What is sustainability accounting? What does ESG mean? We have answers

Sustainability is a hot topic today due to increasing awareness of climate change and inequality, among other pressing issues.

 

The Earth just recorded a seven-year hot streak and we’re approaching the COVID-19 pandemic’s first anniversary. The crisis has had enormous implications on our mental health, the economy and income inequality. Post-pandemic, we need to build back better, and sustainability will be the key to success.

 

What is sustainability?

 

There is no universal definition of sustainability, but many point to the United Nations’ 1987 Brundtland Report that calls for sustainable development that meets our needs today without compromising the needs of those in the future.

 

This idea of meeting our needs without sacrificing the needs of our children, or our children’s children, tends to form the basis of most sustainability definitions.

 

The definition focuses on the planet’s capacity to meet our needs. Without a healthy planet, we will be unable to meet our needs for food, clean air, shelter and other basics. Those of us who live in the developed world — high income earners in particular — are far more likely to be contributing disproportionately to climate change, while those who live in less affluent parts of the world are more likely to suffer the consequences.

 

Right now, the current measurement systems are inconsistent and incomparable. Unlike the financial information for public companies that we can compare and rely upon, we do not have the same reliability for sustainability accounting information.

 

Why does it matter?

 

Sustainability accounting, ESG investing and SRI are not going away any time soon as pressure grows on companies to measure and report their sustainability information.

 

In terms of environmental sustainability, long-term efforts are critical for the sake of humanity and the planet. Sustainability accounting can help companies do business differently because what gets measured, after all, gets managed.

 

To achieve environmental sustainability, we need strong corporate standards that are quantifiably enforced, accountants trained to accurately and comprehensively measure sustainability — and we all need to play a role in changing how we live.

 

Our words and actions matter. As consumers, we can change our lifestyle, our investments and demand change from our governments. Together — along with accountants — we can get there.

 

 

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Leanne Keddie, Assistant Professor, Sprott School of Business, Carleton University

 

 

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This article is republished from The Conversation under a Creative Commons license. Read the original article.