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CPAs and the New Social Contract: The Rise of the Warrior Accountant

Investment Executive | Jan 20, 20201

CPAs and the new social contract - CPAs and the New Social Contract:  The Rise of the Warrior Accountant

The pandemic has highlighted companies’ social risks, CPA Ontario says.  We didn’t see it coming.

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.

See:  Capitalism must be saved by capitalists, argue these pioneering ESG investors

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.

A global pandemic, rolling economic crisis and worldwide protest movement combined to make 2020 an epoch-defining year.

Emerging from these dramatic events into 2021, a consensus is building about the need for a new social contract that will see government, citizens and the private sector working together to tackle inequality and achieve justice.

See: 

Banking Must Take A Stand On Tough Social Issues

Social equity must be central to urban tech innovations

The role of the corporation and the responsibility that businesses have to their employees, customers and the community is increasingly up for debate. Discussions of shareholder primacy have been superseded by solemn promises of stakeholder consultation. Milton Friedman is turning in his grave. CPAs have long had the ability to shape businesses: now they have the capacity to drive real social change.Business leaders are being asked to consider myriad social issues.

From racial pay equity to work from home conditions, from data privacy to tax transparency and human capital—in the post-pandemic era, investors, regulators and the community will increasingly expect companies to measure and improve their impact on society. CPAs are in a unique position to help them do this in a way that is rigorous, thoughtful and bold.

Download the 62 page PDF report --> here

 


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