The laws that govern business will increasingly have to enable and highlight trustworthy activity in order to support a sustainable economic recovery from the global pandemic, according to a report from the Association of Chartered Certified Accountants (ACCA) published to mark Global Ethics Day on October 21.
The increasingly digital economy, climate crisis and social changes are driving new business models, with the Covid-19 virus highlighting the importance of resilient businesses and cooperative action.
Clear and effective business laws are needed more than ever to build back a sustainable economy, which will depend heavily on being able to measure the trustworthiness and integrity of businesses and individuals.
Jason Piper, head of tax and business law for ACCA, and author of the report Tenets of Business Law: A Framework for the Future, writes:
‘Every major economy is experiencing or facing the threat of economic depression, and many face existential threats to some of their most important sectors. The challenges and opportunities facing policy makers and entrepreneurs alike are almost entirely novel, and yet the success of responses to them will depend on timeless concepts, one of the most important of which is integrity.
‘Shared values of integrity are all well and good, but in the online world of digital transactions, how can we measure trustworthiness? We need common frameworks and standards against which trustworthiness can be assessed.’
The report stresses that society depends upon business and businesses rely upon trust in order to judge who is a suitable trading partner.
Accountants have always acted as the gatekeepers of trust, reporting on the financial performance of other businesses in order to provide assurance of their financial actions and position.
However, assessing companies now needs to be viewed through a wider lens and broader criteria encompassing more than just reporting financial data.
Jason Piper adds: ‘Business law structures are designed to enable as much as they are to protect. Compliance and risk management are essential elements of those frameworks, but a successful business will go far beyond that bare minimum. Positive engagement with the transparency and accountability provisions of business regulation demonstrates an openness to collaboration and cooperation.
‘ACCA believes that lawmakers should formulate a framework in which business success makes a net positive contribution to society’s prosperity. To be a sustainable organisation means being committed to minimising environmental impact whilst putting social justice and social responsibility at the heart of the strategy.’
The report says that new ways of doing business will rely more heavily on winning the trust of partners and customers. Increasingly, it will be possible to track the ethics of companies and individuals as part of the decision-making process of whether to trust them. The character of the company can be revealed through attitudes towards human rights, the environment and tax planning.
The accountancy profession can be that source of trust that society is calling for, as they are at the heart of organisations’ efforts to create, protect and communicate their value.