Yeah, I was born in Australia, so I talk funny. I studied accounting and finance and Japanese language. And found it was far easier to get a job using accounting than the other two. And so, I worked as an internal auditor, and then got head-hunted into academia. And so I've been teaching accounting for the last 20 years. >> We're going to be talking about sustainability reporting, that's one of your areas of expertise. What's the value of a company issuing a sustainability report referring sustainability data on a website or whatever. Making it public, and letting people know what they're doing. >> There is the benefit of allowing investors who care about of social responsibility and environmental responsibility, to feel that their money is being put somewhere worthwhile. There has been a slow transition to recognize that reporting on this stuff is worthwhile, and can be aligned with increasing profitability. >> What do we know about, if companies published this kind of data, does it really matter? Do shareholders care and do investors care? >> They do, they do, there's a strange phenomenon in accounting, and in financial accounting. And that is, it's easy to convince a manager to report on anything. In inside they will report on everything but the bad stuff, so whenever there's good news they will happily disclose it voluntarily without any push or encouragement for anyone else. So with their reporting non financial performance on this or that social performance, environmental performance or charitable donations That willingly provide that but not if it's anything bad or embarrassing. And so there's a strange or symmetry or one sidedness about willingness to talk about what may be important. >> So, in terms of accounting, importance is often coached as materiality. Yeah, materiality's a funny way of saying it's a big deal for this particular company. >> And are sustainability metrics material in any sense? Do they matter? >> There's been a lot of skepticism within accounting that they are. So yeah, I guess the presumption has been that they're not. And then, there's a slow dawning shift, that perhaps it is material. And so there's some recent research evidence showing that perhaps it really does make a difference, and it's credible evidence, so it's quite exciting. >> Evidence in terms of it affects the value of a company somehow? >> Yeah, it effects the stock price of a company and it's rate of return on the stock market. And also it's accounting performance in terms of profitability. >> That seems like good evidence. >> Yeah. >> Could you talk a little bit about the role of third party verification in sustainability reporting? And maybe the obligatory versus voluntary nature of the reporting as it's done now. >> Yeah, so I suppose in normal accounting, auditing or verification of accounts is a normal part of the process to make sure that everything is disclosed. Truthfully and that was the whole truth not just the nice truth. So whenever it becomes to voluntary disclosure, it's least commonly used and but it's a small and yet growing industry I suppose. And there's some confusion with the accountants have rolled to audit these non financial disclosures or whether it should be done more effectively by specialists in particular, different areas. >> So a scientist, or a person who does health, or something like that? >> Right. >> Can you tell us a little bit about the Sustainability Accounting Standards Board, which is a parallel organization to the accounting standards board >> Yeah, there's been some interesting development. So the Sustainable Accounting Standards Board started as a wild and crazy idea. And it was championed by a wonderful lady who's done some amazing work and transformed it from a pie in the sky Idea into something that has a lot of buy in from a lot of people and is looking very promising. And the Sustainable Accounting Standards Board initially was told off by the Financial Accounting Standards Board of, go away, you're too similar to us. Kindly differentiate yourself. With increased credibility now and, more recent years there has been a recognition that you guys are the good guys and we don't need to sort of push you away. So it has been an interesting dynamic. >> So can you explain that role of a little bit? What sort of services do they provide, or guidance [INAUDIBLE] >> So the Sustainability Accounting Standards Board, or SASB, is this project to help show that different industries have different things that are important. And so, what's important in one industry is trivial in other industry. So in working in an office any company that does office work or provide services a lot of paper work they don't need to worry about work and safety and paper cuts are not that bad. So that's a tribal thing don't even talk about that. So it's trying to create a customize for different industries. The number of performance majors of things that really matter. And so this is really promising because rather coming out with 100 page glossy report of everything under the sun, mostly good things. The approach is trying to say well here are the few, three of four things that are really important for this industry. You're a company in this industry talk about those please. >> And can a person who's not a licensed accountant, or a certified accountant go to the sustainability kind of standards website, and download information about what those key sustainability indicators might be? >> They can, they can, my students did it last week. >> Good. >> And I think they ask you to register, but it's a free process. And so you can see for manufacturing companies for instance don't kill workers, that's pretty important. And so worker safety is a big important feature for that particular industry. >> So if a person were joining a company and they were looking for a first project to work on in the sustainability realm >> Where would reporting fit in there? I mean there's a lot of companies that report, they have glossy reports and that's fine. But there's a lot of companies that are doing almost nothing. >> Yes. >> What would you say, is reporting an area where a person might be able to have a little impact? >> Well, I suppose it's one way to help be a change agent by saying there's a benefit that at least some of your owners and investors are likely to care about these things. And so, even if they're not explicitly demanding this information. They might be quite receptive to it being provided to them. >> What about carbon and carbon footprints. >> Yes, so this is one of the surprisingly easy approaches. So majorly green house gets emissions of carbon dioxide. It seems overwhelming and vague and who can possibly do it. And then just with a little bit of coaching, it becomes doable. For instance, you can say how much stuff do we burn ourselves? And so that's measurable. How much electricity do we use? That's measurable. And then a script one and script two emissions and then script three emissions of all our suppliers, how much do they burn. Well, that's kind of tricky, but certainly, how much do we burn ourselves, and how much electricity do we use? Those are relatively easy to measure, and pool together and add up. And that's the basis of the Carbon Disclosure Project, or CDP and that was the origin. And they've since branched out into other areas. So greenhouse gas accounting is not too hard to do, at least the simple stuff. >> So that would be a starting place, because it uses energy, it would create a baseline that looked at energy-saving [INAUDIBLE] or something like that? >> Yes, absolutely, yeah. >> So parallels to water, to materials, to waste, do you see any of those similar things? >> Yeah, I'm not as familiar with those areas, but certainly measuring water consumption is doable. Deforestation, I understand the CDP looks at as well. I've not I'm not as familiar with that area. >> So when you're reporting something, you've got a company. And let's suppose it emits 150 metric tons of CO2 during a year. There's another company, and it emits 450, 50 metric tons, so 150, 450. >> Yes. >> Is 150 better than 450? >> Simplistically, yes, but in terms of scale obviously you need to allow for the fact that one company, one's emitting three times more but they might be doing ten times more business. So comparing the number of tons of carbon dioxide emitted to how much their sales are or how many customers they have or something in terms of size, it's a denominator. [CROSSTALK] >> Intensity. >> Yeah. >> And really what we're trying to do is decouple economic activity from carbon emission group. >> Yes. >> Absolutely really like so we'd like that measure >> One day we'll get there. [LAUGH] >> [LAUGH] >> Yeah, in an ideal world, what would a sustainability report do if already kind of revealed some of the, but, maybe go over it again. What would you really like to see? So what kind of components would you have in the- >> Yeah, a study with a simple framework is a good start. And so, you mentioned the B Lab Impact Assessment is a great start. >> What's the value of using a GRA template rather than just going off on your own? Is there any value in that? >> There may will be. The GRA approach has changed over the years, but nevertheless, is still relatively focused on beet companies. So, yeah, I guess I wouldn't particularly encourage that as an approach. Certainly not as a first approach. >> Okay, good, just too complicated as a starting place? >> And, yeah, and somewhat overwhelming. >> Any last comments? >> Thank you for listening to me. [LAUGH] >> [LAUGH] >> Okay, great, thanks.
