Businesses are facing complex challenges to update their operations to be more sustainability focused; these challenges can’t be simply reduced to their parts. There are too many interconnected factors. As a management accountant, you excel at linear, analytical thinking. You can break down complex issues into individualised components and then reassemble the pieces to boost efficiency. Whilst this approach is effective in many areas, it ignores how components operate as a system.
To navigate sustainability challenges, you’ll need a new approach and an adjustment to your day-to-day responsibilities and activities. Generating reports has expanded to include more than financial terms and data — reports are now expected to tell a more complete story of an organisation. These finished stories demonstrate your organisation’s value and are helpful tools when multiple stakeholder groups assemble to problem-solve areas related to sustainability.
‘We can bring the different stakeholders and people together to help solve these problems’, said Martin Farrar, PhD, Associate Technical Director at AICPA® & CIMA®. Farrar compares this role to that of an orchestral conductor — bringing various groups together to achieve a common goal and a uniform sound.
The redefined role of the finance function and the organisational value you curate are deeply explored in Future of Finance 2.0: Redefining finance for a sustainable world, a report published by AICPA & CIMA. The report reveals the findings of an 18-month global research project that was built upon interviews and roundtable discussions with finance leaders, accounting and finance professionals, regulators, and academics, and explored the rapid advancement of the profession and the necessary proficiencies needed to continue its evolution. The report expands on original research completed in 2019 that began exploring how societal changes were affecting the accounting and finance profession.
Because business resiliency depends on how organisations operate, the roles of the finance function have been redefined to include assembling big-picture stories that can help organisations focus on societal benefits and foster collaboration with a wider pool of stakeholders.
Building on the information-to-impact infinity loop
The finance function’s fundamental activities — financial risk assessment, reconciliation of accounts, compilation of management data, and report assurance — remain the same. However, the Future of Finance research identified that these day-to-day activities now follow the information-to-impact infinity loop — a nine-step, repeatable cycle that enables a new way of storytelling that goes beyond financial terms.
The loop focusses on the creation of big-picture reports to be used in community discussions, partnerships, and debates, and helps organisations design an operating model that promotes more sustainability.
To create the big-picture story, begin by understanding your target audience — are they internal or external to the organisation? Data is then gathered from a range of sources so you can analyse it for patterns and relevant insights.
Working with leadership, communicate your insights to advise decision-making; this leads into the final step of the loop, where the created reports can inform internal proposals and new strategies.
Collaboration is a key element woven throughout the loop, as you’ll need to work with various internal departments to assemble necessary data sets. The finalised reports can then be used in community discourse on sustainability-related issues.
‘It’s not just about shareholders’, said Farrar, co-author of the report. ‘You may need to talk to your local community that you sit within about what you do for the local community and what the local community does for you. It’s relationship building.’
By bringing these different groups together, said Farrar, ‘you can have that informed debate and make better decisions around climate change, biodiversity, and social impacts.’
Future-forward and resilient
The foundation of the information-to-impact infinity loop is value measurement, and it relies on your analytical skills. As a management accountant, you will increasingly be called upon to serve in an advisory role, as part of the information-to-impact loop, which will require you to be more cognizant of social and ethical practices than you may have in the past. The information-to-impact infinity loop acknowledges that business practices and the activities of the finance function are evolving to be more multidimensional, and this forward-thinking approach will ensure businesses are resilient and actively creating value.
‘[The finance function] don’t need to become experts on biodiversity or climatology, but they will become the bridge between other experts and bring back [information] into the business’, said Farrar.
The Future of Finance 2.0: Redefining finance for a sustainable world report allows you to link the sustainability movement to the dynamic changes occurring within our profession.
A general understanding of the sustainability movement and how it will affect the roles of the finance function will be useful. The “Fundamentals of ESG Certificate” provides a framework for environmental, social, and governance (ESG) issues, and the “ESG and Sustainable Finance Strategy Course” is designed to help finance leaders collaborate on decision-making efforts within their organisations.
The finance function as a whole is expanding, and the Future of Finance 2.0 research programme explores the scope of these changes within the profession. Examine research on digitalisation, sustainability, and more to prepare for what’s ahead.