Public support for environmental action highlights the moral and legal obligations to tackle climate change and the growth opportunities presented by the transition to a sustainable economy. A global Ipsos survey for the World Economic Forum from 2020 indicates that 86% of participants want a more sustainable and equitable world.
In response to the growing importance of sustainability in the accounting and assurance profession, the International Federation of Accountants (IFAC) is revising its International Education Standards (IES)—specifically IES 2, 3 and 4. As the founder and CEO of Triple Bottom Line Accounting (TBLA), Peter Ellington sees these proposed revisions as a notable milestone in advancing sustainability disclosure standards to meet the needs of investors and broader stakeholder groups and help accountants understand and respond to sustainability issues such as climate change.
Though IFAC’s initiative is a step in the right direction for accountancy around the world, Ellington feels that it will be inadequate if it is only directed toward students instead of formalizing changes to the standards that affect practicing accountants. He believes the proposed revisions to the IES need to be more explicit about how sustainability issues affect accountants and the curriculum.
According to the founder, the standards assume that educators, students and practitioners will inherently understand how existing practices extend to sustainability issues. “Because the changes to accountancy are such a shake-up of the traditional way of doing business, the changes across the syllabus and what is expected need to be spelled out in the standards,” he says.
Ellington especially wants to highlight that IES 7, which pertains to Continuing Professional Development (CPD), is left out from the upcoming revisions—an omission he feels could be detrimental to sustainability-focused progress among those in the accounting profession as well as business associations and economies. “It is assumed that practicing accountants will inherently adapt their practices for sustainability challenges,” he adds. “Guidance on the changes to accounting practices is essential if the profession is to react in a timely manner to the growing challenges of sustainability.”
The founder says the field of sustainability reporting and assurance is constantly developing with new standards, regulations and practices, so accountants who do not keep up with changes in this area may provide incomplete or misguided advice to their clients or employers—resulting in poor decision-making on sustainability issues. Ellington also foresees potential friction between newly qualified accountants with up-to-date sustainability knowledge and senior members of the workforce who lack this understanding.
Established accountants set in traditional ways of thinking and practicing may dismiss or undervalue the opinions of these new entrants. This could lead to sustainability becoming sidelined and the perpetuation of outdated practices, according to Ellington. To avoid these scenarios, he stresses the need for IFAC to update IES 7 and mandate sustainability-focused CPD to ensure the entire profession moves together.
In addition to this suggestion, Ellington recommends explicitly including carbon accounting and greenhouse gas protocols, climate-related financial risk assessment, circular economy principles and natural and human capital accounting within the standards. As an example of what this could look like, the founder points out Chartered Accountants Australia and New Zealand (CA ANZ). The accounting body has already implemented sustainability-focused CPD programs, including workshops and online courses designed to educate members about the latest sustainability reporting frameworks and practices, enhancing their ability to effectively advise clients on sustainability issues.
Ellington believes accountants are responsible for remaining competent in areas that impact businesses and society. Under his leadership, TBLA provides business and tax planning solutions to clients who share the same commitment to environmental and social responsibility. The practice also specializes in net zero assessments and consultancy services for environmental social governance (ESG) reporting. The founder sees TBLA as a reflection of his vision to help individuals and entities achieve the best outcomes and his belief that doing the right thing takes priority over profit.
Given the public demand for environmental action, formally revising CPD requirements to explicitly include sustainability topics could be a significant step forward. As the global economy grapples with sustainability issues, Ellington sees the accountant’s role in measuring, reporting and advising as increasingly critical. Ongoing education in sustainability could equip accounting professionals with the necessary tools to address challenges in this area, maintaining the profession’s credibility and effectiveness.
