Sustainability is NOT a solo endeavour – co-operation across a variety of corporate departments is essential. Meaningful benefits can emerge when the accounting, finance and sustainability departments work together. And while such coalitions seem to be the exception rather than the rule, they are growing in number.
To address this issue, on Oct. 1, 2015, TSSS in partnership with the Chartered Professional Accountants of Canada gathered a panel of corporate and academic professionals at the offices of Loyalty One in Toronto to share their experience implementing successful steps to tear down the silos, bridge the gap and form relationships between accountants and sustainability professionals.
Accounting is more than just the numbers
The event kicked off with a brief presentation by Monica Sood, Principal, Sustainability from CPA introducing their Enhancing Competitiveness in a Changing Climate Program. This represents CPA’s new strategic initiative to address the risks and opportunities companies will face as a result of climate change. Many companies have benefited from the valuable role that finance professionals can play with their skills in performance management, auditing and financial reporting as they are applied to add value to sustainability initiatives. Accounting is more than just the numbers. It’s about getting to understand all facets of a business and appreciating the environment in which it operates.
Business operations will become threatened
Climate change is a reality. Robert Siddall (CFO of Metrolinx) began by discussing how climate impacts have financially impacted operations at Metrolinx. Robert’s background in strategy and finance has prepared him to “make the executive decisions [to address the risks] that may undermine their brand.” The financial impact is primarily the result of extreme weather events recently experienced by Toronto. Ice storms and floods are associated with damages claims from customers, costs of repair as well as costs of adaptation. It’s not just the transportation sector either, many others will find their business operations threatened by the effects of climate change.
Lack of predictability adds to complexity
As Antoine Belaieff (Director of Regional Planning at Metrolinx) put it when asked about the adaptation methods to be implemented by Metrolinx… it’s complicated. For them, adaptation to climate change requires the revamping of infrastructure as well as protocols. Yet both decisions are surrounded by high levels of uncertainty. The business reality is that major infrastructure changes are necessary, but how to prioritize numerous projects poses a challenge given a lack of predictability on the nature and scope of future weather events.
Accountants take the long view
Investments need to be directed into projects that maximize their bang for their buck. Jennifer Ash (VP of Finance and Operations at Frontiers North Adventures) spoke to what accountants can bring to the table in this regard; “accountants are strategic planners by training.” The time frames – as far ahead as 20 years – in which accountants operate make them an asset to developing long term sustainability goals. Accountants are also trained to approach situations from a risk management standpoint. At Frontiers North Adventures, Jennifer uses this expertise to manage the companies’ climate change adaptation strategy. Asking questions and forming partnerships has been the key to success at FNA. Jennifer’s advice? Use all the resources at your disposal to supplement your knowledge, start branching out and breaking down barriers.
It’s about integration
At FNA, the accounting and finance departments work closely with Polar Bears International. This partnership with the scientific community has allowed FNA to grasp and manage risk despite not having a in-house sustainability department. Whether this risk is represented by a change in the arctic ice structure or by a change in polar bear population and migration patterns, the information is integrated into the company’s strategic plans to play a role in the long-term forecasting of future activities. In this way, risk management and sustainability are built into the company’s ethos.
To collaborate is to flourish
Mike Valente (Professor of organization studies and business sustainability at the Schulich School of Business) shed light on the origins of cross-sector collaboration much like that exhibited by FNA. Mike’s research into the many different ways companies adopt initiatives has revealed the following 4 pathways.
- Random and Philanthropic – Initiatives are unrelated to core business processes.
- Strategic but Isolated – Initiatives govern a particular product or process that represents a small portion of the company’s total activity.
- Integration into Organizational Culture – Initiatives have reached a point where they are no longer perceived as separate from day-to-day business functions.
- Industry Shifting Disclosure – Initiatives now represents how a company is now playing a leading role in shifting the sustainability discourse throughout an industry.
These pathways represent a natural progression of increasing impact and motivation. Initially, initiatives are driven from a profitability and strategic relevance perspective. Organizational culture is largely unaffected and they face the risk of being purely marketing initiatives on the company’s behalf. Nevertheless, as all aspects of business are integrated, sustainability goals become cemented into the organization’s DNA. All business ventures take into account the triple bottom line and their impacts are likewise deepened.
Continue the dialogue
If it gets measured it gets managed and accountants are the best suited to the task of measuring the social and environmental impacts of business practise. Encouraging an organization-wide dialogue enables the development of targets and metrics to meet these goals. Merging these with long term plans will go a long way to holding managers accountable and achieving sustainability goals.
Let it Spread
Breaking down silos has the added benefit of diffusing the decision making power within a company. More often than not, tackling climate change risks and discussing adaptation strategies are considered sensitive topics. The power to affect change is thus found in small executive clusters. Mike Valente spoke of the need to integrate all sectors and levels. Decision-making on sustainability initiatives “needs to spread down to the entire organization for ideas to flourish and to get the ball rolling.” More importantly, inclusion in this process will allow key values to saturate the company.
If sustainability is not embedded into the organization’s culture, the risk of having a scapegoat department is very real. Mike further elaborated this idea where mainstream business remains unchanged and employees not associated with sustainability projects feel exempt from taking initiative. They may think “I don’t have to worry about this, that department will take care of it.” The danger, of course, is that ideas and talent which would otherwise bubble up from other sectors and levels remain untapped. The paradox represented here is that having a department dedicated to sustainability is simultaneously necessary to legitimize operations and dangerous is not properly managed. According to Jennifer, widespread values at Frontiers Northern Adventures make it a culturally progressive environment where “everyone is invested and collaborates in becoming a sustainable company and it’s very exciting to be a part of that.”
On this front, Metrolinx is also making headway. Antoine shared how in recognizing the importance of culture Metrolinx is moving to engage all levels of staff. To see the culture embraced the company is appealing to employees’ emotional connections and personal experiences. The goal is to make the culture real. This is done by linking it to real world problems. In doing so, it’s important to make it relevant and fun.
All panelists agreed on the importance of partnerships and networks both within and across organizations. Including accountant and finance professionals has the potential to deepen operations’ social and environmental impacts through understanding the broader environment in which your business operates, establishing metrics and measuring key variables, and fostering communication which will positively impact the culture of your organization. Robert Siddall of Metrolinx put it nicely, “it’s frustrating how little you accomplish in 1 year, but it’s amazing how much you can accomplish in 5.”
For links and bio’s please click here to return to the event invitation.