In Critical Success Factors for Tomorrow's Business Leaders, the international body claims that social media and the 24-hr scrutiny of the digital age mean that there is a direct link between ethics and value creation that business needs to wake up to.
The report follows an international summit held in London where senior CEOs, CFOs and executives together with the heads of global Chartered Accountancy bodies gathered to discuss key issues facing future finance professionals. The report covers issues ranging from geopolitical tensions to the need for tax simplification and also draws on research surveying chartered accountants leading UK businesses.
Ethics emerges as one of the main factors that will shape the future of doing business. The report shows that the moral values of organisations are becoming more important to millennials, who want to do business with brands they trust. The report also notes that there is a tension between highly regulated environments which drive a culture of compliance and embedding an ethical environment. A quoted source says "our businesses are not sustainable if we're depending on regulation to make us ethical. Ethics is about the soul of an organisation. It's not a matter of compliance and it starts in the boardroom."
Pat Costello, Chairman of Chartered Accountants Worldwide said: "The digital age means that everyone is under scrutiny, all of the time, and issues can escalate through social media like wildfire. The right decisions need to be taken in real time - it's no longer enough to rely on the traditional hierarchies. This means we need to foster a culture where people are trained to know what the right thing to do is when a challenge presents itself. A culture of ethics certainly starts in the boardroom, but it can't stop there."
The report also notes that tax is now a reputational issue, with aggressive tax avoidance having the potential to do real reputational harm. Although there are concerns surrounding the difference between legitimate tax planning and aggressive avoidance, the report states "a new kind of economics - reputational economics - is now part of boardroom agendas. And it is here to stay."
The South African Institute of Chartered Accountants (SAICA)'s CEO Dr Terence Nombembe explains that "as chartered accountants, we should uphold the ethical standards of the profession by ensuring compliance to the general anti-avoidance rule (GAAR) in South Africa. As an institute, we are committed towards developing responsible business leaders who have the business acumen and integrity to do the right thing in business." About 78% of the CFOs of the country's listed companies are chartered Accountants South Africa [CAs(SA)], while about 32% CFOsof the top 200 JSE listed companies are CAs(SA).
The report also examines geopolitical tensions including international conflict and the potential for Britain leaving the European Union, the effects of new technology, skill shortages, and the need for simplification of the tax system,
Chartered Accountants Worldwide CEO said: "Business Leaders cannot just manage what is in front of them; they need to be able to see through the complexity to what will be important in the future as well. This means understanding the strategic effects of global issues, whether that is the recent fall in oil prices, conflict in the Middle East, or what is trending on twitter. Chartered accountants are trained to be strategic business leaders, which is why they are well-placed to see the knock-on effects that social change can have on the bottom line. It takes a lot of courage to drive change, but it is the only way to stay ahead."
View the Critical Success Factors for Tomorrow's Business Leaders report.
