Recording and advising on money-based transactions has been the superpower of accountants for centuries.

To enhance their superpowers accountants must now take account of natural and social capitals. Already larger companies are required to report on their environmental, social, and governance (ESG) impact. It is only a matter of time before smaller organisations are required to follow suit. 

Don’t wait for regulation

It is a mistake to wait for regulation before acting. This is because the success of organisations is now influenced by the extent that they can mitigate the risks and take advantage of the opportunities that arise in the new sustainable economy.

Already, smart organisations of all sizes are implementing strategies that respect natural and social capitals in their business models. These organisations will be the winners in the new sustainable world. 

Examples of how accountancy firms are advising these winners are being seen in the new AccountingWEB Pride – ESG category at the Accounting Excellence Awards. Firms entering this category have already explained how their support of green initiatives has increased client and staff retention.

The accountants advising the winners start by taking account of the impacts of natural and social capitals before they are reflected in financial/monetary transactions. They gain a strategic advantage by acting in advance of economic change.

What are these different capitals?

Financial/monetary capital: The measurement of possessions gathered by creating monetary wealth and day-to-day movement in economic transactions.
Natural capital: The essential resources on which humanity and all living things depend, including air, water, soil, plants, food, biodiversity, natural habitat, and climate.
Social capital: How we function together as people effectively. It includes collaboration, fair distribution, trust, participation and caring for each other.

Why is it inevitable that natural and social capitals will be reflected in financial capital? The simple answer to this question is that if we don’t, society as we know it will likely fall into chaos. The natural world would become inhabitable in many places around the globe due to water shortages, crop failures, pandemics and other disasters arising from climate change, biodiversity loss and other human influences on the natural order of the …