Responsible accountability

Formal scorecards and financial accounting systems aren’t set in stone. They represent past choices as to what and how to measure things in business – past choices that may be steering us in the wrong direction. Moreover, once we measure something and rank it in a league table, we wrongly tend to think we’ve mastered it. But big risks and mistakes come from where we’re not looking.

From carbon emissions to social inequalities, responsible businesses need to manage even what they can’t measure easily and stop obscuring and omitting these socio-ecological costs from their accounts. A new world of purpose-led metrics, open reporting and precautionary principle accounting are all innovative ways of meeting this accountability challenge.

Our research at the Centre recommends the following first steps for businesses wanting to begin or continue their journey in this area:

Responsible accountability first steps: Blindspot removal - assess your impact on all 17 Global Goals. Purpose-linked metrics - measure social contribution as keenly as finances. Open reporting - use Global Goals-based monitoring to encourage stakeholder transparency. Ambitious sustainability targets - go beyond compliance and follow the latest science.

You’ll find the practical tools, resources and rationale for how to do these things below, together with many more research-based ideas and inspiring case studies on this essential part of responsible business.

Research and ideas


Carbon accounting

Professor Ian Thomson presents a series of online lectures about carbon literacy, reporting, measurements and risk.


Open reporting platforms, like G17Eco, are potentially revolutionary because they neutralize the company-centric bias of most accounts and democratize the accounting process, allowing more scrutiny and accountability by external stakeholders beyond just shareholders, such as local communities and campaign groups. At its most radical, this approach can help stakeholders create alternative accounting systems, which companies could then be obliged to participate in and integrate into their own accountability practices.

One of the most interesting examples is in the Niger Delta, where the persistent problem of oil spills since the 1990s, caused largely by the activities of the petrochemical multinational Shell, required a new approach by local regulators. The data used by Nigerian authorities to sanction Shell for environmental and social damages was scant and often supplied by the corporate’s own monitoring programmes, making it hugely partial and selective. Shell consequently got away with under-reporting spills and avoiding the costs of clean-up for years.

So a coalition of NGOs developed a web-based ‘counter-account’, which allowed those affected by these oil spills to record when, where and what was being spilled, including images, videos and first-person testimonies of their suffering. This counter-account was highly effective and led to a partnership with the authorities to enable government agencies, oil companies, civil society groups and communities to all engage and share critical information. Now fully integrated into government regulation and rebranded as the Oil Spill Monitor (OSM), it provides open access to detailed accounts of the cause, timing, location, quantity and remediation of every single oil spill in the Niger Delta. Most importantly, it gives everyone affected a chance to give their accounts of the impacts, including local people whose voices would normally go unheard and whose lives have been blighted by disease caused by polluted farmland, fish, drinking water and air.

By capturing all the stakeholders in the region, not only did OSM equip the Nigerian authorities with a more complete range of data to hold Shell to account, but it also allowed local communities and NGOs to audit, verify and challenge the authorities and their official accounts, too. Undercover filming by Amnesty International found the Nigerian authorities’ oil spill investigation teams to be under the control of Shell, bribing locals to lie about pipe leakages being caused by oil thieves’ sabotage. Shell eventually paid £55 million in compensation in 2015 for deliberately minimizing its oil spill assessments after losing a court case led by the human rights charity. And in 2021, a Dutch court found Shell Nigeria liable for damage caused by oil leaks and ordered them to pay compensation to farmers and install equipment to prevent future damage, ruling that they had a duty of care to the communities wherever they operated.

What the OSM illustrates so vividly is how powerful accounting can be in the way it helps represent events that have happened and leads to material changes in the present. All those various stakeholders in the Niger Delta helped to construct an account of the past that could be used to influence future decision-making and governance at a distance – whether Shell’s management at their headquarters in The Hague or the high court judges in London and the Netherlands who heard Amnesty International’s court case. Far from being dull and inert documents, accounts can bring to life the past actions of a company, the specific impacts it has had and the people who were there to see them. As such, they’re an essential tool for NGOs to lobby governments, shareholders to protest against company executives at AGMs and communities to engage with businesses on issues that are often many miles and many years away.

Financialisation dilemma

To encourage countries to account for social and environmental ‘externalities’ in the valuing of their economy (which is normally just predicated on a valuation of the country’s finished goods and services, known as GDP), the UN introduced a System of Environmental-Economic Accounting (SEEA) in the 1990s. It pioneered the idea of ‘natural capital’ and ascribing a monetary ‘asset’ value to nature as a way of integrating it into the balance sheet of the economy, recognizing its value and managing it more sustainably.

But while its intentions may have been laudable, critics say it has led to a narrowly defined valuing of nature as a commodity that’s owned and traded, not enjoyed in its own right. Trees, for example, are measured by their commercial timber and carbon-sequestering value, while their importance to biodiversity or recreation are also linked to market valuations that bear little relation to how people and other wildlife actually enjoy or depend on them. The political ecologist Professor Sian Sullivan says research shows this monetary valuation of nature has had a limited effect on conserving it, arguing the method is ‘coherent to capital(ism), but perhaps obstructive to the system change arguably required for the sustenance of future environmental health and diversity’.

The same tensions exist when companies try to monetize nature and other social externalities in their accounting. If the value of human rights or local communities is only measured by their transactional worth, they become economically determined – not socially – and the true value of them to the business, their customers, stakeholders and the wider world is undermined, reduced and ultimately misrepresented. Besides, it’s widely accepted in accountancy that any financial valuation is always incomplete, biased and specific to the purpose it was originally made for. So, while integrating the Global Goals into a company’s financial accounts is important, it’s impossible to fully capture the responsibility a company has to them if they are only measured financially and presented as a single, inadequate figure.


Materiality is critical to business accountability. Something is material if it might affect the value of the company or influence a stakeholder’s decisions. And materiality determines what a business should disclose to the rest of the world, regardless of financial reporting regulations. For example, if your beer requires clean and unpolluted water, then it’s likely that the impact of climate change on local rainfall patterns and the effects of industrial emissions on water sources are potentially material. So a brewery may need to disclose what efforts it is taking to mitigate these negative impacts. But very few companies classify such sustainability risks as material, meaning they effectively engage in non-disclosure of very real threats to their business. While standard setters, regulators and political institutions like the EU are looking to compel businesses to disclose sustainable risks they consider material, there is a lack of consensus as to how to determine what is material or to whom. However stringent the reporting protocol, the decision about what’s material is left to these often self-appointed bodies to determine and not led by the concerns of the different people and stakeholders using the company reports for their decision-making. But a new generation of more comprehensive and transparent online reporting platforms, like G17Eco, allows the material concerns of the user to be addressed more easily.

Dr Christoph Biehl, Professor Ian Thomson and Madeleine Travers discuss the issue of materiality and its importance to sustainability in more depth in the article below.

Leading viewpoint: Rethinking materiality: the missing link

Planetary boundaries

Professor Johan Rockström of the Stockholm Resilience Centre explains what planetary boundaries are and why responsible businesses should be benchmarking their social and environmental impacts using these global measures.

Precautionary principle accounting

Researchers at the UCL Institute for Innovation and Public Purpose argue that there is ‘radical uncertainty’ when it comes to the environmental breakdown we are currently seeing. Nature is so complex and interconnected that it’s impossible to predict or even imagine what it will do next. Vast forest fires, floods and extreme droughts thought to be once-in-a-century events are happening all around the world with alarming frequency. Therefore it can’t be considered as a ‘conventional market failure’ that can be calculated, say the researchers, because ‘the relevant information that markets require to reorient capital may never be known in full’. As the former US Secretary of Defense, the late Donald Rumsfeld, famously once put it, there will always be ‘unknown unknowns: the ones we don’t know we don’t know’.

So the UCL researchers advocate taking more of a ‘precautionary principle’ approach to accounting, being wary of any innovations that may pose a risk to the environment while the scientific evidence of their effects remain unclear. This is well established in the fields of health or environmental protection, but less so in the world of finance and business (despite accountants’ similar and long-held concept of prudence). After the 2008 global financial crisis, when the limitations of financial modelling and forecasting based on prior data were brutally exposed, new regulatory measures for financial institutions such as stress-testing and minimum capital reserves were introduced. But that same precautionary approach has yet to be taken towards non-financial risks, even though regulating for a transition away from high-emissions activities and products would clearly mitigate against further climate-related crises and the financial crises they would likely precipitate.

Tipping points and thresholds

Successful businesses have experience of acting on leading indicators, models, forecasts and incomplete data. Business decisions have always involved a combination of known facts, trends, experience, intuition and imagined futures. Budgeting and targets are predictions based on models, and investment decisions are based on imagined outcomes measured against different scenarios. While everyone wants as much certainty as possible, we all accept that the future is essentially unknowable. This is why the better your ability to imagine or predict the future, the better your decisions will be. Learning about how different systems will behave will pay back considerably, protecting investments and future-proofing businesses.

Unfortunately, many models of sustainability are incomplete and wrongly assume that a socio-ecological system will respond in a balanced and predictable way, restoring itself if we simply leave it alone. Even when their condition passes a point of rapid decline (see Figure a below), we often mistakenly assume our human impacts will ultimately be reversed in a similar, incremental fashion over time. But the truth is that the resilience of any system can be damaged by humans beyond repair, and resilience behaves in a far more complicated and non-linear fashion (see Figure b).

Charts - responsible accountability

Once a system passes a certain threshold (represented by the dotted arrows in Figure b), even the smallest disturbance may quickly push it beyond a tipping point (f2) where it catastrophically ‘flips’ to a far worse and possibly irreversible state (x1). That’s why f2 should really be considered the ‘point of no return’. Even if all pressures on the system are removed, it is incredibly difficult, if not impossible, for it to recover and flip back in equally dramatic fashion (f1 to x2), which is why for example so much of the UK’s overgrazed uplands have never naturally reverted to their original forest cover even decades after farming has ceased.


Tools and resources

Accounting for the Sustainable Development Goals

Find out how to integrate the Global Goals into your business with AICPA and CIMA’s essential briefing for accountants and business leaders.

AICPA and CIMA promo

Accounting for the Sustainable Development Goals

G17Eco platform

Explore the power of open reporting with World Wide Generation’s ground-breaking monitoring platform that allows various reporting standards to be compared and integrated with the Global Goals.

G17 Eco thumbnail

G17Eco platform

Lifecycle analysis matrix

As the Global Goals become more embedded within international trade agreements, financial markets, taxation, procurement and consumer preferences, the risks to businesses that continue to ignore them are growing. Whether it’s reputational damage or the loss of competitive advantage to those companies that do address the Global Goals, what you don’t know about your sustainability really can hurt you. Ignorance works both ways, however, and businesses may also be missing out on the positive impacts they are making too.

To eliminate these responsibility blindspots, there are numerous 17-dimensional (or 17D) analysis tools available – often freely – that businesses can use to get a fuller picture of their contribution to each of the Global Goals. As well as the Global Goals relationship matrix (see responsible governance) that helps to explore which goals a company is most dependent on overall, you can take a product-by-product approach using a simple life cycle analysis grid (like below) to assess the impacts at each stage of their manufacture and sale.

Global goals mapping

Responsible radar

If there is a particular area of most concern or potential vulnerability, companies can employ a ‘responsible radar’ technique to assess their exposure. For instance, slavery, forced labour and child labour are known to be far more widespread than many business leaders would like to admit, particularly in international supply chains, with sectors such as mining, textiles, agriculture and fisheries the most embroiled. No one – be they employee, customer or shareholder – would be happy knowing they’ve been complicit in exploiting child cobalt miners in the Congo or trafficked fishing workers in Thailand. Many firms in these industries seem to ignore such risks to maintain a kind of culpable deniability if they’re ever exposed.

However, in our world of ever-expanding and easily accessible knowledge, the protection of deniability is wearing paper-thin. And by simply downloading a forced labour map – such as the ‘Products of Slavery’ map from Anti-Slavery International – companies can begin digging into their supply chains and identifying where they are most at risk. The first stage is to list all Tier 1 suppliers and give them a traffic light colour label depending on what sector or product they’re associated: red for those most high-risk industries, amber for medium-risk and green for low-risk, including any supplier belonging to a recognized anti-slavery accreditation scheme (such as Sedex). Then, after placing them on the map according to where they operate, you can see if a supplier is both a ‘red’ risk and located in a high-risk slavery country. Any combination other than a ‘green’ supplier in a low-risk country might warrant some investigation. But those suppliers that are red and in a high- or medium-risk country should be the urgent priority and subject to a second stage of evaluation: this time looking at their sub-suppliers (Tier 2) and drilling down until you are satisfied there is no slavery evident.

This ‘responsible radar’ process can be used to interrogate supply chains for any of the other Global Goal ‘invisibles’ too, with similar worldwide maps available from charities and institutions showing poverty, water scarcity, threatened biodiversity, fossil fuel dependency and education levels by country. Companies may well hit a brick wall trying to find out this sustainability information from many of their suppliers, in which case, it’s worth reflecting carefully why that information isn’t available and whether it’s worth continuing to do business with a supplier if they aren’t quick to find out.

SIMPLE purpose-led metrics

The use of SMART measures that cascade down from strategic business objectives, which are themselves derived from a company’s mission and values, has been the conventional way of performance managing a business for decades. But they have many inherent weaknesses that make them insufficient for tackling sustainability on their own.

Almost by definition, SMART measures are narrow, short-termist and fragmented, particularly in big business where targets are primarily concerned with financial imperatives to produce ever-increasing profits for quarterly reports and rising share prices. As a result, the same traits and priorities are encouraged in employees and the wider business culture, where silo thinking and chasing monthly sales targets for financial reward become the norm.

But greater aspiration and broader motivation are needed to seriously tackle the challenges of sustainability. So a responsible business should look to augment SMART targets with SIMPLE measures that fill in the gaps and link them more directly to their social purpose and the Global Goals, by testing if they are also:


The most comprehensive way of ensuring targets are always both SMART and SIMPLE from the outset is to use one of the many Global Goals-based business reporting and monitoring tools, which help companies map their social purpose and activities against the 17 Global Goals and create KPIs and measures that directly contribute to them. Examples include the World Benchmarking Alliance, Future-Fit Business Benchmark, B Impact Assessment and Business In The Community’s Responsible Business Tracker – all of which provide a full spectrum of sustainability measures and allow their thousands of users to compile handy benchmarks across countries and sectors.

Responsible acountability case studies

The Brazilian sugar producer with healthy soil as a KPI: Native

  • Native’s CEO, Leontino Balbo Jr, started turning his family’s sugar cane plantations into an organic, self-sustaining business in 1987.
  • Recognising its dependency on healthy soil, the firm banned chemical fertilisers, pesticides and burning and introduced practices that would work with nature and the local ecosystem’s services.
  • Native worked with scientists from universities and research institutions to identify natural indicators of soil health that it uses as key performance indicators for the business and its impact.
  • Over 20 years, the plantations’ soil fertility has improved markedly, groundwater sources have regenerated and biodiversity has ‘exploded’ – with crop yields also up by 20%.
  • By improving the resilience of the soil, the sugar cane has also become more resilient to pests and changing climate, surviving more harvests than conventionally-farmed cane.

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How Giki is helping everyone take carbon footprints personally

  • The Giki app helps users scan retail products and see at a glance how sustainable they are.
  • Giki’s website also provides carbon calculators and tools for individuals, companies and groups to reduce their carbon footprint.
  • As a B-Corp and social enterprise, the company ‘walks the talk’ too, boasting a negative carbon footprint and employee policies that encourage no-flying and plant-based diets.
  • The husband-and-wife co-founders’ ambition is to help individuals to link their actions with big sustainability initiatives, like COP26 and the UK Government’s Ten Point Plan.

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The corporate that embraced science-based carbon targets: Capgemini

  • The French multinational became the first IT services company to set emissions limits ratified by the UN-backed Science-Based Targets initiative in 2016.
  • Its aim to slash carbon emissions per employee by 40% by 2030 was almost met by 2019, thanks in part to a big energy-saving drive with its network of datacentres.
  • Its newest and most sustainable datacentre in Swindon, Wiltshire, has achieved power savings of 91% against the industry average.
  • The company’s ‘Road to Net Zero’ plan aims to achieve carbon neutrality across its operations and supply chains by 2030 but doesn’t include historic emissions.

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