A Changing Landscape
Escaping the effects of the pandemic has been a tricky task for many, with finance professionals having no choice but to ride the wave.. Over the last two years across the wider financial ecosystem we saw stock exchanges closing their trading floors to rely even more on remote trading, mobile banking usage spiking and widespread embracing of FinTech accelerated across many financial disciplines. Obviously, the accountancy profession was not immune to this reliance on technology, something that has been building even before the pandemic accelerated our reliance upon it.
In the age of A.I, accountants need to retain their relevance and importance, and continue to drive organisations and businesses forward using technology to do this. Also over this time, there has also been a huge cry for organisations to cut emissions and reduce their climate impact, with the outcomes of COP26 very much relevant to the world of the accountancy profession and its responsibility to report on a company’s performance and risk appetite. The dual challenges of digital adoption and the climate crisis are very much issues that the accountancy profession needs to embrace.
But how will they achieve this, and help the companies they work for and the clients they support to handle the necessary changes of a transforming landscape?
Digital transformation has been vital for organisations in responding to the disruption of work and business systems. In a time where the choices were adapt or die, eight in ten organisations fast-tracked their digital transformation programmes. In the same Dell survey, which included over 4000 business leaders globally, 89% said that the pandemic highlighted the need for a more ‘agile and scalable IT environment’. Scalability has become a buzzword, but is one of the most exciting aspects for businesses during their digitalisation. Global work and communication has only become easier and more accessible with improved technology. This has allowed businesses to streamline meetings, services and systems to overcome what economists have called “The Great Shutdown” or “The Coronavirus Recession”. Financial teams are no longer the hidden backbone of organisations, they have come to the fore to prop up the decisions made by business leaders by providing imperative data and insights on how to survive such testing times, and come out on the other side of it thriving.
Investing in and embracing technology will aid financial teams by allowing them to shift away from time-consuming everyday tasks. Cloud accounting software is a significant ongoing trend that many are turning to, as new, resilient infrastructures are implemented. Cybersecurity is another factor that accountants must continue to recognise, to retain their position of importance. Assets and information have been stored online for a long time by companies, but as many will look to embrace A.I and other new avenues like digital currencies, protecting from data hacking and other online threats is a key goal. During the pandemic Financial teams have not only had to manage difficult calls on furloughing staff and cutting costs, but also managing expansions and growth. Ensuring the organisation is set up for future profitability is a task CFOs and their finance teams must continue to lead.
The events of COP26 were largely focused on big business, but the call for environmental improvements across all organisations was a prevalent trend of 2021. Quickly, we started to see sustainability being adopted as a part of the ‘DNA’ of many companies. Our own research. ‘Climate action and the accountancy profession: building a sustainable future’, revealed that 40% of UK organisations are ready to increase investment into tackling climate change.
However, some have been viewed as ‘greenwashing’ or even ‘greenwishing’, concepts where a company pretends to be making sustainable changes and choices just for good publicity, without fulfilling them. Some companies may be daunted by the task ahead with the same research revealing 44% of accountants and finance professionals say their organisations had yet to set targets to be net zero compliant by 2050. However, many have made significant changes and impacts, and we have started to also see a societal shift. As ‘Gen Z’ filters into the working world, they’re bringing more sustainable and ethical considerations with them, which puts pressure on organisations to do the same.
Financial teams and accountants can again make themselves key here, as reshaping business models and environments can often be a trade off between initial investment and improved sustainability. Deciding what, when and where to invest in is a vital process, especially for smaller and medium sized companies who may have struggled during the pandemic period. The sector isn’t shying away from this task – again our own research illustrates this with an overwhelming majority of finance and accounting professionals (76%) agree it is important they are involved in supporting their organisations to tackle climate change, but they see barriers holding them back such as the internal organisational perception that climate action is not viewed as the responsibility of the finance team (54%), lack of commercial incentive (36%), lack of support from leadership (24%) and poor data (23%).
Switching from in-person to online meetings has already helped many companies reduce their carbon footprint, but finance teams can make themselves vital by taking charge of the environmental reshaping of their organisations. In fact, we’re calling on everyone within the global ACCA community to plan how they are going to play their part in delivering the UN SDGs by asking everyone a simple question: ‘what steps can I take?’. We know that if every member of our profession takes concrete steps to deliver these, we have the combined power to create a better, fairer and more sustainable future.
Biggest Takeaways for Finance and Accounting Teams Heading into 2022
The role of the finance team itself is changing with a greater focus on insight and forward-looking considerations rather than just reporting the events of the past. As a result, they must ensure that they remain relevant to their many stakeholders to drive change.
Increasing digitisation, new technologies, and renewed focus on sustainability are just a few of the more paramount reasons that make proper digital transformation a necessity for firms in the new year and beyond. Underpinning these and other contributing factors is the need to adopt agile principles and automate processes wherever possible to further accelerate change.
But it’s our belief that accountants have immense power to drive many of these internal decisions by quantifying and re-framing them to other stakeholders as budget-conscious measures—not only is transformation necessary for extrinsic factors, but is key for the health of the organisation’s bottom line and ultimately the planet too.
By-lined to Claire Bennison, head of ACCA UK