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3 questions to Madlen Sobkowiak on Sustainable Accounting

Madlen Sobkowiak , Associate Professor

Accounting is evolving at great speed, driven by urgent environmental and social issues faced by each and every organization around the world. Madlen Sobkowiak, an Associate Professor at EDHEC, is at the forefront of these transformations via her research and teaching on sustainable - or extra-financial - accounting.

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25 Jan 2024
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Could you define what sustainable (or extra financial) accounting is?

In the past, accounting was primarily, if not exclusively, about economic indicators and performance. However, for years now (even decades for some), this has been changing, especially with an accelerating pace recently. An organization now needs to integrate environmental, social, and governance (ESG) practices into both its operations and reporting.

 

This shift is primarily driven by regulations, especially in the European Union, as exemplified by the Non-Financial Reporting Directive (NFRD) in 2017 and the Corporate Sustainability Reporting Directive (CSRD) in 2024 and in the coming years, the scope will be broader. The motivation is simple: forcing companies to “write in their books” more and more criteria linked to nature (1), human well-being, and governance.

 

What is your latest paper “Rethinking Planetary Boundaries: Accounting for Ecological Limits” (2) about?

We’ve tried to push further the current limits of environmental accounting. By gathering co-authors from different background, we want to address the pitfalls of isolated approaches. How do we holistically bring nature into accounting? To us, the planetary boundaries framework, by encompassing various subjects at different scales, is a first step towards that. And we think it is key to translate this vision into indicators and tools to link the reality and behaviors of organizations with the outcomes on nature. We used to focus on balancing the economic budget and now we argue it’s time to focus on a balance that encompasses the planet and its communities (3).

 

How do you propose to combine the different scales at stake?

Indeed, each organization has numerous parameters and scales in its relationship with all their stakeholders. Precisely because it is about measuring and reporting, accounting is a transmission or a translation mechanism working in both ways. The objective is not to tick boxes but to initiate discussions and innovation, internally and externally, to truly enhance environmental outcomes.

 

The issue of data is key of course, and we have tremendous efforts to make, both in terms of research and concrete frameworks and solutions, to define the right paths, and solve the paradoxes we meet. “Ecologizing” accounting is an exciting objective and I look forward to taking the next steps with my colleagues and students!

 

 

References

(1) The making of imperfect indicators for biodiversity: A case study of UK biodiversity performance measurement (2022). Madlen Sobkowiak. Business Strategy and the Environment, Volume 32, Issue 1, Pages 336-352. https://doi.org/10.1002/bse.3133

(2) Rethinking Planetary Boundaries: Accounting for Ecological Limits (2023). Madlen Sobkowiak, Juliette Senn & Hendrik Vollmer. Social and Environmental Accountability Journal
Volume 43, 2023 - Issue 3. Pages 259-272. https://doi.org/10.1080/0969160X.2023.2283019

(3) Transnational Corporations, Biosphere Stewardship, and Sustainable Futures (2022). H. Österblom, J. Bebbington, R. Blasiak, M. Sobkowiak, and C. Folke. Annual Review of Environment and Resources. https://doi.org/10.1146/annurev-environ-120120-052845

 

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