Covid-19 has resulted in increased scrutiny of companies’ social impact, ushering in a new era of “warrior accountants,” says a new report from CPA Ontario.
The pandemic, along with growing global demand for social justice, has “accelerated demand for impact investing strategies,” according to the report.
“Responding to pressure from shareholders and customers, more companies are beginning to report on social metrics and set targets for social change beyond what the law requires,” the report said.
The report suggested social-impact reporting will require accountants to shift their position on environmental, social and governance (ESG) risks.
For the most part, accountants have taken a defensive position on ESG risks to guard against reputational risk, the report said. Warrior accountants must take an offensive position that “is more assertive in putting organizational ESG performance in the public domain.”
The report noted that ESG reporting has become a “strategic imperative” for companies, with chief financial officers now signing off on ESG reports alongside financial statements.
“‘Purpose over profit’ has become the mantra of a stakeholder-capitalist movement that seeks to widen the scope of company value to encompass employees, customers and the broader community,” the report said.
CPA Ontario noted that many companies already report on their social impact. Bank of Montreal, for instance, keeps data on the loans it makes to women-owned businesses, and Royal Bank of Canada published a dedicated diversity and inclusion report in 2019.
CPA Ontario added that the accounting industry must strive to achieve standardized measurements of social risk reporting to avoid “impact-washing.”
“By progressing ESG measurement and impact, ‘warrior accountants’ can substantively change business and society for the better by providing standardized forms of measurement to help quantify the results of what can often be fuzzy corporate pledges,” Carol Wilding, president and CEO of CPA Ontario, said in a release.
For further details, see CPA Ontario’s report.