More than three-fourths of large companies surveyed have a formal sustainability strategy compared to a third of smaller companies, according to findings released Thursday by the AICPA, the Chartered Institute of Management Accountants (CIMA) and the Canadian Institute of Chartered Accountants (CICA). On a comparative basis, 88% of CIMA respondents from large companies indicated having a formal sustainability strategy, compared with 67% for CICA and 61% for AICPA respondents.
The organizations surveyed leaders from their respective memberships and conducted interviews with sustainability executives from leading companies to examine key characteristics of business sustainability and the level of finance function involvement in corporate sustainability initiatives. Large companies were defined as those with more than 1,000 employees and smaller companies as those with fewer than 1,000 employees.
“Although we believe the data are significant, we would caution users that those who responded to the survey likely have a higher level of engagement in sustainability than the population as a whole,” said AICPA Technical Manager Ken Witt.
Compliance with regulatory requirements was the most common driver of business sustainability. According to the study, 34% of large organizations and 24% of smaller organizations cited compliance as the top factor with profitability and other strategic factors increasing in significance.
After compliance, the next most critical drivers differed between large and small companies. Thirty-two percent of large organizations listed managing reputational risk as the second-most critical factor, and 19% of smaller companies listed cost-cutting efficiency.
Although large companies currently have more robust sustainability capabilities, with 79% already having a formal strategy compared with 33% of smaller companies, an additional 23% of smaller companies said they plan to formulate a strategy within two years.
“The response from SME companies was one of the interesting findings of the survey,” said Witt. “While the level of formality is different for SMEs, I think our results show that increasing numbers of smaller companies are getting bottom-line benefits from sustainability efforts.”
The finance function’s contributions to organizational sustainability programs appeared to be highly valued, yet underdeveloped. Fifty-six percent of respondents said that finance plays a role in business case/investment analysis, but only 33% were tracking related performance measures. CIMA respondents were more likely to take a lead role in the various aspects of finance function involvement in sustainability than their U.S. or Canadian counterparts.
The three accounting organizations are founding members of the Accounting Bodies Network of the Prince’s Accounting for Sustainability Project that met in London on Thursday.
“ The survey report highlights the important work that we have to do in the accounting profession,” said Arleen Thomas, AICPA senior vice president–Member Competency & Development. “[This] is why the AICPA is taking a leadership role in the U.S. and collaborating with CIMA, CICA and the Prince’s Project to provide global thought leadership and services to help our members develop skills and competence in sustainability accounting and reporting.”
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