Accountants aren’t normally renowned for their charm or big picture thinking. We’ve all heard the cheesy jokes. What’s the difference between an accountant and a lawyer? The accountant knows he’s boring.
Jeremy Nicholls, the former chartered accountant and CEO of Social Value International, has a way of turning such stereotypes on their head. We were lucky to have him in Melbourne last week when he presented at the Measuring Social Outcomes Conference and made time to speak with the team at Social Ventures Australia.
Jeremy has been a leading voice in the global movement to change the way the world accounts for value. For thousands of years, Jeremy reminded us, we have mostly been content to account for financial value alone. You could argue that it has served us reasonably well, with living standards rising drastically across many parts of the world. But as income inequality seems to spiral out of control and many of the world’s social and environmental problems remain unsolved, it is apparent that financial accounting is not ‘fit-for-purpose’ in the twenty first century.
In his view, the key to really improving the way we measure impact will be to build a common language. For those of us in the SVA Consulting team, Social Return on Investment (SROI) is a familiar and powerful framework. Our colleagues in the Impact Investing team, might be more comfortable with the Impact Reporting and Investment Standards (IRIS), a catalog of generally-accepted performance metrics that some impact investors use to measure social, environmental, and financial success. Meanwhile, a Director of Sustainability at an ASX 100 company would probably be most fluent in the language of the Global Reporting Initiative (GRI).
Sound confusing? Well whatever your preferred acronym, Jeremy believes we are all speaking dialects of the same language. The challenge is how can we move towards standardization more quickly and begin to influence policy and mainstream accounting practices. He mentioned two examples of recent progress. The first was Puma’s environmental profit and loss account (E P&L). Back in 2011, the sports footwear company made public the world’s first E P&L, which put a definitive dollar value on the impact their products and sustainability programs have on the environment.
The second was the UK’s Social Value Act. This innovative new law came into force in January 2013 and requires public bodies to consider providers based on the social value they create, not on cost alone. The uptake of similar ‘social procurement’ laws globally has huge potential to change the way public services are commissioned.
Jeremy acknowledges that there is a long way to go before social impact measurement crosses over into the mainstream. However, he remains an optimist and with more than 45 national memberships and counting, Social Value International is playing an important role. So next time you’re at a barbeque, think twice before you snub the accountant next to you. If Jeremy Nicholls is anything to go by, they may just have the personality and passion we need to build a better world.