Speech by ADPD Chairperson Carmel Cacopardo at the MIA Biennial Conference
The Malta Institute of Accountants Biennial Conference – A New Mindset: Reduce. Reuse. Report.
Sustainability is not about window-dressing. It is a lifestyle designed for permanence. It is not just about the environment: it is about how we interact with each other and with our surroundings, about the present and the future, about our ethical behaviour in all that we do: in politics as well as in the professions and in business.
Sustainability is about people and planet, and yes about profits too.
The point of departure in describing sustainability is that we do not live in an economy but in an eco-system. We cannot live without the services provided by the eco-system of which we form part but we cannot say the same about the economy.
On this basis it is easier to understand that being in a sustainable state signifies that we are in harmony with our surroundings: in harmony with the eco-system in which we live.
We have heard many a time the dictum attributed to Milton Friedman (1970) that “the business of business is business”. Some still think on the same lines: that shouldering ethical, environmental and social impacts generated by business is not the business of business. They insist that, if pressed to address its impacts, business would consider relocating, seeking countries where legislation relative to environmental and social protection and ethical standards is minimal or inexistent.
The publication of CSR reports by business, at times also referred to as sustainability reports is a powerful statement to the contrary: the business of business is much more than business.
Non-financial reporting is an accountability tool. It is an instrument of business transparency, essential background information to fully understand business operations: not just their environmental and social impacts but also, much more importantly, the ethical parameters within which business operates.
Various statutory provisions, nowadays, provide regulations which guide us to understand what is happening around us. The non-financial reporting of business is one such tool which in order to ensure its effectiveness needs an element of standardisation.
This is the specific purpose of the current debate within the EU on the need to amend the Directives dealing with corporate sustainability reporting. The new rules will widen the catchment area of the reporting companies and will also specify in more detail as to what should be reported on.
The points at issue to the local debate are, primarily, in my opinion the following three:
First, we should ensure that no bright spark seeks some form of exemption, not even partial. The corporate world impacts our lives in the same way as is done elsewhere all over the European mainland. We, all of us, are entitled to know what is going on: the corporate world needs to be transparent just as much as the political world. Without corporate transparency it is not possible to ensure corporate accountability.
Second, in addition to companies listed on the stock exchange, banks and insurances, as well as companies to which these new non-financial reporting provisions will eventually be applicable it is essential that all public utilities are roped in: water and energy utility bodies in particular. This will require a proactive government which seeks to apply the spirit of the proposed directive, where necessary going beyond the actual text.
Third, each SME contributes to the corporate climate. The sum of the SME contribution is substantial and needs to be addressed through some form of uniform reporting too. The debate is as always how not to burden SMEs with excessive administrative responsibilities which at times may go beyond their resources. This must not however be the excuse to shirk away from our collective responsibilities. It is an area where the state can and should collaborate with civil society to ensure that all do their part adequately.
Sustainability reporting, or, as some would prefer non-financial reporting, will not deal just with all sorts of applicable environmental matters, but also with social and employee issues as well as respect for human rights. It is also expected that anti-corruption and bribery matters are reported on too.
The corporate world must put all its cards on the table. It must be transparent. It is only in this way that it will be fully accountable.