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The battle of the acronyms – where next for corporate accounting

Corporate sustainability reporting has become a battleground of acronyms – ISSB (International Sustainability Standards Board), CSRD (Corporate Sustainability Reporting Directive), GRI (Global Reporting Initiative) – that vie for attention. These differing frameworks represent not just technical standards but divergent ideologies shaping the future of capitalism itself. A profound transformation is underway — a shift from a narrow focus on financial returns to a broader recognition of social and environmental impacts.

At the heart of this transformation lies a fundamental tension within capitalism — a tension between the pursuit of profit and the imperative of responsibility. Capitalism, often celebrated as humanity’s most powerful engine of progress, has undeniably transformed the world, driving innovation, economic growth, and human prosperity. Yet, this same engine has also fuelled inequality, environmental degradation, and social unrest, leaving a trail of crises in its wake

(Colin unpacks this tension in his new book – Capitalism and Crises: How to fix them – explaining how the capitalist system and profit, the fuel that drives it, operate.) 


The nexus of profit and purpose lies at the crux of this paradox. Originally conceived as the reward for creating value, profit has often been divorced from its broader societal implications. Companies, driven by the imperative of maximising shareholder returns, have frequently overlooked the true costs of their actions on a company’s other stakeholders such as workers, suppliers, communities, and NGOs representing civil society who are focused on the environment.  

Companies often neglect to include the costs of avoiding and remedying these harms, resulting in an understatement of their true financial position. Furthermore, they miss out on the potential benefits of investments in employees, environmental improvements, suppliers, and community development. Simply put, companies must find innovative ways to capitalise on these investments rather than merely relying on traditional revenue streams. 

In response to these challenges, a diverse array of reporting standards and frameworks has emerged, each reflecting a distinct vision of how best to measure and communicate corporate sustainability performance.


The ISSB, for example, focuses on financial risks and opportunities, particularly those related to climate change, urging companies to adopt strategies that address sustainability concerns. Meanwhile, the European Union’s CSRD takes a more holistic view, encompassing social impacts and human rights, and holding companies accountable to all stakeholders affected by their actions. Towards that end, the European Financial Reporting Advisory Group’s (EFRAG) Sustainability Reporting Board (SRB) has developed the European Sustainability Reporting Standards (ESRS).  

Yet this approach faces three significant challenges. 

  • Firstly, it’s impractical to standardise everything, as each company, sector, and country has unique risks and expenditures tied to their processes, locations, products, and technologies.
  • Secondly, focusing solely on costs — be it capital, labour, or materials — can lead to increased expenses, raising concerns among companies, particularly those in developing and emerging markets, as well as in vulnerable communities. 
  • Lastly, the complexity of concepts such as single versus double materiality can be overwhelming, making it difficult for stakeholders to grasp and navigate the reporting landscape.

The crux of the matter is that businesses should profit from creating benefits, not harm. Companies must align their purposes with producing profitable solutions that benefit society and the planet. Boards should ensure this alignment, guided by a purpose judgment rule. If companies profit from harming others, they should face consequences: regulation, reputation damage, litigation, and taxation. (For more on the necessary renewal of governance structures read Strategic purpose - a call for new governance practices)

To achieve fair profits, relying solely on non-financial metrics won’t suffice. However, corporate sustainability reporting is a positive step forward, as transparency reduces risk through improved information sharing. Decisions must be informed by robust accounting to address the crises we face effectively. Without accurate data, we cannot gauge our progress or success in solving these challenges.

In this context, management accounting plays a crucial role in enabling companies to understand and manage their sustainability performance. By providing tools and techniques for measuring, monitoring, and reporting on non-financial metrics, management accounting helps companies align their business strategies with their sustainability goals and communicate their performance to stakeholders effectively.

(Ensuring management accountants have, and understand, these tools and techniques was one of the drivers behind the creation of our Online ESG and Sustainable Financial Strategy Course which Amir leads.)


Other issues abound. There’s a risk of ‘garbage in, garbage out’, where flawed data leads to unreliable outcomes. And in sectors like utilities, the cost-benefit analysis often guides decisions but may not always yield the right answer for society or the environment. If profit and economic outcomes remain the primary drivers, stakeholders may manipulate accounts to suit their preferences. Shifting these underlying drivers and adopting a new accounting approach focused on fair profit can drive meaningful change. 

The reporting standards domain has seen significant consolidation and convergence, but it’s crucial for the standard-setting community to maintain and enhance this alignment, given the urgency of the situation. With limited time to address pressing sustainability challenges, continued collaboration among all stakeholders is imperative.

However, realising the full potential of corporate reporting requires more than just technical solutions — it requires a fundamental shift in mindset and culture. Companies must move beyond a narrow focus on short-term financial returns and embrace a broader vision of success — one that encompasses not just profit but also purpose. This requires leadership, vision, and a commitment to transparency, accountability, and continuous improvement.

Ultimately, the journey towards more sustainable and responsible capitalism is not just a technical challenge but a moral and ethical imperative. The battle of acronyms in corporate reporting reflects a broader struggle within capitalism itself — a struggle to reconcile profit with purpose, short-term gains with long-term sustainability, and narrow self-interest with the common good.

We have long been researching and engaging in this space of accountancy and corporate reporting. Six years ago, we called for the then existing standard-setting regimes for financial reporting - the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) - to be widened to include setting standards for sustainability-related information.


In the ensuing years there have been many advances in sustainability reporting standards and many new acronyms. But recognising the need to move forward and address the current divergence in standard setting at the Oxford Initiative on Rethinking Performance we were delighted recently to host Capitalism and Crises: Can accounting and reporting fix them (playing off the title of Colin's book) with key players from across the field – ISSB, CSRD, GRI, EFRAG, SRB, ESRS.  

And while there may be differing approaches and viewpoints, as we saw at our event there is also hope with a growing recognition that sustainability is not just a cost to be minimised but an opportunity to be embraced, a source of innovation, resilience, and competitive advantage. That is something to remain positive about.