Sustainable change or SOX 2.0?

I had not intended riffing on my colleague Vinnie Mirchandani's piece: How ERP vendors can change the world. Seriously.
Written by Dennis Howlett, Contributor

I had not intended riffing on my colleague Vinnie Mirchandani's piece: How ERP vendors can change the world. Seriously. We'd discussed the topic over the phone earlier in the week and at the time it was clear he had a solid position which Larry Dignan duly picks up. But there was one aspect of the conversation which has since taken on greater meaning. From Vinnie's post:

But they are letting their accounting side versus their shop floor side lead that. The focus is on compliance and reporting. As further proof, alumni of SAP and Oracle have launched a company called Hara. The founders have a Sarbanes-Oxley compliance background.

I've mentioned this to sustainability buffs in recent times and because of my background in accounting, people often ask me about carbon emission accounting. It's not a topic I find particularly interesting unless it is regarded as a commodity extension to existing reporting. Then I see that PwC, together with the UK's Confederation of British Industry has published a template for greenhouse gas emissions reporting.

I took the time to more than skim read it and while I am sure it is well intentioned, it is exactly what I would expect to see from an accounting based approach. I won't bore readers with details but it took the all too familiar accounts style of format with masses of detail in the reporting of actual performance but very little of substance in regard to strategy. It tells me one thing: Consultants are tee-ing up their clients for a fresh wave of report building that will be reflective of the kind of controls and strictures with which Sarbanes-Oxley has saddled us.

It's already happening. One person I know who is responsible for his company's sustainability report described the excruciating detail in which the Big Four 'auditor' went through their report. None of us who are even vaguely serious about this stuff want greenwashing but SOX 2.0 in disguise? Or worse still as James Farrar suggests:

You see, the dirty little secret of corporate social responsibility is, as we have all known for years, the trade off and optimization analysis required to drive serious decisions such as for carbon, recycling & packaging performance is complex. But rather than throw the problem to the Operations Research department; it has instead been parked for too long with the PR group who busied themselves writing attractive CSR reports and thinking about crisis preparedness and reputation management.

Given the humungous problems attached to the general credibility of the Big Four and 'auditing' in general, I would have thought that greater imagination could have been used in coming up with reports that inspire. Instead they act as a sleep aid. And therein lies another problem.

Vinnie's call to action is entirely reasonable given the amount of technology that's available to us but unless that is articulated into an inspiring strategy then who is going to care? What I saw in the PwC template seemed to illustrate a disconnect between what I see on the ground in the minds of those who are trying to bring change and the lack of well articulated strategy by the companies that could make a difference. That disconnect has to be addressed. In making such strategies resonate with people you get the support needed to execute on a differentiating position. I struggle to believe such approaches can come from the Big Four. They are too heavily vested in billing consulting hours and I wonder whether they have correctly understood the balance between economic and sustainability needs. Whether companies believe that is another matter.

Tech companies could do a lot more but they will need to reconsider the relationships they hold with the big consulting organizations and those who start and stop at accounting led measures. It will be a tough ask but is eminently do-able given the current expectations for change.

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