each Goal, the interconnectivity of the Goals, and the need to measure progress, which will require huge amounts of data—data that will need accountants to make sense of and to build trust in; and
• has a distinguished record of building strong local institutions, which will be necessary to achieve the Goals.
|Going forward, PAOs can broadly play three key roles in contributing to the 2030 Agenda for Sustainable Development. Within each of these are various questions that PAOs might consider to further focus their contributions to the Goals. IFAC looks forward to a continuing dialogue within and beyond the profession around these areas, and other ways the profession can make a difference.||1. MAINSTREAMING THE SDGS:
• What is the role that PAOs play in the planning and preparation of SDG-based national development strategies?
• Once targets are prioritized and mainstreamed into national or local plans and budgets, how will sectors collaborate to achieve the SDGs?
• How can such targets be incorporated into business strategies and plans?
• How will the profession help governments improve existing budget systems to deliver the SDGs?
|2. IMPLEMENTING THE SDGS:
• What role do PAOs play in the implementation of interventions linked to the SDG targets?
• How will PAOs help boost accountability during the implementation process and not just post facto?
3. MONITORING THE SDGS:
• Which specific indicators may be useful when measuring and reporting a PAO’s contribution to the SDGs?
• How can PAOs help support the collection and analysis of data?
Goal 4: Quality Education
ENSURE INCLUSIVE AND EQUITABLE QUALITY EDUCATION AND PROMOTE LIFELONG LEARNING OPPORTUNITIES FOR ALL
The 2030 targets for this Goal most relevant to the profession include:
- 4.3: Ensure equal access for all women and men to affordable and quality technical, vocational, and tertiary education, including university.
- 4.6: Ensure that all youth and a substantial proportion of adults, both men and women, achieve literacy and numeracy.
|THE PROFESSION’S PRIORITIES IN DELIVERING QUALITY EDUCATION
Relevant, equitable, and affordable education is widely recognized as a critical factor in ending extreme poverty and enabling economic development.
PAOs are clear champions for this Goal.
Currently, the profession is:
• working toward meeting the global demand for accountants with a range of skills—technical but also leadership, business, and entrepreneurship-related skills.
Providing relevant professional education and skills is at the heart of the profession and its capacity building efforts (also see Goal 8: Decent work and economic growth); and
• providing continuing professional education to accountants throughout their careers, helping them maintain relevance and a positive contribution to sustainable outcomes.
|• Undertake initiatives to boost the profession’s talent pool. To further strengthen the relationship between a developed profession and economic prosperity, it is important for the profession to continue finding innovative ways to create opportunities for those with talent and ability to qualify as professional accountants. Developing and expanding accountancy education through strong PAOs is a key focus of the profession’s efforts to enhance capacity and open up the profession to others. It also involves providing relevant training and support to professional accountants who can work effectively in business and the public sector.
||• Identify innovative ways to contribute to societal goals, such as increasing financial literacy. An increasing number of PAOs have programs to develop financial literacy within society. Improving financial literacy is key to broadening access to financial services, a key requirement in many Goals (1, 2, 5, 8, and 9) and a necessary factor for gender equality (Goal 5).
• Consider how to address inequality in the rates of men and women entering the profession. To enable equal access, take steps to understand and remove any genderbased constraints within the educational systems that deter women from entering the profession.
| INITIATIVES TO BOOST THE TALENT POOL
To support Singapore’s SkillsFuture initiative, the Association of Chartered Certified Accountants (ACCA) and the Institute of Singapore Chartered Accountants partnered to provide more opportunities to those who aspire to become accountants and meet the evolving needs of the profession by offering high-quality education and training for students from institutes of technical education, polytechnics, and universities as well as mid-career professionals.
ACCA research on talent in global finance functions suggests that changing finance delivery models will have an impact on attracting talent to the profession. The research highlights that aspirations of younger generations in today’s finance function may be changing, too, with finance and broader business partner roles being valued more highly than finance roles in shared services.
CIMA’s Global Research Programme produced an analysis of global employability and the challenges the finance sector faces in the competition for the best talent. The analysis triggered a wider debate about talent management and perceived gaps between accountancy education and employers’ needs. This research discusses how this gap may be bridged.
New research by Institute of Chartered Accountants of Scotland and the UK Financial Reporting Council highlights the mix of skills and qualities needed in an audit team to perform high-quality public interest audits in a modern and complex global business environment.
INNOVATIVE WAYS TO CONTRIBUTE TO FINANCIAL LITERACY IN SOCIETY
• YES Bank, the Bombay Stock Exchange (BSE), and the Institute of Chartered Accountants of India (ICAI) partnered to improve financial literacy by offering financial literacy camps in YES pan-India branches.
• A number of PAOs, including CPA Canada, Chartered Accountants Australia and New Zealand, and the American Institute of CPAs (AICPA), have programs providing financial literacy education and information to society. The AICPA’s financial literacy initiatives include 360 Degrees of Financial Literacy and Feed the Pig. CPA Canada offers free financial education to various audiences, including children and seniors, with more than 1,200 community events across Canada each year to enhance the financial literacy of all Canadians.
| INITIATIVES TO ALIGN ACCOUNTANCY EDUCATION WITH INTERNATIONAL STANDARDS AND BEST PRACTICES
IFAC’s PAO Capacity Building Program has significant projects in several countries.
• In Ghana, Rwanda, and Uganda projects to strengthen the professional qualifications delivered by national PAOs are underway. These projects cover review of professional qualification study materials, enhancing examination systems (including training staff and examiners), and supporting tuition and practical training arrangements. The projects also support continuing professional development content review and policy in line with international standards.
• A project in Nigeria focuses on study and examination material review and enhancement, as well as the examination processes, of the Nigerian College of Accountancy, which is overseen by the Association of National Accountants of Nigeria.
• A project exploring the need for a regional qualification in basic accounting skills has been commissioned through the MOSAIC initiative, an effort relevant to Goal 8. A feasibility study is underway, with an initial focus on Africa, assessing existing qualifications, reviewing the skills gap, and considering how the introduction of basic accounting skills would impact the labor market.
Goal 5: Gender Equality
ACHIEVE GENDER EQUALITY AND EMPOWER
ALL WOMEN AND GIRLS
The 2030 targets for this Goal most relevant to the profession include:
- 5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic, and public life.
|THE PROFESSION’S PRIORITIES IN DELIVERING GENDER EQUALITY
Although inclusion is a business opportunity (see “Why Diversity Matters” from McKinsey), it is a challenge for many organizations, including the accountancy profession as a whole. Like any institution or business, the profession is able to fulfill its greatest potential when it draws members and leaders from the widest possible pool of talent. Accountancy, like all professions, businesses, and industries, needs to embrace,
|utilize, and engage with all talents and capabilities, especially women (a broader definition of diversity is addressed by Goal 10).
A diverse profession is a resilient profession. In many countries fewer women than men enter the accountancy profession. Equally important, the rates of women reaching leadership roles in accountancy and finance are often low. There have been important successes in some nations and regions—women make up 75% of accountants in Singapore, 69% in
|the Philippines, and more than half of all new CPAs in the US. But the problem is not yet solved—especially when looking at leadership positions. For example, in the US, while women represent almost half of all professional staff at accounting firms, only 21% of all firm partners are women. Although well below gender parity, this is a high proportion within the profession globally, much higher than in emerging and developing economies, where women comprise less than 5% of partners in accounting firms.
|• Champion diversity, especially in gender, through programs to attract, retain, and—in particular—advance accountants, and advocate for working environments and non-traditional career paths that appeal to female accountants of the future.
• Create partnerships and support initiatives to increase the number of women in accountancy and finance, as well as in broader finance and business leadership roles. For example, the Royal Nederlandse Beroepsorganisatie van Accountants signed the Talent to the Top Charter with other stakeholders, which is a public commitment to diversity at management levels.
INITIATIVES TO SUPPORT WOMEN IN ACCOUNTANCY AND BUSINESS
- The Women’s Accounting Leadership Series is a new continuing education event designed for women in accounting and finance. Co-sponsored by the Institute of Management Accountants and Pace University (US), the initiative brings together women in accountancy and finance with varying years of experience and from different industries for career and technical discussions. The setting provides a forum to share thoughts on their own leadership development and strategies for success.
- The AICPA’s Women’s Initiatives Executive Committee is committed to retaining and advancing women in the profession. One of its activities is the Women’s Leadership Summit, which helps women build skills in business development, mentoring, networking, and client service.
- The Institute of Chartered Accountants of India has created a Portal for Women Members to empower women members and assist the Institute in formulating and implementing plans, policies, and programs to support the development of its members.
- ACCA’s Women in Finance initiative promotes the value of women in senior roles in business and accountancy as part of their wider diversity agenda. It explores the challenges facing women today and offers guidance with practical solutions.
- ICAEW’s Boardroom Diversity portal provides the latest research, reports, articles, and guides on legal and regulatory initiatives in the UK and around the world to increase representation and diversity on corporate boards.
- CPA Canada and its Women’s Leadership Council provide data and resources for members, such as the 2016 Business Case for Advancing Women in Leadership, which provides updated data and information on women in business and in the CPA profession specifically. It also offers two toolkits for women in business, one to assist in navigating their careers and another for organizations wishing to retain and advance women.
- In addition to the International Federation of Women Accountants, a number of national associations and forums exist, including the Association of Women Accountants, Ghana, and the Society of Women Accountants Nigeria, which allows members to interact and support each other.
- The MOSAIC website, which collates news and resources related to development of the profession around the world, includes a section dedicated to inclusion, women, and leadership.
Goal 8: Decent Work and Economic Growth
PROMOTE SUSTAINED, INCLUSIVE, AND SUSTAINABLE ECONOMIC GROWTH, FULL AND PRODUCTIVE EMPLOYMENT, AND DECENT WORK FOR ALL
The 2030 targets for this Goal most relevant to the profession include:
- 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries.
- 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small-, and medium-sized enterprises, including through access to financial services.
|THE PROFESSION’S PRIORITIES IN DELIVERING DECENT WORK AND ECONOMIC GROWTH
Economic growth has a wide impact on many of the SDGs, including ending poverty (Goal 1). This SDG highlights two different but related elements for the profession’s attention.
The first is the need for accountants to deploy their professional skills and competences to help foster resilient and responsible organizations (linking to Goal 12). Business in the 21st century requires responsible leaders who direct company strategies and operations with a view to achieving sustainable economic, social, and environmental performance. This is the essence of the seminal King Code of Governance for South Africa: social and environmental responsibility and economic viability cannot stand in isolation from each other.
This vision is being embraced by a small but increasing number of organizations.
The scope of influence of many accountants working in business and the public sector affords them an important role in facilitating responsible behavior and decisions leading to resilient and successful organizations. As finance professionals, they need to ensure that short-, medium-, and long-term financial, social, environmental, and reputational consequences are taken into account in decision making.
The second and broader element is the contribution of the profession to greater prosperity and improved living standards. Research conducted by the Centre for Economics and Business Research for IFAC associated the
|size and growth of the profession with the development of economies. The profession’s impact on better information, reporting, measurement, and decision making is decisively associated with improved living standards and the health, well-being, and prosperity of nations and their citizens. Where developed, the profession is an important influence on the creation and maintenance of strong and trustworthy institutions (Goal 16), which are ultimately the basis for improving people’s welfare.
The profession’s capacity to address constraints to sustainable growth— such as fraud and corruption, poor public sector governance and financial management, poor accounting and auditing practices—is important as these directly affect the drivers of economic development, including domestic and foreign investment. Providing high-quality financial
|• Enhance awareness among accountants of the SDGs and the opportunities they create, and help foster the significant contribution of the profession to economic growth. The profession’s contribution to sustainable economic growth will be greatly enhanced through the individual contributions of accountants around the world. Through their qualifications and continuing education, PAOs can equip their members with sustainable business practices, enabling them to respond to a range of sustainable development challenges.
• Continue the commitment and effort to build the capacity of the profession and of PAOs, especially in jurisdictions that are currently unable to fully meet economic needs. Creating inclusive opportunities for people to become accountants provides direct support to the development of economies. It helps set the right
|conditions to make investment in infrastructure, provide the foundations of sustainable growth, and facilitate transparency and accountability. PAOs can also proactively promote policies that encourage entrepreneurship and job creation, and the protection of people.
• Support the development and adoption of globally accepted standards for financial reporting for the public and private sectors, auditing, and ethics, to facilitate trans-border investments, transactions, and common global practices. The implementation of international standards improves the reliability of financial information, capital flows and investments, and cross-border trade, which ultimately help emerging economies increase their participation in the global economy. Coupled with transparency, this also helps build public access to information (Goal 16).
|and non-financial information is a significant support for achieving sound capital markets and resilient companies, as well as for effective and efficient public service delivery.
Given the importance of a developed profession to the international development agenda, strengthening the capacity of the profession, particularly in developing economies, is a priority to ensure an adequate supply of competent professional accountants.
Globally, there are more than 150 countries that either do not have a PAO or do not have a PAO with sufficient capacity to function effectively. Through their diagnostic reviews, the World Bank and other institutions have highlighted weak capacity in many jurisdictions. IFAC estimates that the cost to close this global capacity gap is in excess of US
|$100 million, might take 30 years to achieve, and will require improved cooperation and collaboration among the profession, development partners, and the private sector.
Efforts to conquer these challenges and close this gap include; i) MOSAIC, a historical memorandum of understanding between IFAC and 12 development partners, which provides the foundation for an aligned approach to enhancing the capacity of PAOs; and ii) IFAC’s PAO Capacity Building Program, which supports the development and growth of PAOs around the world including managing peer-to-peer projects to support PAOs in a number of countries, including Ghana, Rwanda, and Uganda using a grant from the UK Department for International Development.
COMMITMENT TO DEVELOPING THE ACCOUNTANCY PROFESSION
- PAOs are engaged in a range of activities to support sustainable development of the global profession, often with assistance from aid agencies. PAOs advise on accountancy legislation, approaches to regulation, and institutional development of PAOs, regulators, and other key organizations.
- Many PAOs in developed economies provide mentoring and practical help to PAOs in developing economies, such as the ICAEW, whose contribution is highlighted in Building Capacity for a Sustainable Future.
- The MOSAIC website provides a platform to share key success factors, challenges, and lessons learned. The resources and news provided are relevant to the development of the profession and assist in building a picture of the state of the profession globally. It also includes curated guidance on PAO development issues from across the IFAC network. To showcase specific projects, highlight achievements, and encourage wider knowledge sharing, the website also includes a database of current and completed capacity building projects.
- IFAC’s PAO Capacity Building Series provides practical support for developing healthy national and regional professional accountancy organizations.
Goal 9: Industry, Innovation, Infrastructure
BUILD RESILIENT INFRASTRUCTURE, PROMOTE INCLUSIVE AND SUSTAINABLE INDUSTRIALIZATION, AND FOSTER INNOVATION
The 2030 targets for this Goal most relevant to the profession include:
- 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities.
- 9.5a: Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological, and technical support to African countries, least developed countries, landlocked developing countries, and small island developing states.
|THE PROFESSION’S PRIORITIES IN DELIVERING INDUSTRY, INNOVATION, INFRASTRUCTURE
This Goal highlights the interconnected nature of all the Goals. Transformational change in infrastructure, including in the energy, transportation, and building sectors, to meet climate change goals (Goal 13) will require large-scale private sector engagement. This clearly demonstrates that climate change mitigation policies need to be considered in a broader policy context that covers an enabling investment framework through partnerships (Goal 17).
High-quality economic infrastructure underpins economic activity, both within and across national borders. It is one of the most powerful levers available to support business in
|making the investments that drive inclusive, sustainable growth. The Business Twenty (B-20), a forum where the private sector produces policy recommendations for the Group of Twenty (G-20) nations, issued its Infrastructure & Investment Taskforce report in 2014, which detailed this connection and the importance of integrated reporting. Integrated reporting promotes integrated thinking about a broader view of capital than today’s financially focused business reporting, which supports both investment and innovation.
Accountants in business and government enable confidence in financing infrastructure by providing critical services in decision analysis, due diligence, business advice, anticorruption and money laundering
|activities, as well as through integrated reporting. They are in a unique position to make a business case for investment in infrastructure development, in both private and public sectors, that integrates sustainability and value creation within the decision-making process.
The involvement of accountants in supporting investments in research and development (R&D) is also important to help ensure such investments are well managed and deliver against objectives. Within the R&D process, accountants will typically be involved in identifying projects that support strategy, planning, design, and production decisions that meet needs while also being cost effective, and then evaluating the effectiveness of the R&D carried out.
|• Facilitate the profession’s contribution to integrated reporting as a means to rebalance economic and capital market decision making in favor of long-term value creation and investment, as recommended in the B-20’s report. The critical role of accountants in business in bringing about a multi-capitals approach to value creation through integrated reporting is covered under Goal 12. Accounting for sustainable development through integrated reporting is undertaken in the context of strategy, how organizations create value, and how capital allocation decisions are ultimately affected.
• Identify and evaluate opportunities for investment in new technology and infrastructure to enhance the sustainability of organizations. The rebalancing toward longterm value creation is also encouraged by providing an enlightened contribution to sustainable development
|through applying relevant management, reporting, and accounting practices that support targeted R&D and innovation. To this end, accountants in business can support ongoing thought leadership on the technical aspects of value creation and investment appraisal.
• Accelerate efforts to influence and drive sound public and private sector governance and financial management. While infrastructure investment has a multiplier effect, enabling exponential economic development, there is an acute problem of underinvestment in public infrastructure in many countries, regardless of level of development. Too often, poor governance and public sector financial management inhibits investment. Accrual accounting, which involves the proper valuation and recognition of assets, also facilitates better utilization of those assets and strengthens resource mobilization.
INITIATIVES RELATED TO INFRASTRUCTURE, INVESTMENT, AND INNOVATION
- The profession facilitates integrated reporting adoption through its influence and reach throughout the world. The Integrated Reporting PAO Network provides a means for PAOs to share updates, ideas, and experiences related to their contribution to integrated reporting, and for IFAC to support PAOs in developing their integrated reporting capacity.
- The Accountability. Now. initiative, which is supported by a broad coalition led by the profession, campaigns for government accountability and transparency. Sound public financial management and reporting, based on accrual accounting, is necessary for governments and citizens to have a clear understanding of a jurisdiction’s or entity’s financial position, including all assets and liabilities. Promoting economic development and enhanced public services by investing in new infrastructure is not possible without understanding the availability of public finances and financial commitments already in place.
- IFAC’s Project and Investment Appraisal for Sustainable Value Creation provides guidance on evaluating investments to support long-term decision making focused on sustainable value creation.
- Infrastructure development and innovation thought leadership from the profession advances thinking related to Goal 9. This includes Chartered Accountants Australia and New Zealand’s report, Will Technology Disrupt Our Existing and Future Infrastructure?, which explores how technological innovation is changing, and will continue to change, the way infrastructure is utilized and how businesses and people use infrastructure. 20 Issues on Business Innovation also provides ideas for businesses to encourage and support innovation across their organizations.
Goal 12: Responsible Consumption and Production
ENSURE SUSTAINABLE CONSUMPTION AND PRODUCTION PATTERNS
The 2030 targets for this Goal most relevant to the profession include:
- 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.
|THE PROFESSION’S PRIORITIES IN DELIVERING RESPONSIBLE CONSUMPTION AND PRODUCTION
Private sector expectations have clearly advanced to higher level with the SDGs. A recent trend is for codes of corporate governance—such as the King Code of Governance for South Africa and the UK Corporate Governance Code—to highlight the responsibility of directors for their company’s sustainable success by taking long-term objectives into account in their decision making. The implication is that delivering value to shareholders is an outcome of a company’s business model and activities, not the primary objective. The new normal is an expectation that organizations deliver a net-positive contribution to the environment, economy, and society rather than merely being “less bad” than competitors.
Goal 12 is particularly relevant to accountants in business. Integrating sustainability into business and corporate governance is key for seizing the most important business
|opportunities presented by the SDGs and reducing risk. For companies to seize the SDGs as business opportunities, they need to view sustainability goals as a part of the fabric of their organization—an integral part of financial, strategic, and operational goals.
Accountants in business need to build on their traditional role of optimizing business processes and avoiding waste and stay abreast of innovation and emerging technologies in their industry to make sure that they are supporting the development of products, services, and processes that are profitable and contribute directly or indirectly to the SDGs.
Goal 12 will also place a new demand on corporate reporting, and require a new level of transparency that needs to demonstrate how corporate objectives and activities contribute to responsible consumption and production.
The information and analysis accountants in business provide to support decision making needs to include a more expansive
|understanding of the disparate sources and drivers of longer-term value to enable better strategy development and implementation through changes to the business model. Financial reports are critical but not sufficient in discharging a governing board’s duty to be accountable. Integrated thinking and reporting provide the means and additional incentives for CFOs, and their finance teams, to focus on the information and the decisions that matter to a company and its potential success.
The profession has a significant role in facilitating responsible organizations and markets that can better serve society and thrive over time. There is a long way to go before business and industry can make a full contribution to sustainable development wherever they operate, and accountants in business have significant scope to enhance their contribution to this process.
|• Provide visible and practical leadership to help drive greater insights and transparency that can lead to a more enlightened and inclusive capital markets system through real change in the way organizations make decisions based on a longer-term perspective. Through facilitation by accountants in business, this can be delivered by:
–– ensuring that corporate objectives and activities contribute to sustainable development goals, requiring greater connectivity between social and environmental responsibility, and economic benefit;
–– focusing on relevant business risks and opportunities, impacts, and their ability to create value over time; and
–– making strategic and operational decisions that improve resource productivity and allocation and contribute to building a resilient business model can deliver both a societal benefit and a financial benefit to the organization (see “A Circular Economy Must Drive Management Accounting in the 21st Century”).
• Help companies, especially large and transnational companies, adopt sustainable business practices through integrating sustainability information into their governance, management, and reporting. Through their professional and business skills, accountants are well placed to provide relevant insight and analysis to decision makers serving as a basis of refining business models that will ultimately determine an organization’s ability to create value over time. It is important for policymakers and organizations to understand the purpose of the information being disclosed, and to help ensure that reporting is not treated as a matter of compliance but rather as a means of improving strategic and operational decisions, as well as enlightening outside stakeholders.
• Further develop support services that help accountants play a role in embedding sustainable development into strategy and operations. This could include training and sharing guidance and case studies highlighting good practices. IFAC partners with organizations such as the Prince of Wales’ Accounting for Sustainability Project (A4S) and the Natural Capital Coalition to help achieve this (for more on the importance of partnerships to the SDGs, see Goal 17).
|A NEW DEMAND ON REPORTING AND ASSURANCE
Goal 12 places a new demand on corporate reporting, as well as establishes a new level of transparency that needs to demonstrate how corporate objectives and activities contribute to responsible consumption and production. This new level of transparency will also enable accountants to contribute to other SDGs by promoting better water stewardship (Goal 6), life below water (Goal 14), and life on land (Goal 15), using frameworks such as the Natural Capital Protocol, the Global Reporting Initiative’s Sustainability Reporting Standards, and the International Integrated Reporting Framework.
The World Business Council for Sustainable Development, the Global Reporting Initiative, and the UN Global Compact established the
|SDG Compass to help organizations maximize their contribution to the SDGs. This initiative provides guidance for companies on how they can align their strategies as well as measure and manage their contribution to realizing the SDGs.
Confidence in reporting will also be critical and needs to be facilitated by audit and assurance services. The International Auditing and Assurance Standards Board (IAASB) recently issued its Discussion Paper, Supporting Credibility and Trust in Emerging Forms of External Reporting. The Discussion Paper takes a framework-neutral approach, focusing on facilitating a discussion about the IAASB’s potential role and where others can or need to play a role in a holistic and interactive process to support credibility and trust in broader forms of reporting.
| INITIATIVES TO SUPPORT SUSTAINABLE OUTCOMES
• Creating Value with Integrated Thinking: The Role of the Professional Accountant provides thought leadership on the accountant’s role in integrated thinking to drive real change in the way markets and organizations make decisions. The report also champions the CFO and finance function’s role in integrated thinking and reporting.
• Accounting for Sustainability. From Sustainability to Business Resilience helps accountants develop a greater awareness of how they can help their organizations address issues of sustainability and more fully incorporate these issues into business strategy. It clarifies the important role accountants can, and must, play in embracing sustainability and linking it to a broader business agenda and strategy, which will help ensure that the organizations they serve are resilient.
• The A4S CFO Leadership Network developed practical guides on four sustainability areas: managing future uncertainty; natural and social capital accounting; embedding sustainability in capital investment appraisal; and enhancing investor engagement. Each guide is supported by case studies from Network members demonstrating application of the approaches and techniques.
• Various PAOs undertake activities and publications that place sustainability at the heart of business and accounting—many of which can be found in the IFAC Global Knowledge Gateway.
Goal 13: Climate Action
TAKE URGENT ACTION TO COMBAT CLIMATE CHANGE AND ITS IMPACTS
The 2030 targets for this Goal most relevant to the profession include:
- 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
- 13.2: Integrate climate change measures into national policies, strategies, and planning.
- 13.3: Improve education, awareness raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning.
|THE PROFESSION’S PRIORITIES ON CLIMATE ACTION
The December 2015 Paris Agreement of the UN Framework Convention on Climate Change is essential in achieving this Goal, and sets the context. The profession can do much to support governments, capital markets, and organizations implement plans for climate change mitigation and adaptation in line with the Paris Agreement.
In certain roles, accountants have specific responsibilities in delivering accountability against climate change targets. For example, auditors general play a major role in holding governments to account for performance, including against climate goals and targets.
|Accountants in business play a critical role in supporting their organizations in responding to climate change and its impacts. First and foremost, they can help make the case for climate action by framing climate change opportunities and risks in a business context. Connecting this Goal to business objectives and long-term business resilience is important in gaining wide-spread support and ensuring business sustainability.
The objective performance data and insights accountants in business can provide should include material climate change issues and help establish and monitor appropriate targets and goals for emissions management and abatement. Their reporting and communication skills can be applied to developing enhanced forms of
|reporting, such as environmental profit and loss statements and integrated and sustainability reporting, which provide insights to investors, employees, and other stakeholders on an organization’s climate change performance.
|• Support market-based policy initiatives, such as carbon pricing, as a key policy lever to encourage necessary efficiency gains and investment in new technology and cleaner energy, as well as to ensure a level competitive playing field.
• Encourage and support consistency, accessibility, and usefulness of climate-related disclosure and reporting. The profession supports the Financial Stability Board (FSB)’s Task Force on Climate- Related Financial Disclosures, which recognizes that users of climate-related financial disclosure commonly identify inconsistencies in disclosure practices, a lack of context for information, and incomparable reporting as major obstacles to incorporating climaterelated risks as a consideration in their investment, credit, and underwriting decisions over the medium and long term. The FSB’s work is also supported
|by the Climate Disclosure Standards Board (CDSB), an international consortium of business and nongovernmental organizations that also works to advance and align corporate reporting to equate natural capital with financial capital, and helps provide investors with decision useful information via the mainstream corporate report through its framework for reporting information.
• Keep accountants informed of how they can support their organizations’ efforts to lower carbon emissions and adapt to climate change. This will encourage self-analysis and awareness of how the accountant’s skill set and competences can be applied to climate action, for example, by helping organizations identify and understand climate risk and measure and provide assurance on carbon data.
SUPPORT FOR CLIMATE CHANGE ACTION
- The accountancy profession is proactive in highlighting the significant contribution accountants make in helping governments, capital markets, and organizations implement plans for climate change mitigation and adaptation. At the global level, IFAC submitted a letter of support to the UN Framework Convention on Climate Change calling for international agreement on global emissions during the days leading up to the 21st session of the Conference of Parties in 2015 and the Paris Agreement on emission reduction targets.
- The A4S Accounting Bodies Network submitted an open letter from the global accountancy bodies that make up its members urging world leaders to take concerted climate action.
- The article “Integrated Reporting and Climate Change: A Perfect Marriage,” posted on IFAC’s Global Knowledge Gateway, explains how to use integrated reporting to better understand climate change risk.
- CPA Canada, in partnership with Natural Resources Canada, is leading a multi-year initiative to help businesses and organizations better understand and adapt to the implications of climate change. This project assists Canada’s professional accountants in playing a pivotal role in adaptation by providing them with the resources required to support organizations in addressing emerging climate-related issues. The initiative has successfully provided thought-provoking examples of the emerging role of CPAs in climate change adaptation.
Goal 16: Peace and Justice and Strong Institutions
PROMOTE PEACEFUL AND INCLUSIVE SOCIETIES FOR SUSTAINABLE DEVELOPMENT, PROVIDE ACCESS TO JUSTICE FOR ALL AND BUILD EFFECTIVE, ACCOUNTABLE, AND INCLUSIVE INSTITUTIONS AT ALL LEVELS
The 2030 targets for this Goal most relevant to the profession include:
- 16.5: Substantially reduce corruption and bribery in all their forms.
- 16.6: Develop effective, accountable, and transparent institutions at all levels.
|THE PROFESSION’S PRIORITIES IN DELIVERING PEACE AND JUSTICE AND STRONG INSTITUTIONS
Without peace, stability, human rights, and effective governance—based on the rule of law—achieving sustainable development goals will remain elusive.
The SDGs emphasize good governance focused on smart regulation, rule of law, and well-functioning national institutions. Transparent institutions and justice systems also enable a stable and fair playing field for business operations. For many emerging and developing economies, the priority is to bring about governance, investment, trade, and competition policies that contribute to good business and entrepreneurship.
In particular, fraud and corruption are a threat to achieving the SDGs. Goal16 is referred to by some as “the people’s Goal” because fraud and corruption hinder business, constrain competition, divert resources away from those who need it, reduce public investment, and deter foreign investment. Sustainable development efforts can be futile in an environment of poor governance and corruption.
The profession’s capacity to address constraints to sustainable growth, such as poor governance, fraud and corruption, poor public sector financial management, and inadequate accounting and auditing practices, is important as these directly affect the drivers of economic development, including domestic and foreign investment. A significant basis for sound capital markets and resilient companies, as well as effective and efficient public service delivery, is high-quality, reliable financial and non-financial information.
Transparent, consistent, and robust anti-bribery and corruption measures must be applied across both public and private sectors.
|Given the vast monetary sums channeled through governments, effective public sector financial management is vital to a global solution. Delivering strong organizational cultures rooted in good governance and ethics supports governments and other public sector organizations in developing policies that deliver resilient public services, reduce fraud and corruption, and ultimately foster more equitable development of economies.
The profession encourages strong collaboration and commitment from the private, public, and regulatory communities to fight bribery and corruption by, for example, its involvement in the Organisation for Economic Co-operation and Development’s Ministerial Meeting on Anti-Bribery in March 2016, where IFAC President Olivia F. Kirtley spoke about the role of accountancy in combating bribery.
|Transparent, responsive, and accountable institutions are a vital part of what it takes to improve lives and implement a sustainable development agenda. Together with properly governed financial systems, they help provide a stable environment within which business can operate, and reduce the costs and risks of doing business. Strong institutions are based on good governance, which is also rooted in open budgeting and sound financial reporting. Accrual accounting and budgeting help governments and public sector organizations develop policies and programs that deliver sustainable, resilient public services and stronger economies, ultimately leading to more confident foreign investors (see “Incomplete Public Accounting threatens Africa’s Welfare and Growth,” Financial Times).
||The role of Supreme Audit Institutions (SAIs) and Courts of Auditors in helping governments achieve international goals is also critical, as described in the IMF Public Financial Management blog, “How National Audit Offices Can Support Implementation of the SDGs”. Strong external public audit ensures public accountability. With their independent and objective work, the International Organization of Supreme Audit Institutions (INTOSAI) and its SAI members on achieving accountability for the MDGs should be continued with the SDGs.
On a personal level, professional accountants—through demonstrating ethical and professional conduct by complying with the Code of Ethics for Professional Accountants—have enormous scope to positively influence
|organizations in the public and private sectors. This involves creating a culture of ethical behavior within and beyond finance teams and supporting ethical practices, such as combating and eliminating fraud and corruption.
The Code of Ethics has also recently been updated to provide a pathway for professional accountants to disclose potential non-compliance situations to appropriate public authorities without being constrained by the ethical duty of confidentiality. It places emphasis on the role of senior-level accountants in business in promoting a culture of compliance with laws and regulations and prevention of non-compliance within their organizations, such as enabling a more timely response to fraud.
|• Advocate for good governance focused on smart regulation, rule of law, and wellfunctioning national institutions. As part of its recent #BuildTrust campaign, IFAC’s recommendations to the G-20 focus on creating sustainable, inclusive growth by:
–– strengthening governance, which in both the public and private sectors is at the heart of accomplishing the G-20 objectives of recovery, growth, and stability, as well as combating fraud and corruption and restoring public trust and integrity;
–– promoting and adopting principles for good regulation to create a more consistent, effective international regulatory environment;
–– acknowledging the importance of international standards across all jurisdictions, including international standards for accounting, auditing and assurance, professional ethics and education, and public sector accounting; and
–– calling for global use of the International Integrated Reporting Framework.
• Enhance the capacity of accountants to contribute their expertise to implementing and
|monitoring governance arrangements and controls that hinder fraud, corruption, and money laundering while enhancing transparency. PAOs can help achieve this by providing practical support to accountants and, where possible, resources and training to help combat fraud and corruption. They can also offer broader support to help government and public sector organizations ensure that their planning and budgeting, cost management, investment, and financial reporting are more effective, transparent, and understandable to the government and its stakeholders, particularly citizens.
• Promote the importance of external public sector auditing in monitoring and reporting on national efforts to implement the SDGs and their targets. External public sector auditing can directly contribute to development goals by having the auditors monitor and report on national efforts to implement the SDGs and their targets. In addition, the auditors’ efforts to fight corruption, fraud, and financial mismanagement at both national and local government levels help to protect public funds and the governments’ capacity to deliver on goals through public services and investments.
SUPPORT FOR PEACE, JUSTICE, AND STRONG INSTITUTIONS
- Building partnerships with others within and beyond the profession to help bring about change: In 2016, many accountancy organizations, including IFAC, and legal institutions issued a joint anti-corruption statement. The letter described the profession’s commitment to combating fraud by continuing to work with governments, regulators, law enforcement agencies, and other international organizations.
- Supporting the profession with thought leadership and guidance:
– The International Framework for Good Governance in the Public Sector, developed by IFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA), encourages effective public sector governance by improving decision making and the efficient use of resources.
– CIPFA’s Counter Fraud Center and Chartered Accountants Australia and New Zealand’s Fraud Insights help the fight against fraud and corruption across local and central government, as well as across the health, education, charity, and private sectors.
Goal 17: Partnerships for the Goals
STRENGTHEN THE MEANS OF IMPLEMENTATION AND REVITALIZE THE GLOBAL PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT
The 2030 targets for this Goal most relevant to the profession include:
• 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection.
• 17.3: Mobilize additional financial resources for developing countries from multiple sources.
• 17.9: Enhance international support for implementing effective and targeted capacity building in developing countries to support national plans to implement all the Sustainable Development Goals, including through North-South, South-South, and triangular cooperation.
• 17.13: Enhance global macroeconomic stability, including through policy coordination and policy coherence.
• 17.14: Enhance policy coherence for sustainable development.
• 17.16: Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries.
| THE PROFESSION’S PRIORITIES FOR PARTNERSHIPS TO ACHIEVE THE GOALS
The SDGs will not be achieved without businesses supporting partnerships to pursue shared objectives or address systemic challenges. Partnerships can be across the value chain, within their sector or with governments and civil society organizations. Strong partnerships and collaboration are the most important ingredients in achieving the SDGs. Cross-sector institutional partnerships ensure every Goal has the support and resources it needs.
IFAC, on behalf of the global accountancy profession, will continue to partner with stakeholders, including PAOs, INTOSAI, governments, accountancy firms, international donors and other development agencies, regulators, and others to help maximize contribution to the SDGs.
Together with governments and taxpayers, accountants have a significant role in improving revenue collection at the national level, and in preventing tax evasion and illicit cash flows. “The Role of Professional Accountants in the Proper Functioning of Taxation Systems” explores the various roles and responsibilities of accountants in the tax area.
|• Collectively consider where the profession can contribute, especially in terms of where its perspective and influence would be valued, and which partnerships and collaborations would enhance its contributions. For example, over time, IFAC, PAOs, and accountancy firms have established positive and effective relationships with a wide range of accountancy and economic development bodies as well as non-governmental organizations and other professions.|
IFAC and our member organizations work with, and through, others to make an effective contribution to the SDGs. Partners include:
• PAOs, thereby contributing to strong national, regional, and local systems for sustainable organizations, markets, and economies;
• governments and business, enabling a political and business contribution to the SDGs;
• regulators, thereby ensuring that regulation facilitates rather than hinders the contributions of the profession and business, and enabling investment to achieve desired outcomes;
• development agencies, thereby contributing to the financing and investment of the development of the accountancy profession;
• the six largest international accounting networks, the Organisation for Economic Co-operation and Development, and the Global Initiative for Fiscal Transparency to implement accrual-based financial reporting as part of Accountability. Now;
• the Natural Capital Coalition and its Natural Capital Protocol to identify, measure, and value natural capital so that it is visible and understood when making decisions, which also enables the profession’s contribution to Goals 14 and 15;
• the A4S’s work with CFOs and PAOs on embedding sustainability and sustainable development;
• the International Integrating Reporting Council’s efforts to achieve an integrated approach to corporate reporting, enabling better quality and more meaningful reporting that acts as a catalyst for behavioral change and long-term thinking;
• the Global Reporting Initiative to enable accessible, timely, and comparable sustainability information through its Sustainability Reporting Standards; and
• the UN Global Compact and UN Conference on Trade and Development to facilitate corporate sustainability and broaderbased reporting.
What Next? Where Next?
|The profession can do much to contribute directly and indirectly to achieving the SDGs through a broad range of activities, all of which create value for organizations and the societies in which they operate.
This publication offers a snapshot of how the profession and its almost three million members can contribute to the SDGs today. It paints a picture of what the profession is already doing, and where its efforts might be scaled up and more connected to the SDGs. In some areas, the profession and its members need to accelerate the pace of their activities in relation to the SDGs that are within the range of their expertise. In other areas, they may need to introduce new initiatives to help achieve the targets.
PwC Chair Malcolm Preston reinforces this message in PwC’s recent report on the SDGs, Make It Your Business: Engaging with the Sustainable Development Goals:
|If we genuinely want to achieve a world where advancements and achievements are fully inclusive and no one and no country are left behind, it is important to think creatively about how the profession evolves to fit this new reality. Against this backdrop, the SDGs should be seen as an opportunity for the profession to reflect on the nature of the changes ahead and the capitalizing on the highest potential of the accountant within it.