By: John Levy
Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.
AICPA Principles of Professional Conduct,
Section 53 -Article II The Public Interest
The AICPA Principles of Professional Conduct (the “Code”) in Sections 53, Article 2 discusses the profession’s “public interest responsibility.” The Code states in Section 53, Article II,
The accounting profession’s public consists of clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of certified public accountants to maintain the orderly functioning of commerce. This reliance imposes a public interest responsibility on certified public accountants. The public interest is defined as the collective well-being of the community of people and institutions the profession serves.
Sustainability efforts improve the collective well-being of an organization’s stakeholders. An argument could be made that ignoring sustainability is actually unethical under the Code’s definition of the public interest responsibility.
The Code discusses the CPA’s broad responsibility to “the collective well-being of the community of people and institutions the profession serves” not just to clients, for CPAs in public practice, or shareholder, for CPAs in industry. The Code recognizes a variety of stakeholders and most professional literature defines four broad types of stakeholders. Further, the literature defines the accounting profession’s responsibility to stakeholders in priority order from those we owe the greatest responsibility downward.
The priority is as follows:
- The Public
- The Profession
- The Company or Client
Under this structure, sustainability, since it directly affects the public, should have a high priority for CPAs. CPAs comply with the Code and behave ethically when we serve the public interest.
However, we also have an obligation to our profession. By committing to using our skills in measuring and reporting to expand beyond simply profit and loss to measuring and reporting on sustainability efforts, we are acting ethically by advancing the profession.
Sustainability efforts benefit our companies by doing more with less—we are saving not only resources, but also money. When we improve sustainability efforts we not only reduce reputational risk, but we may also create new areas of increased potential profitability. Sustainability efforts can protect and create shareholder wealth.
Finally, the Code acknowledges that we owe a responsibility to ourselves. By learning new sustainability skills, we make ourselves a more valuable resource to our clients and companies.
At its core, sustainability is about leading an ethical life. We create sustainability when we
- Understand how our actions affect others,
- Harm no one,
- Help as many as possible, and
- Take responsibility for our actions.
To act in a sustainable manner is to respect the natural environment. Each of us has an ethical responsibility to minimize the harm we cause the planet and other living creatures. We can lead our lives in ways that reduce resource consumption, and we can work to repair any damage we may cause. We honor this principle every time we recycle waste at work and home, turn off lights when leaving a room, reduce thermostats, re-purpose plastic containers, or re-use a grocery bag.
Sustainability also means nurturing our connections to others. We support sustainability when we contribute to charities or volunteer at a not-for-profit. Involvement with your children’s school, little league, or soccer team benefits the greater community.
A sustainable society runs on trust. You drive through an intersection with a green light because you trust that other drivers will stop at the red light. Without that trust, traffic lights don’t mean a thing and traffic becomes chaotic and inefficient. If you could not trust pilots and airlines, you would not fly. When you cannot trust companies and/or markets, you do not become a shareholder.
Returning to ethical behavior rebuilds trust. Sustainable actions are ethical actions; yet ethical arguments seldom inspire business change. CPAs can help others understand, however, that sustainability is more than doing the right thing and more than placating treehuggers or singing “Kumbaya.” Sustainable business practices and a sustainable strategy can create long-term value through cost savings, risk reduction, differentiation, and employee retention.
Look for more from John on the topic of sustainability in the upcoming issue of Interim Report magazine hitting mailboxes soon!
John F. Levy, CPA, MBA, is the CEO of Board Advisory, a consulting firm that assists public companies, or companies aspiring to be public, with corporate governance, compliance, financial reporting and financial strategies. He has served as CFO of both public and private companies. John currently serves on the Board of Directors of three public companies, including as Chairman of one company and lead director of another. He is a graduate of the Wharton School of the University of Pennsylvania and can be reached at john@ BoardAdvisory.net.